GLU MOBILE INC (Form: 10-Q, Received: 08/09/2013 17:17:47)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 June 30, 2013

¨	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 001-33368

Glu Mobile Inc.

(Exact name of the Registrant as Specified in its Charter)

Delaware

91-2143667

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

45 Fremont Street, Suite 2800

San Francisco, California 94105

(Address of Principal Executive Offices, including Zip Code)

(415) 800-6100

(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 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 “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

Shares of Glu Mobile Inc. common stock, $0.0001 par value per share, outstanding as of August 5, 2013: 70,534,972.

Explanatory Note

This Quarterly Report on Form 10-Q contains restated unaudited condensed consolidated financial statements and related disclosures for the three and six months ended June 30, 2012 and restated unaudited condensed consolidated financial statements for the year ended December 31, 2012, which have been derived from the restated audited consolidated financial statements as of that date. Details are discussed below and in Note 1A (Restatement of Financial Statements) to the accompanying unaudited condensed consolidated financial statements.

Restatement Background

On July 31, 2013, the Audit Committee of our Board of Directors determined, in consultation with Glu’s management and PricewaterhouseCoopers LLP, our independent registered public accounting firm (“PwC”), that the following financial statements that we previously filed with the Securities and Exchange Commission (the “SEC”) should no longer be relied upon: (1) the audited consolidated financial statements for the years ended December 31, 2011 and December 31, 2012; (2) the unaudited condensed consolidated financial statements included in our quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and September 30 for 2012 (including the corresponding 2011 quarterly periods contained therein); and (3) the unaudited condensed consolidated financial statements included in our quarterly report on Form 10-Q for the quarter ended March 31, 2013.

While preparing our financial outlook for the third quarter and full year of 2013, our management consulted with PwC, regarding the appropriate revenue recognition methodology for a new type of online-only game – our “Games-as-a-Service” titles – that we expect to introduce in the second half of 2013. We expect that these titles will primarily be sold through smartphone digital storefronts, such as the Apple App Store, Google Play Store, Amazon App Store and others (the “Digital Storefronts”). As a result of these discussions, it was determined that revenues generated from sales to end customers through the Digital Storefronts of our existing games should have been recorded on a gross basis because, upon further review of the agreements with the Digital Storefronts, it was determined that we should be considered the principal in the sales transaction. We have therefore corrected our revenue recognition policy to record on a gross basis the revenues attributable to sales to end customers through the Digital Storefronts.

Accordingly, we restated our previously issued consolidated financial statements for the years ended December 31, 2011 and 2012, and are restating our previously issued unaudited condensed consolidated financial statements for the three and six months ended June 30, 2012, to correct for the error in our presentation of smartphone revenues and cost of revenues, as well as corresponding adjustments to our deferred revenues and deferred cost of revenues. This resulted in an increase in our previously reported revenues and a corresponding identical increase in cost of revenues. This decreased our gross margin (gross profit as a percent of revenue) in each reporting period, but had no effect on gross profit, operating income/(loss), net income/(loss), cash flows or any per share amounts for any period. In addition, these changes did not change the timing of recognition of any revenues or costs among reporting periods.

A detailed discussion of the impact of the proper accounting for smartphone revenue recognition is contained in Note 1A to the notes to our audited consolidated financial statements in Part II – Item 8 of our Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC concurrently herewith.

Internal Control Consideration

Our management has determined that there was a control deficiency in our internal control over financial reporting that constitutes a material weakness, as discussed in Part I — Item 4 of this report. A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim condensed consolidated financial statements will not be prevented or detected on a timely basis. For a discussion of management’s consideration of our disclosure controls and procedures and the material weakness identified, see Part I — Item 4 included in this report.

GLU MOBILE INC.

FORM 10-Q

Quarterly Period Ended June 30, 2013

TABLE OF CONTENTS


	Page
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012 (Restated)		4

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 and the Three and Six Months Ended June 30, 2012 (Restated)		5

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2013 and the Three and Six Months Ended June 30, 2012		6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and June 30, 2012 (Restated)		7

Notes to Condensed Consolidated Financial Statements		8

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		26

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		39

ITEM 4. CONTROLS AND PROCEDURES		40

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS		42

ITEM 1A. RISK FACTORS		42

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		57

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		57

ITEM 4. MINE SAFETY DISCLOSURES		57

ITEM 5. OTHER INFORMATION		57

ITEM 6. EXHIBITS		57

SIGNATURES		58

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLU MOBILE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share data)


	June 30, 2013			December 31, 2012
				(Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	19,131		$	22,325
Accounts receivable, net		10,433			11,881
Prepaid royalties		400			—
Prepaid expenses and other		4,580			5,167

Total current assets		34,544			39,373
Property and equipment, net		4,114			5,026
Restricted cash		1,730			—
Other long-term assets		445			227
Intangible assets, net		7,772			10,889
Goodwill		19,468			19,440

Total assets	$	68,073		$	74,955

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,636		$	7,269
Accrued liabilities		2,138			2,124
Accrued compensation		2,778			5,989
Accrued royalties		1,759			2,781
Accrued restructuring		118			4
Deferred revenues		10,121			11,711

Total current liabilities		25,550			29,878
Other long-term liabilities		2,534			6,190

Total liabilities		28,084			36,068

Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized at June 30, 2013 and December 31, 2012; no shares issued and outstanding at June 30, 2013 and December 31, 2012		—			—
Common stock, $0.0001 par value: 250,000 shares authorized at June 30, 2013 and December 31, 2012; 70,298 and 66,022 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively		7			6
Additional paid-in capital		280,640			271,016
Accumulated other comprehensive income/(loss)		62			167
Accumulated deficit		(240,720	)		(232,302	)

Total stockholders’ equity		39,989			38,887

Total liabilities and stockholders’ equity	$	68,073		$	74,955

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

GLU MOBILE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Revenues	$	24,445		$	29,264		$	49,050		$	55,773
Cost of revenues:
Platform commissions, royalties and other		7,670			7,780			15,132			15,302
Amortization of intangible assets		1,078			932			2,152			1,685

Total cost of revenues		8,748			8,712			17,284			16,987

Gross profit		15,697			20,552			31,766			38,786

Operating expenses:
Research and development		11,224			15,697			22,854			30,730
Sales and marketing		5,143			4,701			10,151			9,076
General and administrative		3,852			4,556			7,771			8,922
Amortization of intangible assets		495			495			990			990
Restructuring charge		937			320			1,448			320

Total operating expenses		21,651			25,769			43,214			50,038

Loss from operations		(5,954	)		(5,217	)		(11,448	)		(11,252	)
Interest and other income/(expense), net:
Interest income		4			5			7			12
Other income/(expense), net		159			205			288			(168	)

Interest and other income/(expense), net		163			210			295			(156	)

Loss before income taxes		(5,791	)		(5,007	)		(11,153	)		(11,408	)
Income tax benefit		2,870			2,019			2,735			1,579

Net loss	$	(2,921	)	$	(2,988	)	$	(8,418	)	$	(9,829	)

Net loss per common share — basic and diluted	$	(0.04	)	$	(0.05	)	$	(0.12	)	$	(0.15	)
Weighted average common shares outstanding — basic and diluted		69,812			63,802			68,105			63,516

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

GLU MOBILE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands)


	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net Loss	$	(2,921	)	$	(2,988	)	$	(8,418	)	$	(9,829	)

Other comprehensive loss:
Foreign currency translation adjustments		389			(457	)		133			(296	)
Reclassification to net loss (1)		(238	)		—			(238	)		—

Other comprehensive loss		151			(457	)		(105	)		(296	)

Comprehensive loss	$	(2,770	)	$	(3,445	)	$	(8,523	)	$	(10,125	)

(1)

The reclassification to net loss relates to the write-off of cumulative translation adjustment upon substantial liquidation of the Company’s Brazilian entity and is recognized in Restructuring charge in the Company’s unaudited condensed consolidated statement of operations for the three months ended June 30, 2013.

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

GLU MOBILE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Six Months Ended June 30,
	2013			2012
				(Restated)
Cash flows from operating activities:
Net loss	$	(8,418	)	$	(9,829	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,392			1,118
Amortization of intangible assets		3,142			2,675
Stock-based compensation		1,981			6,874
Change in fair value of Blammo earnout		(18	)		1,031
Non-cash foreign currency remeasurement (gain)/loss		(266	)		168
Non-cash restructuring charges		244			—
Changes in allowance for doubtful accounts		24			161
Changes in operating assets and liabilities:
Accounts receivable		1,336			(1,265	)
Prepaid royalties		(400	)		307
Prepaid expenses and other assets		560			(701	)
Accounts payable		1,740			(693	)
Accrued liabilities		32			(36	)
Accrued compensation		(1,565	)		(11	)
Accrued royalties		(988	)		(588	)
Deferred revenues		(1,598	)		867
Accrued restructuring charge		(45	)		(346	)
Other long-term liabilities		(2,779	)		(2,304	)

Net cash used in operating activities		(5,626	)		(2,572	)

Cash flows used in investing activities:
Purchase of property and equipment		(785	)		(1,149	)
Purchase of intangible assets		—			(5,000	)
Restricted cash		(1,730	)		—
Other investing activities		(200	)		—

Net cash used in investing activities		(2,715	)		(6,149	)

Cash flows from financing activities:
Proceeds from exercise of warrants and issuance of common stock		4,237			150
Proceeds from exercise of stock options and ESPP		982			1,213

Net cash provided by financing activities		5,219			1,363

Effect of exchange rate changes on cash		(72	)		(322	)

Net decrease in cash and cash equivalents		(3,194	)		(7,680	)
Cash and cash equivalents at beginning of period		22,325			32,212

Cash and cash equivalents at end of period	$	19,131		$	24,532

Supplemental disclosure of cash flow information
Common stock issued for property and equipment	$	189		$	—

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

GLU MOBILE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

Note 1—The Company, Basis of Presentation and Summary of Significant Accounting Policies

Glu Mobile Inc. (the “Company” or “Glu”) was incorporated in Nevada in May 2001 and reincorporated in the state of Delaware in March 2007. The Company develops and publishes a portfolio of action/adventure and casual games designed to appeal to a broad cross section of the users of smartphones and tablet devices who purchase its games through direct-to-consumer digital storefronts, such as the Apple App Store, Google Play store, Amazon Appstore, and others (“Digital Storefronts”). The Company creates games based on its own original intellectual property as well as third-party licensed brands.

The Company has incurred recurring losses from operations since inception and had an accumulated deficit of $240,720 as of June 30, 2013. For the three months ended June 30, 2013, the Company incurred a net loss of $2,921. For the six months ended June 30, 2013, the Company incurred a net loss of $8,418. The Company may incur additional operating losses and negative cash flows in the future. Failure to generate sufficient revenues, reduce spending or raise additional capital could adversely affect the Company’s ability to achieve profitability and its intended business objectives.

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”) in the United States for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 15, 2013, as amended by Amendment No. 1 filed with the SEC on August 9, 2013. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, which the Company believes are necessary for a fair statement of the Company’s financial position as of June 30, 2013. and its unaudited condensed consolidated results of operations for the three and six months ended June 30, 2013 and 2012 (restated), respectively. These unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the entire year. The unaudited condensed consolidated balance sheet presented as of December 31, 2012 (restated) has been derived from the audited consolidated financial statements as of that date, and the unaudited condensed consolidated balance sheet presented as of June 30, 2013 has been derived from the unaudited condensed consolidated financial statements as of that date.

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

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents that were held in operating bank accounts and accounts receivable.

The Company derives its accounts receivable from revenues earned from customers or through Digital Storefronts located in the U.S. and other locations outside of the U.S. The Company performs ongoing credit evaluations of its customers’ and the Digital Storefronts’ financial condition and currently does not require any collateral from its customers or the Digital Storefronts. The Company bases its allowance for doubtful accounts on management’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company reviews past due balances over a specified amount individually for collectability on a monthly basis and all other balances quarterly. The Company writes off accounts receivable balances against the allowance when it determines that the amount will not be recovered.

The following table summarizes the revenues from customers or aggregate purchases through Digital Storefronts that accounted for more than 10% of the Company’s revenues for the periods indicated:


	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
				(Restated)						(Restated)
Apple		53.3	%		41.4	%		50.4	%		42.5	%
Google		17.9			19.8			18.7			18.7

At June 30, 2013, Apple accounted for 44.4% and Medium Entertainment, which does business as PlayHaven, accounted for 11.8% of total accounts receivable. At December 31, 2012, Apple accounted for 44.3%, PlayHaven accounted for 13.2% and Google accounted for 10.8% of total accounts receivable. No other customer or Digital Storefront represented more than 10% of the Company’s total accounts receivable as of these dates.

Recent Accounting Pronouncements

In February 2013, the FASB issued ASU 2013-2, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income . This guidance requires the presentation of the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income, but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. The guidance is effective for fiscal years beginning after December 15, 2012. During the three and six months ended June 30, 2013, the Company adopted this guidance and reclassified the accumulated translation adjustment related to its Brazilian subsidiary out of accumulated other comprehensive income to restructuring charge in the Company’s unaudited condensed consolidated statements of operations upon the substantially complete liquidation of the entity.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists . Under this guidance, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. This accounting guidance will not have a material impact on the Company’s condensed consolidated financial statements once adopted.

Note 1A—Restatement of Financial Statements

Restatement Background

While preparing the Company’s financial outlook for the third quarter and full year of 2013, the Company’s management consulted with PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, regarding the appropriate revenue recognition methodology for a new type of online-only game – the Company’s “Games-as-a-Service” titles – that the Company expects to introduce in the second half of 2013. The Company expects that these titles will primarily be sold through Digital Storefronts. As a result of these discussions, it was determined that revenues generated from sales to end customers through the Digital Storefronts of the Company’s existing games should have been recorded on a gross basis because, upon further review of the agreements with the Digital Storefronts, it was determined that the Company should be considered the principal in the sales transaction. The Company has therefore corrected its revenue recognition policy to record on a gross basis the revenues attributable to sales to end customers through the Digital Storefronts.

Accordingly, the Company has restated its previously issued consolidated financial statements for the years ended December 31, 2011 and 2012 to correct for the error in its presentation of smartphone revenues and cost of revenues, as well as corresponding adjustments to the Company’s deferred revenues and deferred cost of revenues. This resulted in an increase in the Company’s previously reported revenues and a corresponding identical increase in cost of revenues. This decreased the Company’s gross margin (gross profit as a percent of revenue) in each reporting period, but had no effect on gross profit, operating income/(loss), net income/(loss), cash flows or any per share amounts for any period. In addition, these changes did not change the timing of recognition of any revenues or costs among reporting periods.

The following table summarizes the Condensed Consolidated Balance Sheet at December 31, 2012 as derived from that reported on the Company’s Form 10-K filed on March 15, 2013, compared to the restated accounts as reported on the Company’s Form 10-K/A filed on August 9, 2013:


	December 31, 2012
	As Reported		Adjustments		As Restated
Prepaid expenses and other	$	2,487	$	2,680	$	5,167
Total assets		72,275		2,680		74,955
Deferred revenues		9,031		2,680		11,711
Total liabilities		33,388		2,680		36,068
Total liabilities and stockholders’ equity		72,275		2,680		74,955

The following table summarizes the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2012, as reported on the Company’s Form 10-Q filed on August 9, 2012, compared to the restated accounts as reported on the Company’s Form 10-K/A filed on August 9, 2013:


	Three Months Ended June 30, 2012 (unaudited)						Six Months Ended June 30, 2012 (unaudited)
	As Reported		Adjustments		As Restated		As Reported		Adjustments		As Restated
Revenues	$	23,621	$	5,643	$	29,264	$	45,165	$	10,608	$	55,773
Cost of revenues:
Platform commissions, royalties and other		2,137		5,643		7,780		4,694		10,608		15,302
Amortization of intangible assets		932		—		932		1,685		—		1,685

Total cost of revenues		3,069		5,643		8,712		6,379		10,608		16,987

Gross profit	$	20,552	$	—	$	20,552	$	38,786	$	—	$	38,786

The following table summarizes the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012, as reported on the Company’s Form 10-Q filed on August 9, 2012, compared to the restated accounts as reported on the Company’s Form 10-K/A filed on August 9, 2013:


	Six Months Ended June 30, 2012 (unaudited)
	As Reported			Adjustments			As Restated
Changes in operating assets and liabilities, net of effect of acquisitions:
Prepaid expenses and other assets	$	(433	)	$	(268	)	$	(701	)
Deferred revenues		599			268			867
Net cash used in operating activities		(2,572	)		—			(2,572	)

Note 2—Net Loss Per Share

The Company computes basic net loss per share by dividing its net loss for the period by the weighted average number of common shares outstanding during the period less the weighted average unvested common shares subject to restrictions imposed by the Company.


	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net loss	$	(2,921	)	$	(2,988	)	$	(8,418	)	$	(9,829	)

Basic and diluted shares:
Weighted average common shares outstanding		69,902			64,523			68,196			64,240
Weighted average unvested common shares subject to restrictions		(90	)		(721	)		(91	)		(724	)

Weighted average shares used to compute basic and diluted net loss per share		69,812			63,802			68,105			63,516

Net loss per share — basic and diluted	$	(0.04	)	$	(0.05	)	$	(0.12	)	$	(0.15	)

The following weighted average options to purchase common stock, warrants to purchase common stock, unvested shares of common stock subject to restrictions, shares contingently issuable in connection with the Blammo earnout (as described below in Note 3 – Fair Value Measurements), and restricted stock units (“RSUs”) have been excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have had an anti-dilutive effect:


	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Warrants to purchase common stock		1,363		4,067		2,560		4,216
Unvested common shares subject to restrictions		90		721		91		724
Options to purchase common stock		10,559		10,315		10,599		9,994
Contingently issuable shares of common stock		—		—		377		—
RSUs		538		—		269		—

		12,550		15,103		13,896		14,934

Note 3—Fair Value Measurements

Fair Value Measurements

The Company accounts for fair value in accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a three-tier hierarchy, which prioritizes the inputs used in measuring fair value as follows:

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

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; 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 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s cash and cash equivalents, which were held in operating bank accounts, are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. As of June 30, 2013 and December 31, 2012, the Company had $19,131 and $22,325, respectively, in cash and cash equivalents. In addition, the Company’s restricted cash is classified within Level 1 of the fair value hierarchy. The carrying value of accounts receivable and payables approximates fair value due to the short time to expected receipt of payment or cash.

Liabilities for Contingent Consideration

On August 1, 2011, the Company completed the acquisition of Blammo Games Inc. (“Blammo”), by entering into a Share Purchase Agreement (the “Share Purchase Agreement”) by and among the Company, Blammo and each of the owners of the outstanding share capital of Blammo (the “Sellers”). Blammo is a developer of free-to-play games for the iOS platform located in Toronto, Canada. Pursuant to the terms of the Share Purchase Agreement, the Company agreed to issue to the Sellers, in the aggregate, (i) 1,000 shares of the Company’s common stock plus (2) up to an additional 3,313 shares of the Company’s common stock (the “Additional Shares”) if Blammo achieves certain net revenue targets during the years ending March 31, 2013, March 31, 2014 and March 31, 2015.

On May 16, 2013, the Company issued 742 shares of common stock to the former Blammo shareholders based on the Net Revenue (as such term is defined in the Share Purchase Agreement) that Blammo achieved for its fiscal year ended March 31, 2013. Since the contingency related to the number of shares earned in connection with the target for the year ended March 31, 2013 was resolved and the number of shares became fixed as of March 31, 2013, the fair value of these shares as then last remeasured in the amount of $2,263 has been presented in additional paid-in capital in the Company’s unaudited condensed consolidated balance sheet since March 31, 2013. The fair value of this earnout expense (cumulative changes recorded through March 31, 2013) has been presented in additional paid-in capital on the Company’s unaudited condensed consolidated balance sheet as of June 30, 2013. The remaining Additional Shares will be issued to the Sellers if, and to the extent that, Blammo achieves certain Net Revenue performance targets as follows: (i) for fiscal 2014 (April 1, 2013 through March 31, 2014), (a) 417 Additional Shares will be issued to the Sellers if, and only in the event that, Blammo meets its Baseline Net Revenue goal for such fiscal year, and (b) up to an additional 833 Additional Shares will be issued to the Sellers to the extent that Blammo exceeds its Baseline Net Revenue goal and meets its Upside Net Revenue goal for such fiscal year, and (ii) for fiscal 2015 (April 1, 2014 through March 31, 2015), (a) no Additional Shares will be issued to the Sellers if Blammo does not meet its Baseline Net Revenue goal for such fiscal year and (b) up to 1,154 Additional Shares will be issued to the Sellers to the extent that Blammo exceeds its Baseline Net Revenue goal and meets its Upside Net Revenue goal for such fiscal year. To the extent that Blammo meets its Baseline Net Revenue goal for a fiscal year but does not meet its Upside Net Revenue goal for such fiscal year, Additional Shares will be issued to the Sellers on a straight-line basis based on the amount by which Blammo exceeded the Baseline Net Revenue goal. Blammo’s Baseline and Upside Net Revenue goals for fiscal 2014 and 2015 are as follows:


Fiscal Year	Baseline Net Revenue		Upside Net Revenue
Fiscal 2014	$	5,500	$	10,000
Fiscal 2015	$	8,500	$	15,000

Three of the five Sellers are also employees of Blammo. If any of these employee Sellers voluntarily terminates his employment with Blammo (other than because of a disability that prevents him from performing his job) or if the Company or Blammo terminates such Seller’s employment for Cause (as defined in the Share Purchase Agreement), then such Seller will be eligible to receive Additional Shares if and when such Additional Shares are earned as described above only with respect to the fiscal year in which such termination of employment occurs (and all previous fiscal years to the extent applicable), but not with respect to any Additional Shares issued in any subsequent fiscal year. In such an event, the Additional Shares that such Seller would have otherwise received will be forfeited and will not be issued by the Company or distributed to the other Sellers, but the other Sellers’ rights to receive Additional Shares will not otherwise be affected. The fair value of the contingent consideration issued to the three Sellers who are also employees of Blammo is not considered part of the purchase price, since vesting is contingent upon these employees’ continued service during the earn-out periods. The Company records the contingent consideration issued to these employees as a compensation expense over the earn-out period of one to three years. See Note 9 for further details. In accordance with ASC 805, Business Combinations , non-employee contingent consideration issued to the two Sellers who are not employees of Blammo was recorded as part of the purchase accounting and is fair valued at each subsequent reporting period. The total fair value of the non-employee contingent consideration liability has been estimated at $42 and $412 as of June 30, 2013 and December 31, 2012, respectively. During the three months ended June 30, 2013 and 2012, the Company recorded fair value expense adjustments of $48 and $386, respectively, which represent the changes in fair value of the contingent consideration for both respective periods. During the six months ended June 30, 2013 and 2012, the Company recorded fair value expense adjustments of $18 and $1,031, respectively, which represent the changes in fair value of the non-employee contingent consideration for both respective periods. In accordance with ASC 805, changes in the fair value of non-employee contingent consideration are recognized in general and administrative expense in the Company’s unaudited condensed consolidated statements of operations.

Level 3 liabilities consist of acquisition-related liabilities for contingent consideration (i.e., earnouts) related to the acquisition of Blammo. As of December 31, 2012, the Company recorded a contingent consideration liability of $2,512, of which $1,855 was recorded as a current liability in accrued compensation as settlement was less than one year. As of June 30, 2013, the Company recorded a contingent consideration liability of $258, of which $210 was recorded as a current liability in accrued compensation as settlement is less than one year. The Company uses a risk-neutral framework to estimate the probability of achieving the revenue targets set forth above for each year. The fair value of the contingent consideration was determined using a digital option, which captures the present value of the expected payment multiplied by the probability of reaching the revenue targets for each year. Key assumptions for the three months ended June 30, 2013 included a discount rate of 35.0%, volatility of 37.0%, risk-free rates of between 0.12% and 0.31% and probability-adjusted revenue levels. Key assumptions for the three months ended June 30, 2012 included a discount rate of 25.0%, volatility of 41.0%, risk free rates of between 0.18% and 0.39% and probability-adjusted revenue levels. Probability-adjusted revenue is a significant input that is not observable in the market, which ASC 820 refers to as a Level 3 input.

Note 4—Balance Sheet Components

Accounts Receivable


	June 30,			December 31,
	2013			2012
Accounts receivable	$	10,889		$	12,313
Less: Allowance for doubtful accounts		(456	)		(432	)

	$	10,433		$	11,881

Accounts receivable includes amounts billed and unbilled as of the respective balance sheet dates. The Company had no significant bad debts during the three and six months ended June 30, 2013 and 2012.

Prepaid expenses and other

Prepaid expenses and other includes platform commissions of $2,519 and $2,680 (restated) that have been deferred as of June 30, 2013 and December 31, 2012, respectively.

Property and Equipment


	June 30,			December 31,
	2013			2012
Computer equipment	$	5,974		$	6,255
Furniture and fixtures		558			566
Software		6,207			6,304
Leasehold improvements		1,376			2,227

		14,115			15,352
Less: Accumulated depreciation and amortization		(10,001	)		(10,326	)

	$	4,114		$	5,026

Depreciation expense for the three months ended June 30, 2013 and June 30, 2012 was $661 and $556, respectively. Depreciation expense for the six months ended June 30, 2013 and June 30, 2012 was $1,392 and $1,118, respectively.

Other Long-Term Liabilities


	June 30,		December 31,
	2013		2012
Uncertain tax position obligations		841		3,859
Contingent earnout liability		48		657
Deferred income tax liability		664		647
Deferred rent and other		981		1,027

	$	2,534	$	6,190

Note 5—Business Combinations

GameSpy Industries, Inc.

On August 2, 2012, the Company completed the acquisition of GameSpy Industries, Inc. (“GameSpy”) pursuant to an Agreement and Plan of Merger (the “GameSpy Merger Agreement”) by and among the Company, Galileo Acquisition Corp., a California corporation and wholly owned subsidiary of the Company (“Galileo”), IGN Entertainment, Inc. (“IGN”) and GameSpy. GameSpy, which is based in California, provides technology and services for multiplayer and server-based gaming. The Company acquired GameSpy as part of its efforts to enhance the monetization and retention of the Company’s players by incorporating GameSpy’s technology that powers community functionality, synchronous multiplayer and asynchronous player versus player mechanics into the Company’s games.

Pursuant to the terms of the GameSpy Merger Agreement, the Company issued to IGN, as GameSpy’s sole shareholder, in exchange for all of the issued and outstanding shares of GameSpy capital stock, a total of 600 shares of the Company’s common stock, for consideration of approximately $2,796, based on the $4.66 closing price of the Company’s common stock on The NASDAQ Global Market on August 2, 2012; 90 shares of which will be held in escrow until November 2, 2013 as security to satisfy indemnification claims under the GameSpy Merger Agreement. In addition, the Company, GameSpy and IGN entered into a Transition Services Agreement, pursuant to which IGN will provide to the Company and GameSpy certain backend data center transition services related to GameSpy’s private cloud storage infrastructure for up to two years following the acquisition.

The allocation of the GameSpy purchase price was based upon valuations for certain assets acquired and liabilities assumed. The valuation was based upon calculations and valuations, and the Company’s estimates and assumptions are subject to change as the Company obtains additional information for its estimates during the respective measurement periods (up to one year from the acquisition date). The following table summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition:


Assets acquired:
Cash	$	913
Accounts receivable, net		1,695
Property and equipment		485
Intangible assets:
Customer contract and related relationships		250
Titles, content and technology		1,300
Goodwill		1,096

Total assets acquired		5,739

Liabilities assumed:
Other accrued liabilities		(689	)
Deferred revenue		(1,684	)
Deferred tax liability		(570	)

Total liabilities acquired		(2,943	)

Net acquired assets	$	2,796

Acquisition-related intangibles included in the above table are finite-lived and are being amortized on a straight-line basis over their estimated lives of two to three years, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized.

In connection with the acquisition of GameSpy, the Company recorded net deferred tax liabilities of $570, with a corresponding adjustment to goodwill. These deferred taxes were primarily related to identifiable intangible assets and net operating losses.

The Company allocated the residual value of $1,096 to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), goodwill will not be amortized but will be tested for impairment at least annually. Goodwill created as a result of the GameSpy acquisition is not deductible for tax purposes.

Valuation Methodology

The Company engaged a third-party valuation firm to aid management in its analyses of the fair value of GameSpy. All estimates, key assumptions and forecasts were either provided by or reviewed by the Company. While the Company chose to utilize a third-party valuation firm, the fair value analyses and related valuations represent the conclusions of management and not the conclusions or statements of any third party.

In the valuation of GameSpy customer contracts, these contracts were valued over their remaining terms, which included consideration of moderate anticipated renewals and is consistent with market participant considerations. These contracts were fair valued using the Multi-Period Excess Earnings (“MPEE”) method of the income approach and key assumptions used included: projected revenue and operating expenses for GameSpy’s remaining contracts, the remaining contractual period of the contracts and a discount rate of 14%. The Company valued developed technology using the replacement cost method of the cost approach and based on the perceived value that a market participant would ascribe to the GameSpy technology, which allows for hosting multi-player games on mobile devices and other platforms. Key assumptions used included fully burdened headcount spending information. As of the valuation date, the fair value of GameSpy’s deferred revenue was $1,684, which reflects the costs including hosting fees, salaries and benefits, equipment and facilities to support the contractual obligations associated with these revenues, plus a market participant margin. The deferred revenue will be recognized on a straight-line basis over 24 months.

Pro Forma Financial Information (unaudited)

Pro forma results of operations of the GameSpy acquisition have not been presented because they are not material to the Company’s condensed consolidated results of operations.

Note 6—Goodwill and Intangible Assets

Intangible Assets

The Company’s intangible assets were acquired in connection with the acquisitions of Macrospace in 2004, iFone in 2006, MIG in 2007, Superscape in 2008, Griptonite and Blammo in 2011 and GameSpy in the third quarter of 2012, as well as in connection with the purchase of the Deer Hunter trademark and brand assets from Atari, Inc. (“Atari”) in the second quarter of 2012. The carrying amounts and accumulated amortization expense of the acquired intangible assets, including the impact of foreign currency exchange translation, at June 30, 2013 and December 31, 2012 were as follows:


		June 30, 2013							December 31, 2012
		Gross		Accumulated			Net		Gross		Accumulated			Net
		Carrying		Amortization			Carrying		Carrying		Amortization			Carrying
		Value		Expense			Value		Value		Expense			Value
		(Including		(Including			(Including		(Including		(Including			(Including
	Estimated	Impact of		Impact of			Impact of		Impact of		Impact of			Impact of
	Useful	Foreign		Foreign			Foreign		Foreign		Foreign			Foreign
	Life	Exchange)		Exchange)			Exchange)		Exchange)		Exchange)			Exchange)
Intangible assets amortized to cost of revenues:
Titles, content and technology	2 yrs	$	12,642	$	(11,670	)	$	972	$	12,781	$	(11,518	)	$	1,263
Catalogs	1 yr		1,183		(1,183	)		—		1,257		(1,257	)		—
ProvisionX Technology	6 yrs		195		(195	)		—		207		(207	)		—
Carrier contract and related relationships	5 yrs		19,710		(18,001	)		1,709		19,585		(16,421	)		3,164
Licensed content	5 yrs		2,994		(2,994	)		—		2,952		(2,952	)		—
Service provider license	9 yrs		476		(293	)		183		467		(262	)		205
Trademarks	7 yrs		5,225		(1,117	)		4,108		5,225		(760	)		4,465

			42,425		(35,453	)		6,972		42,474		(33,377	)		9,097

Other intangible assets amortized to operating expenses:
Emux Technology	6 yrs		1,262		(1,262	)		—		1,341		(1,341	)		—
Noncompete agreement	4 yrs		5,152		(4,352	)		800		5,187		(3,395	)		1,792

			6,414		(5,614	)		800		6,528		(4,736	)		1,792

Total intangibles assets subject to amortization		$	48,839	$	(41,067	)	$	7,772	$	49,002	$	(38,113	)	$	10,889

Acquisition-related intangibles included in the above table are finite-lived and are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are realized. The Company has included amortization of acquired intangible assets directly attributable to revenue-generating activities in cost of revenues. The Company has included amortization of acquired intangible assets not directly attributable to revenue-generating activities in operating expenses. The Company acquired approximately $1,550 of intangible assets as part of the GameSpy acquisition in the third quarter of 2012.

On April 1, 2012, the Company acquired from Atari its Deer Hunter trademark and associated domain names and also took a license to the other intellectual property associated with the Deer Hunter brand for total consideration of $5,000 in cash. The license agreement pursuant to which the Company licensed the other intellectual property associated with the Deer Hunter brand has a term equal to the longer of (i) 99 years and (ii) the expiration of the copyrights in and copyrightable elements of the Deer Hunter intellectual property assets. The acquisition price has been recorded as acquired intangible assets and classified within “Trademarks” in the above table and will be amortized over the estimated useful life of seven years.

During the three months ended June 30, 2013 and 2012, the Company recorded amortization expense in the amounts of $1,078 and $932 respectively, in cost of revenues. During the six months ended June 30, 2013 and 2012, the Company recorded amortization expense in the amounts of $2,152 and $1,685 respectively, in cost of revenues. During the three months ended June 30, 2013 and 2012, the Company recorded amortization expense in the amounts of $495 and $495, respectively, in operating expenses. During the six months ended June 30, 2013 and 2012, the Company recorded amortization expense in the amounts of $990 and $990, respectively, in operating expenses.

As of June 30, 2013, the total expected future amortization related to intangible assets was as follows:


	Amortization		Amortization
	Included in		Included in		Total
	Cost of		Operating		Amortization
Period Ending December 31,	Revenues		Expenses		Expense
2013 (remaining six months)	$	2,083	$	324	$	2,407
2014		1,496		382		1,878
2015		1,020		94		1,114
2016		765		—		765
2017		714		—		714
2018 and thereafter		894		—		894

	$	6,972	$	800	$	7,772

Goodwill

The Company has goodwill attributable to its MIG, GameSpy, Blammo and Griptonite acquisitions as of June 30, 2013. The Company attributed all of the goodwill resulting from the MIG acquisition to its Asia and Pacific (“APAC”) reporting unit. The Company acquired $1,096 of goodwill during 2012 as part of the GameSpy acquisition. All of the goodwill attributable to the GameSpy, Blammo and Griptonite acquisitions has been fully assigned to the Company’s Americas reporting unit. The Company had fully impaired in prior years all goodwill allocated to its EMEA reporting unit. The goodwill allocated to the Americas reporting unit is denominated in U.S. Dollars (“USD”) and the goodwill allocated to the APAC reporting unit is denominated in Chinese Renminbi (“RMB”). As a result, the goodwill attributed to the APAC reporting unit is subject to foreign currency fluctuations.

In the valuation of the goodwill balance for Griptonite, Blammo, MIG and GameSpy, the Company gave consideration to the future economic benefits of other assets that were not individually identified or separately recognized. The acquired studio workforce for each of these acquisitions was estimated to have value, and since the acquired workforce is not individually identified or separately recognized, it was subsumed within the goodwill recognized as part of each business combination. The Company further planned to leverage its preexisting contractual relationships with Digital Storefronts to distribute new titles developed by the Griptonite and Blammo studios and the expected synergies are reflected in the value of the goodwill recognized. The Company also plans to use the GameSpy technology to enable features in its games that are designed to enhance the monetization and retention of the Company’s players, and these synergies are reflected in the value of goodwill recognized.

Goodwill by reporting unit for the periods indicated was as follows:


	June 30, 2013												December 31, 2012
	Americas			EMEA			APAC			Total			Americas			EMEA			APAC			Total
Balance as of January 1
Goodwill	$	42,946		$	25,354		$	24,251		$	92,551		$	41,915		$	25,354		$	24,220		$	91,489
Accumulated Impairment Losses		(24,871	)		(25,354	)		(22,886	)		(73,111	)		(24,871	)		(25,354	)		(19,273	)		(69,498	)

		18,075			—			1,365			19,440			17,044			—			4,947			21,991
Goodwill Acquired during the year		—			—			—			—			1,031			—			—			1,031
Effects of Foreign Currency Exchange		—			—			28			28			—			—			31			31
Impairment Losses		—			—			—			—			—			—			(3,613	)		(3,613	)

Balance as of period ended:		18,075			—			1,393			19,468			18,075			—			1,365			19,440
Goodwill		42,946			25,354			24,279			92,579			42,946			25,354			24,251			92,551
Accumulated Impairment Losses		(24,871	)		(25,354	)		(22,886	)		(73,111	)		(24,871	)		(25,354	)		(22,886	)		(73,111	)

Balance as of period ended:	$	18,075		$	—		$	1,393		$	19,468		$	18,075		$	—		$	1,365		$	19,440

In accordance with ASC 350, the Company’s goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Under ASC 350, the Company performs the annual impairment review of its goodwill balance as of September 30 or more frequently if triggering events occur.

The Company evaluates qualitative factors and overall financial performance to determine whether it is necessary to perform the first step of the multiple-step goodwill test. This step is referred to as “Step 0.” Step 0 involves, among other qualitative factors, weighing the relative impact of factors that are specific to the reporting unit as well as industry and macroeconomic factors. After assessing those various factors, if it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity will need to proceed to the first step of the goodwill impairment test. ASC 350 requires a multiple-step approach to testing goodwill for impairment for each reporting unit annually, or whenever events or changes in circumstances indicate the fair value of a reporting unit is below its carrying amount. The first step measures for impairment by applying the fair value-based tests at the reporting unit level. The second step (if necessary) measures the amount of impairment by applying the fair value-based tests to individual assets and liabilities within each reporting unit. The fair value of the reporting units is estimated using a combination of the market approach, which utilizes comparable companies’ data, and/or the income approach, which uses discounted cash flows.

Note 7—Commitments and Contingencies

Leases

The Company leases office space under non-cancelable operating facility leases with various expiration dates through September 2020. Rent expense for the three months ended June 30, 2013 and 2012 was $791 and $647, respectively. Rent expense for the six months ended June 30, 2013 and 2012 was $1,476 and $1,247, respectively. The terms of the facility leases provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. The deferred rent balance was $739 and $632 at June 30, 2013 and December 31, 2012, respectively, and was included within other long-term liabilities.

In April 2013, the Company entered into a sublease for 29 square feet of office space for its new San Francisco headquarters. The term of the sublease began on May 23, 2013 and will expire on March 31, 2018. The Company provided the sub-landlord a letter of credit in the amount of $1,230 to secure its obligations under the lease. Cash deposited as a security to the letter of credit has been classified as restricted cash on the Company’s unaudited condensed consolidated balance sheet as of June 30, 2013.

In connection with the acquisition of Griptonite in 2011, the Company assumed lease obligations related to the premises located in Kirkland, Washington (the “Griptonite Lease”). The Griptonite Lease covers approximately 54 rentable square feet and initially had a term that ends on September 30, 2015; however, in August 2012, the Company and the landlord of the Griptonite Lease entered into an amendment to the Griptonite Lease that changed the termination date of the Griptonite Lease to September 30, 2013. As part of the purchase accounting adjustments for Griptonite, the Company had eliminated the existing deferred rent balance and recorded a fair value adjustment to reflect the current market value of the unfavorable operating lease commitment. The fair value of the unfavorable operating lease obligation was $106 as of June 30, 2013 and was $477 as of December 31, 2012.

In June 2013, the Company entered into a lease for 18 square feet of office space at its new location in Bellevue, Washington (the “New Griptonite Lease”). The term of the lease begins on October 1, 2013 and will expire on September 30, 2020, unless the Company exercises its right to early terminate the lease effective as of September 30, 2017. The Company provided the landlord a letter of credit in the amount of $500 to secure its obligations under the lease and this has been classified as restricted cash on the Company’s unaudited condensed consolidated balance sheet as of June 30, 2013. In addition, the Company has provided the landlord with a guarantee of lease to guarantee its obligations under the New Griptonite Lease.

At June 30, 2013, future minimum lease payments under non-cancelable operating leases were as follows:


	Minimum
	Operating
	Lease
Period Ending December 31,	Payments
2013 (remaining six months)	$	2,072
2014		3,871
2015		4,025
2016		3,422
2017		2,668
2018 and thereafter		1,902

	$	17,960

Minimum Guaranteed Royalties

The Company has entered into license and publishing agreements with various owners of brands and other intellectual property to develop and publish games for mobile devices. Pursuant to some of these agreements, the Company is required to pay minimum royalties or license fees over the term of the agreement regardless of actual game sales. Future minimum royalty payments as of June 30, 2013 were $290, which are due over the remaining six months of 2013.

Income Taxes

As of June 30, 2013, unrecognized tax benefits and potential interest and penalties are classified within “other long-term liabilities” on the Company’s unaudited condensed consolidated balance sheets. As of June 30, 2013, the settlement of the Company’s income tax liabilities could not be determined; however, the liabilities are not expected to become due within the next 12 months.

Indemnification Agreements

The Company has entered into agreements under which it indemnifies each of its officers and directors during his or her lifetime for certain events or occurrences while the officer or director is or was serving at the Company’s request in that capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and enables the Company to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. Accordingly, the Company had recorded no liabilities for these agreements as of June 30, 2013 or December 31, 2012.

In the ordinary course of its business, the Company includes standard indemnification provisions in most of its license agreements with carriers and other distributors. Pursuant to these provisions, the Company generally indemnifies these parties for losses suffered or incurred in connection with its games, including as a result of intellectual property infringement, viruses, worms and other malicious software, and legal or regulatory violations. The term of these indemnity provisions is generally perpetual after execution of the corresponding license agreement, and the maximum potential amount of future payments the Company could be required to make under these provisions is often unlimited. To date, the Company has not incurred costs to defend lawsuits or settle indemnified claims of these types. As a result, the Company believes the estimated fair value of these indemnity provisions is minimal. Accordingly, the Company had recorded no liabilities for these provisions as of June 30, 2013 or December 31, 2012.

Contingencies

From time to time, the Company is subject to various claims, complaints and legal actions in the normal course of business. The Company assesses its potential liability by analyzing specific litigation and regulatory matters using available information. The Company’s estimate of losses is developed in consultation with inside and outside counsel, which involves a subjective analysis of potential results and outcomes, assuming various combinations of appropriate litigation and settlement strategies. After taking all of the above factors into account, the Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed reasonably probable and the amount can be reasonably estimated. The Company further determines whether an estimated loss from a contingency should be disclosed by assessing whether a material loss is deemed reasonably possible. Such disclosure will include an estimate of the additional loss or range of loss or will state that an estimate cannot be made.

In April 2013, Lodsys Group, LLC, a Texas limited liability company (“Lodsys”), filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that the Company has been infringing two of Lodsys’ patents, and is seeking unspecified damages, including treble damages for willful infringement, interest, attorneys’ fees and such other costs as the Court may deem just and proper. On June 19, 2013, the Company filed an answer to Lodsys’s complaint (i) denying all of Lodsys’s claims, (ii) setting forth certain affirmative defenses to Lodsys’s claims and (iii) asserting counterclaims that the Company does not infringe the Lodsys patents and that the Lodsys patents are invalid. This action has only recently been filed and, accordingly, the Company is not in a position to assess whether any loss or adverse effect on its financial condition is probable or remote or to estimate the range of potential loss, if any.

The Company does not believe it is party to any currently pending litigation, the outcome of which is reasonably likely to have a material adverse effect on its operations, financial position or liquidity. However, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, potential negative publicity, diversion of management resources and other factors.

Note 8—Stockholders’ Equity

Acquisitions

On August 2, 2012, the Company issued an aggregate of 600 shares of its common stock to IGN in connection with the Company’s acquisition of GameSpy.

See Note 5 for more information about this acquisition.

Shares issued in connection with the Blammo Earnout

On May 16, 2013, the Company issued 742 shares to the former Blammo shareholders based on the Net Revenue that Blammo achieved for its fiscal year ended March 31, 2013. The fair value of this earnout amount has been presented in additional paid-in capital on the Company’s condensed consolidated balance sheet as of June 30, 2013.

See Note 3 for more information about this issuance.

Warrants to Purchase Common Stock

During the six months ended June 30, 2013 and 2012, respectively, investors exercised warrants to purchase 2,825 and 100 shares of the Company’s common stock, and the Company received gross proceeds of $4,237 and $150 in connection with these exercises.

Warrants outstanding as of June 30, 2013 were as follows:

Number

Exercise

of Shares

Price

Outstanding

Term

per

Under

Issue Date

(Years)

Share

Warrant

August 2010

1.50

1,035

See Note 14 – Subsequent Events – for additional information.

Note 9—Stock Option and Other Benefit Plans

2007 Equity Incentive Plan

In January 2007, the Company’s Board of Directors adopted, and in March 2007 the Company’s stockholders approved, the 2007 Equity Incentive Plan (the “2007 Plan”). The 2007 Plan permits the Company to grant stock options, restricted stock units, and other stock-based awards to employees, non-employee directors and consultants. In April 2013, the Company’s Board of Directors approved, and in June 2013, the Company’s stockholders approved, the amended and restated 2007 Equity Incentive Plan (the “Amended 2007 Plan”). The Amended 2007 Plan includes an increase of 7,200 shares in the aggregate number of shares of common stock authorized for issuance under the plan. It also includes a fungible share provision, pursuant to which each share that is subject to a stock-based award that is not a “full value award” (restricted stock, RSUs, or other stock-based awards where the price charged to the participant for the award is less than 100% of the fair market value) reduces the number of shares available for issuance by 1.39 shares. When a stock-based award that is not a full value award is cancelled, the underlying shares are returned to the pool of shares available for grant at a ratio of 1.39 shares for each share cancelled. As of June 30, 2013, 7,368 shares were available for future grants under the Amended 2007 Plan.

2007 Employee Stock Purchase Plan

In January 2007, the Company’s Board of Directors adopted, and in March 2007 the Company’s stockholders approved, the 2007 Employee Stock Purchase Plan (the “2007 Purchase Plan”). As of June 30, 2013, 1,146 shares were available for issuance under the 2007 Purchase Plan.

2008 Equity Inducement Plan

In March 2008, the Company’s Board of Directors adopted the 2008 Equity Inducement Plan (the “Inducement Plan”) to augment the shares available under its existing 2007 Plan. The Company has not sought stockholder approval for the Inducement Plan. As such, awards under the Inducement Plan are granted in accordance with NASDAQ Listing Rule 5635(c)(4) and only to persons not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such individual’s entering into employment with the Company. The Inducement Plan permits the Company to grant only nonqualified stock options. In May 2013, the Company’s Board of Directors amended the Inducement Plan to increase the number of shares available for grant by 200 shares. As of June 30, 2013, 70 shares were reserved for future grants under the Inducement Plan.

Share-Based Awards Available for Grant

The calculation of share-based awards available for grant under the Amended 2007 Plan and the Inducement Plan for the six months ended June 30, 2013 is as follows:


	Shares
	Available
Balances at December 31, 2012		1,178
Increase in authorized shares		7,400
share-based awards granted (1)		(2,999	)
share-based awards canceled (2)		1,859

Balances at June 30, 2013		7,438

(1)	Under the terms of the Amended 2007 Plan, RSUs granted on or after June 6, 2013 reduce the number of shares available for grant by 1.39 shares for each share subject to an RSU award.

(2)	RSUs granted after June 6, 2013 that are forfeited and returned to the pool of shares available for grant increase the pool by 1.39 shares for each share subject to an RSU that is forfeited.

RSUs

The Company grants RSUs to its employees under the Amended 2007 Plan. The cost of RSUs is determined using the fair value of the Company’s common stock on the date of grant. RSUs typically vest and are settled over approximately a four-year period with 25% of the shares vesting on or around the one-year anniversary of the grant date and the remaining shares vesting quarterly thereafter. Compensation cost is amortized on a straight-line basis over the requisite service period.

RSU Activity

A summary of the Company’s RSU activity for the six months ended June 30, 2013, is as follows:


				Weighted
	Number of			Average
	Units			Grant Date
	Outstanding			Fair Value
Awarded and unvested, December 31, 2012		—		$	—
Granted		1,071			2.72
Vested		—			—
Forfeited		(70	)		2.74

Awarded and unvested, June 30, 2013		1,001		$	2.72

Restricted stock units expected to vest, June 30, 2013		699

Stock Option Activity

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2013:


	Options Outstanding
				Weighted		Weighted
	Number			Average		Average		Aggregate
	of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (Years)		Value
Balances at December 31, 2012		10,921		$	3.07
Options granted		1,908			2.62
Options canceled		(1,789	)		3.66
Options exercised		(320	)		1.31

Balances at June 30, 2013		10,720		$	2.94		3.94	$	2,947

Options vested and expected to vest at June 30, 2013		9,647		$	2.93		3.82	$	2,909
Options exercisable at June 30, 2013		5,302		$	2.93		3.02	$	2,427

The aggregate intrinsic value in the preceding table is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of the Company’s common stock on The NASDAQ Global Market of $2.21 per share as of June 28, 2013 (the last trading day in the quarter). Consolidated net cash proceeds from option exercises were $417 and $628 for the six months ended June 30, 2013 and 2012, respectively. The Company realized no significant income tax benefit from stock option exercises during the three or six months ended June 30, 2013 or 2012. As required, the Company presents excess tax benefits from the exercise of stock options, if any, as financing cash flows rather than operating cash flows.

The Company applies the fair value provisions of ASC 718, Compensation-Stock Compensation (“ASC 718”). Under ASC 718, the Company estimated the fair value of each option award on the grant date using the Black-Scholes option valuation model and the weighted average assumptions noted in the following table.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Dividend yield		—	%		—	%		—	%		—	%
Risk-free interest rate		0.69	%		0.66	%		0.66	%		0.66	%
Expected volatility		52.2	%		69.2	%		52.6	%		69.2	%
Expected term (years)		4.00			4.00			4.00			4.00

The Company based its expected volatility on its own historic volatility and the historical volatility of a peer group of publicly traded entities. The expected term of options gave consideration to early exercises, post-vesting cancellations and the options’ six-year contractual term. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury Constant Maturity Rate as of the date of grant. The weighted-average fair value of stock options granted during the six months ended June 30, 2013 and 2012 was $1.07 and $2.22 per share, respectively.

The Company calculated employee stock-based compensation expense recognized in the three and six months ended June 30, 2013 and 2012 based on awards ultimately expected to vest and reduced it for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates

The following table summarizes the consolidated stock-based compensation expense by line items in the condensed consolidated statement of operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Research and development	$	163	$	2,396	$	831	$	5,656
Sales and marketing		93		155		160		270
General and administrative		480		487		990		948

Total stock-based compensation expense	$	736	$	3,038	$	1,981	$	6,874

The above table includes compensation expense attributable to the contingent consideration potentially issuable to the Blammo employees who were former shareholders of Blammo, which is recorded as research and development expense over the term of the earn-out periods, since these employees are primarily employed in product development. The Company re-measures the fair value of the contingent consideration each reporting period and only records a compensation expense for the portion of the earn-out target that is likely to be achieved. In addition, the Company is exposed to potential continued fluctuations in the fair market value of the contingent consideration in each reporting period, since re-measurement is impacted by changes in the Company’s share price and the assumptions used by the Company. The Company has estimated the total fair value of this liability at $216, and $2,242 as of June 30, 2013 and December 31, 2012, respectively; the amount as of June 30, 2013 excludes the 2013 contingent consideration earnout that was classified into additional paid-in capital. See Note 3 for further details. During the three and six months ended June 30, 2013, the Company recorded $214 and $27 of stock-based compensation income and expense, respectively, related to this contingent consideration. During the three and six months ended June 30, 2012, the Company recorded $1,874 and $4,751 of stock-based compensation expense, respectively, related to this contingent consideration.

At June 30, 2013, the Company had $1,884 of total unrecognized compensation expense, net of estimated forfeitures, related to RSUs that will be recognized over a weighted-average period of approximately four years. As of June 30, 2013, the Company had $6,726 of total unrecognized compensation expense related to stock options, net of estimated forfeitures and excluding unvested Blammo stock-based contingent consideration expense, which will be recognized over a weighted average period of 2.68 years. As permitted by ASC 718, the Company has deferred the recognition of its excess tax benefit from non-qualified stock option exercises.

Note 10—Income Taxes

The Company recorded an income tax benefit of $2,870 and $2,735 for the three and six months ended June 30, 2013, respectively, and an income tax benefit of $2,019 and $1,579 for the three and six months ended June 30, 2012, respectively, primarily related to the release of uncertain tax positions due to expiration of certain statutes of limitations in certain foreign jurisdictions, which was partially offset by foreign withholding taxes and income taxes. The income tax rates vary from the Federal and State statutory rates due to the valuation allowances on the Company’s net operating losses, foreign tax rate differences and withholding taxes.

The Company estimates its annual effective tax rate at the end of each quarterly period and records the tax effect of certain discrete items, which are unusual or occur infrequently, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit can be recognized and jurisdictions where a reliable estimate of ordinary income cannot be made are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections. The Company’s ability to use its net operating loss carryforwards and federal and state tax credit carryforwards to offset future taxable income and future taxes, respectively, may be subject to restrictions attributable to equity transactions that result in changes in ownership as defined by Internal Revenue Code Section 382.

The Company accounts for uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”). As of June 30, 2013 and December 31, 2012, the total amount of unrecognized tax benefits was $3,901 and $4,626, respectively. As of June 30, 2013 and December 31, 2012, approximately $817 and $817, respectively, of unrecognized tax benefits, if recognized, would impact the Company’s effective tax rate. The remaining balance, if recognized, would adjust the Company’s deferred tax assets, each of which are subject to a valuation allowance. At June 30, 2013, the liability for uncertain tax positions decreased by approximately $737 due to the expiration of certain statutes of limitation in foreign jurisdictions in which the Company does business. At June 30, 2013, the Company anticipated that the liability for uncertain tax positions, excluding interest and penalties, could decrease by approximately $755 within the next twelve months due to the expiration of certain statutes of limitation in foreign jurisdictions in which the Company does business.

The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. The Company recorded $30 and $53 of interest on uncertain tax positions during the three months ended June 30, 2013 and 2012, respectively. The Company recorded $70 and $114 of interest on uncertain tax positions during the six months ended June 30, 2013 and 2012, respectively. During the three months ended June 30, 2013, the Company released $2,412 of interest and penalties on uncertain tax positions due to expiration of certain statutes of limitation in foreign jurisdictions in which the Company does business. As of June 30, 2013 and December 31, 2012, the Company had a liability of $56 and $2,348, respectively, related to interest and penalties for uncertain tax positions.

The Company is subject to taxation in the United States and various foreign jurisdictions. The material jurisdictions subject to examination by tax authorities are primarily the State of California, United States, United Kingdom, Canada, and China. The Company’s federal and California tax returns are open by statute for tax years 2002 and forward and could be subject to examination by the tax authorities. The statute of limitations for the Company’s 2010 and 2011 tax returns for the various entities in the United Kingdom will close in 2013. The Company’s China income tax returns are open by statute for tax years 2008 and forward.

Note 11—Segment Reporting

ASC 280, Segment Reporting (“ASC 280”), establishes standards for reporting information about operating segments. It defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews selected financial information on a geographic basis; however this information is included within one operating segment for purposes of allocating resources and evaluating financial performance.

Accordingly, the Company reports as a single reportable segment—mobile games. For purpose of enterprise-wide disclosures, a breakdown of the Company’s total sales to customers in the feature phone and smartphone markets is shown below:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
			(Restated)				(Restated)
	(in thousands)				(in thousands)
Feature phone	$	1,423	$	3,710	$	3,279	$	7,875
Smartphone		23,022		25,554		45,771		47,898

Revenues	$	24,445	$	29,264	$	49,050	$	55,773

For purposes of enterprise-wide disclosures, the Company attributes revenues to geographic areas based on the country in which the distributor’s, advertising service provider’s or carrier’s principal operations are located. In the case of Digital Storefronts, revenues are attributed to the geographic location where the end-user makes the purchase. The Company generates its revenues in the following geographic regions:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
			(Restated)				(Restated)
United States of America	$	9,921	$	16,454	$	20,945	$	31,509
Americas, excluding the USA		1,349		1,356		2,508		2,534
EMEA		5,346		5,817		10,798		11,423
APAC		7,829		5,637		14,799		10,307

	$	24,445	$	29,264	$	49,050	$	55,773

The Company attributes its long-lived assets, which primarily consist of property and equipment, to a country primarily based on the physical location of the assets. Property and equipment, net of accumulated depreciation and amortization, summarized by geographic location was as follows:


	June 30,		December 31,
	2013		2012
Americas	$	2,951	$	3,649
EMEA		974		1,092
APAC		189		285

	$	4,114	$	5,026

Note 12—Restructuring

Restructuring information as of June 30, 2013 was as follows:


	Restructuring
	2012 and 2013						2010			2009
	Facilities and other			Workforce			Facilities and other			Facilities and other			Total
Balance as of January 1, 2012	$	—		$	—		$	653		$	234		$	887
Charges to operations		—			1,371			—			—			1,371
Charges settled in cash		—			(1,367	)		(653	)		(234	)		(2,254	)

Balance as of December 31, 2012		—			4			—			—			4
Charges to operations		584			864			—			—			1,448
Non Cash Adjustments		(183	)		—			—			—			(183	)
Charges settled in cash		(283	)		(868	)		—			—			(1,151	)

Balance as of June 30, 2013	$	118			—		$	—		$	—		$	118

During 2009, 2010, 2012, and 2013, the Company’s management approved restructuring plans to improve the effectiveness and efficiency of its operating model and reduce operating expenses around the world. The 2012 and 2013 restructuring plans included $584 of facility-related restructuring charges related to streamlining of the Company’s facility in Kirkland, Washington, and additional costs associated with vacating the Company’s Brazil office. In addition, the Company recorded a non-cash adjustment of $238 in respect of the cumulative translation adjustment related to the Company’s Brazilian subsidiary that was reclassified to net loss upon the substantial liquidation of the entity and is recognized in restructuring charge on the Company’s unaudited condensed consolidated income statement for the six months ended June 30, 2013.

Since inception of the 2012 and 2013 restructuring plans through June 30, 2013, the Company incurred $2,235 of restructuring charges relating to employee termination costs in its San Francisco, California, EMEA, APAC, Brazil and Kirkland, Washington offices. During the six months ended June 30, 2013, the Company recorded $864 of the 2012 and 2013 restructuring plan charges relating to employee termination costs in its Brazil, San Francisco, China, Kirkland, and EMEA offices.

As of June 30, 2013, the Company’s remaining restructuring liability of $118 was comprised of facility-related costs, which are expected to be fully paid down by the end of 2013. As of December 31, 2012, the Company’s remaining restructuring liability of $4 was comprised of employee termination costs.

Note 13—Related Party Transactions

Hany Nada, one of the Company’s directors, serves as one of the seven managing directors of Granite Global Ventures II L.L.C., the general partner of each of Granite Global Ventures II L.P. and GGV II Entrepreneurs Fund L.P., which together beneficially owned approximately 8.14% of the Company’s stock as of June 30, 2013. Hany Nada also serves as one of the seven managing directors of GGV Capital IV L.L.C., the general partner of each of GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P. (together, “GGV IV”). During the fourth quarter of 2012, GGV IV acquired an approximate 33.7% shareholding in Medium Entertainment, which does business as PlayHaven and Hany Nada joined PlayHaven’s Board of Directors. The Company had a preexisting relationship with PlayHaven as of the date of GGV IV’s investment in PlayHaven. For the three months ended June 30, 2013 and 2012, the Company generated revenues of $1,204 and $1,708, respectively, from PlayHaven. For the six months ended June 30, 2013 and 2012, the Company generated revenues of $2,497 and $2,940, respectively, from PlayHaven. As of June 30, 2013 and December 31, 2012, PlayHaven accounted for 11.8% and 13.2%, respectively, of the Company’s total accounts receivable balance.

Note 14—Subsequent Events

On July 15, 2013, the Company and MGM Interactive Inc. entered into a warrant agreement which provides MGM the right to purchase up to 3,333 shares of the Company’s common stock (the “Warrant Shares”) at an initial exercise price of $3.00 per share (the “Warrant”), subject to adjustments for dividends, reorganizations and other common stock events. The Warrant expires on July 15, 2018.

The Warrant Shares are subject to the following vesting schedule:

(a)	333 of the Warrant Shares vested and became exercisable on July 15, 2013;

(b)

an additional 333 of the Warrant Shares will vest and become exercisable on each date on which the Company commercially releases a new mobile game (each, a “New Game”) that is based on a mutually agreed intellectual property of MGM (excluding any localizations, updates, alterations or upgrades to any previously commercially released New Game) or a sequel to a previously released New Game, subject to certain exceptions; and

(c)

an additional 1,000 of the Warrant Shares will vest and become exercisable on the date (if any) on which the Company commercially releases a new mobile game based on a mutually agreed license to the JAMES BOND intellectual property (a “Bond Title”), with an additional 1,000 of the Warrant Shares vesting and becoming exercisable on each date (if any) on which the Company commercially releases a new Bond Title or a sequel to a previous Bond Title (excluding any localizations, updates, alterations or upgrades to any previously commercially released Bond Title); provided that the Company currently does not have the right to develop any mobile game based on the JAMES BOND intellectual property and will have no right to develop any mobile game based on the JAMES BOND intellectual property until such time (if ever) as MGM and the Company negotiate terms therefor, and enter into a definitive agreement wherein MGM grants to the Company the right to develop and distribute a mobile game based upon the JAMES BOND intellectual property, and that the execution of any such agreement will be subject to any required third party approvals.

The Warrant is exercisable only for cash. If the Warrant is fully exercised, assuming no intervening adjustments, the Company will receive approximately $10,000 in proceeds. The Warrant also provides that the Company will file a registration statement with the Securities and Exchange Commission to register the shares of common stock that are issued upon exercise of the Warrant no later than September 13, 2013.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) the unaudited condensed consolidated financial statements and related notes contained elsewhere in this report and (2) the audited consolidated financial statements and related notes and the Management’s Discussion and Analysis of Financial Condition and Results of Operations section, included in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on August 9, 2013. The information in this discussion and elsewhere in this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “may,” “will,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “could,” “estimate,” “continue” and similar expressions or variations identify forward-looking statements.

Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a discrepancy include, but are not limited to, those discussed elsewhere in this report, particularly in the section titled “Risk Factors” set forth in Part II, Item 1A of this report. All forward-looking statements in this report are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes the following sections:

•

A discussion of the recent restatement of our financial statements;

•

An Overview that discusses at a high level our operating results and some of the trends that affect our business;

•

Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments underlying our financial statements;

•

Recent Accounting Pronouncements;

•

Results of Operations, including a more detailed discussion of our revenues and expenses; and

•

Liquidity and Capital Resources, which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments.

Restatement

As discussed in the Explanatory Note and in Note 1A to the accompanying unaudited condensed consolidated financial statements, we have restated our audited financial statements and related disclosures for the years ended December 31, 2011 and 2012 and corresponding quarterly periods therein, and our unaudited condensed consolidated financial statements and related disclosures for the three and six months ended June 30, 2012. The information presented in this MD&A reflects such restatement.

Overview

This overview provides a high-level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important to understand our financial results for the three and six months ended June 30, 2013, as well as our future prospects. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this report, including our unaudited condensed consolidated financial statements and accompanying notes.

Financial Results and Trends

Revenues for the three months ended June 30, 2013 were $24.4 million, a 16.5% decrease compared to the three months ended June 30, 2012, in which we reported revenues of $29.3 million. Revenues for the six months ended June 30, 2013 were $49.1 million, a 12.1% decrease compared to the six months ended June 30, 2012, in which we reported revenues of $55.8 million. These decreases were primarily due to decreases in revenues that we generated from our smartphone games as a result of fewer titles being released during the first half of 2013, weaker performance of existing titles and lower revenues from offers. Weaker performance of existing titles was due to the fact that we released Deer Hunter Reloaded in the second quarter of 2012, which was one of our most successful product launches to date, and we did not have any title launches in the second quarter of 2013. Additionally, revenues from offers have been negatively impacted since the beginning of the second half of 2012 when we lost the ability to make certain types of offers available to our users on the Apple platform. Our smartphone revenues decreased from $25.6 million for the three months ended June 30, 2012 to $23.0 million for the three months ended June 30, 2013, and decreased from $47.9 million for the six months ended June 30, 2012 to $45.8 million for the six months ended June 30, 2013. The decreases in total revenues were also due to decreases in revenues that we generate from our feature phone games, due to the continued migration of users from feature phones to smartphone devices. Our feature phone revenues declined from $3.7 million in the three months ended June 30, 2012 to $1.4 million for the three months ended June 30, 2013, and declined from $7.9 million in the six months ended June 30, 2012 to $3.3 million for the six months ended June 30, 2013. We believe that the migration of users from feature phones to smartphone devices will continue during the remainder of 2013 and for the foreseeable future as consumers continue to upgrade their mobile phones. Accordingly, we have concentrated our product development efforts exclusively towards developing new titles for smartphones, tablets and other next-generation platforms, such as the Mac App Store, and intend to continue to devote significantly fewer resources towards selling games for feature phones.

The majority of our smartphone revenues have historically been derived from Apple’s iOS platform, which accounted for 60.7% and 57.2% of our total revenues for the three months ended June 30, 2013 and June 30, 2012, respectively, and 58.8% and 57.4% of our total revenues for the six months ended June 30, 2013 and June 30, 2012, respectively. We generated the majority of these iOS-related revenues through in-app purchases and sales of premium games made through the Apple App Store, which represented 53.3% and 41.4% of our total revenues for the three months ended June 30, 2013 and June 30, 2012, respectively, and 50.4% and 42.5% of our total revenues for the six months ended June 30, 2013 and June 30, 2012, respectively, with the balance of our iOS-related revenues generated from offers and advertisements in games distributed on the Apple App Store. In addition, we generated approximately 27.9% and 26.1% of our total revenues for the three months ended June 30, 2013 and June 30, 2012, respectively from the Android platform and 28.6% and 24.3% of our total revenues for the six months ended June 30, 2013 and June 30, 2012, respectively. We generated the majority of our Android-related revenues through in-app purchases and sales of premium games made through the Google Play store, which represented 17.9% and 19.8% of our total revenues for the three months ended June 30, 2013 and June 30, 2012, respectively and 18.7% and 18.7% of our total revenues for the six months ended June 30, 2013 and June 30, 2012, respectively, with the balance of our Android-related revenues generated from other platforms that distribute apps that run the Android operating system (e.g., the Amazon App Store). We expect the percentage of our total revenues that we derive from each of Apple and Google to increase in 2013 compared to 2012.

To increase our revenues we must continue to execute on our strategy of becoming the leading developer and publisher of free-to-play games for smartphones, tablets and other next-generation platforms. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee and to engage with various advertisements and offers that generate revenues for us. Because our games can be downloaded and played for free, we are able to more quickly build a significantly larger customer base than we could if we charged users an upfront fee for downloading our games, which was our previous feature phone business model.

However, for us to continue to execute on our strategy, we must improve our monetization of our players. We believe that deep monetization is one of the primary areas in which we must be proficient to succeed in the mobile gaming industry in 2013 and beyond. Accordingly, we have implemented a number of measures designed to improve our game monetization. These include: (1) hiring a number of new personnel with monetization expertise, (2) including new categories of games (such as role-playing games and card battle games) in our planned 2013 product portfolio that often have higher monetization rates than our single-player focused action/adventure and casual games, and (3) including deeper “meta game” functionality in our games, by which we mean increasing the player’s ability to continue to create content or otherwise invest in the game outside the core gameplay loop, which we believe should result in increased player retention. In addition, we have continued transitioning towards becoming a games-as-a-service company, in which the majority of our future games will be only playable online. This will enable us to deliver a number of additional features in our games, such as tournaments, live events and more frequent content updates, which we believe will contribute to better monetization in our games. We plan to continue to invest in our GluOn games-as-a-service technology platform and hire additional monetization, live operations, server technology, user experience and product management personnel to support our transition to becoming a games-as-a-service company, though we expect our rate of hiring will slow dramatically after the third quarter of 2013.

We also intend to grow our revenues through our recently formed third party publishing initiative, Glu Publishing. Our Glu Publishing department is initially focusing on entering into relationships with developers of successful games in Asian markets where Glu will localize and publish those games in the United States and other non-Asian markets. We expect to commercially release approximately six third party titles by the end of 2013 and expect this number to increase in 2014. Because we expect to pay these third party developers royalties, which may include upfront license fees or non-recoupable minimum guarantees, to obtain the rights to publish their games, our gross margins are expected be lower on our revenues generated from our Glu Publishing initiative.

In addition, our revenues will continue to depend significantly on growth in the mobile games market and our ability to successfully compete against a continually increasing number of developers and the overall strength of the economy, particularly in the United States. Our revenues also depend on maintaining our continued good relationship with the digital storefront operators, primarily Apple and Google, each of whom could unilaterally alter their terms of service in ways that could harm our business. For example, Apple has, beginning in the second quarter of 2011, made several changes to its app store developer agreement relating to privacy and our ability to include certain types of third-party advertising in our games. These changes have in the past, and may in the future, negatively impact our smartphone revenues.

Our net loss in the three months ended June 30, 2013 was $2.9 million versus a net loss of $3.0 million in the three months ended June 30, 2012. This decrease in our net loss was primarily due to a $4.1 million decrease in operating expenses and an increase of $851,000 in our income tax benefit arising from the release of uncertain tax liabilities. The decrease in our operating expenses was driven by a $2.1 million decrease in stock-based compensation for Blammo shareholders since their earnout shares for Blammo’s 2013 fiscal year were earned as of March 31, 2013 and issued during the second quarter of 2013. The decrease in operating expenses was also partly due to a $2.4 million decrease in employee compensation, primarily arising from terminations of research and development personnel as a result of the restructuring in our Brazil, San Francisco, China, Kirkland, and EMEA offices, and due to lower attainment of employee bonuses in the first half of 2013. These favorable factors were partially offset by a decline in our feature phone and smartphone revenues of $4.8 million. Our net loss in the six months ended June 30, 2013 was $8.4 million versus a net loss of $9.8 million in the six months ended June 30, 2012. This decrease in our net loss was primarily due a $6.8 million decrease in operating expenses, an increase of $1.2 million in our income tax benefit due to the release of uncertain tax liabilities, and an increase of $451,000 in other income resulting from favorable foreign exchange movements in the first six months of 2013 compared to the comparable period of 2012. The decrease in our operating expenses was driven by a $4.7 million decrease in stock-based compensation for Blammo shareholders since their 2013 earnout shares were earned as of March 31, 2013 and issued during the second quarter of 2013. The decrease in operating expenses was also partly due to a $3.0 million decrease in employee compensation, primarily arising from terminations of research and development personnel as a result of the restructuring in our Brazil, San Francisco, China, Kirkland, and EMEA offices, and due to lower attainment of employee bonuses in the first half of 2013. These favorable factors were partially offset by a decline in our feature phone and smartphone revenues of $6.7 million. Our operating results were also affected by fluctuations in foreign currency exchange rates of the currencies in which we incurred meaningful operating expenses (principally the British Pound Sterling, Euro, Chinese Renminbi, Brazilian Real and Russian Ruble), and our customers’ reporting currencies, which fluctuated significantly in 2012 and the first six months of 2013.

Our ability to attain and sustain profitability depends not only on our ability to grow our revenues, but also on our ability to manage our operating expenses. The largest component of our recurring expenses is personnel costs, which consist of salaries, benefits and incentive compensation, including bonuses and stock-based compensation. We increased our spending on sales and marketing initiatives in the first half of 2013 compared to the first half of 2012 in connection with the launch and promotion of our games, and we anticipate that our sales and marketing expenditures will continue to increase in absolute dollars during 2013 compared to 2012, since advertising costs in our industry have generally been rising. We expect that the restructuring measures we implemented in the fourth quarter of 2012 and first and second quarters of 2013, which primarily consisted of headcount reductions and facility streamlining in our Kirkland studio, and winding down our studio in Brazil, will enable us to hire additional games-as-a-service personnel with monetization expertise without substantially increasing our overall research and development expenses.

Cash and cash equivalents at June 30, 2013 totaled $19.1 million, a decrease of $3.2 million from the $22.3 million balance at December 31, 2012. This decrease was primarily due to $5.6 million of cash used in operations and $2.7 million of cash used in investing activities. These outflows were partially offset by $5.2 million of proceeds received from warrant exercises, option exercises, and purchases under our employee stock purchase program. We expect to have cash and cash equivalents of at least $9.0 million at December 31, 2013.

Key Operating Metrics

We manage our smartphone business by tracking various non-financial operating metrics that give us insight into user behavior in our free-to-play and premium smartphone games. The three metrics that we use most frequently are Daily Active Users (DAU), Monthly Active Users (MAU), and Average Revenue Per Daily Active User (ARPDAU). Our methodology for calculating DAU, MAU and ARPDAU may differ from the methodology used by other companies to calculate similar metrics.

DAU is the number of individuals who played a particular smartphone game – either premium or free-to-play – on a particular day. An individual who plays two different games on the same day is counted as two active users for that day when we aggregate DAU across games. In addition, an individual who plays the same game on two different devices during the same day (e.g., an iPhone and an iPad) is also counted as two active users for each such day when we average or aggregate DAU over time. Average DAU for a particular period is the average of the DAUs for each day during that period. We use DAU as a measure of player engagement with the titles that our players have downloaded.

MAU is the number of individuals who played a particular smartphone game – either premium or free-to-play – in the month for which we are calculating the metric. An individual who plays two different games in the same month is counted as two active users for that month when we aggregate MAU across games. In addition, an individual who plays the same game on two different devices during the same month (e.g., an iPhone and an iPad) is also counted as two active users for each such month when we average or aggregate MAU over time. Average MAU for a particular period is the average of the MAUs for each month during that period. We use the ratio between DAU and MAU as a measure of player retention.

ARPDAU is the total free-to-play smartphone revenue – consisting of micro-transactions, advertisements and offers – for the measurement period divided by the number of days in the measurement period divided by the DAU for the measurement period. ARPDAU reflects game monetization. Revenues for purposes of our ARPDAU calculation are our free-to-play revenues from micro-transactions and offers. Under our revenue recognition policy, we recognize these revenues over the estimated average playing period of a user, but our methodology for calculating our DAU does not align with our revenue recognition policy for micro-transactions and offers, under which we defer revenues. For example, if a title is introduced in the last month of a quarter, we defer a substantial portion of the micro-transaction and offer revenue to future months, but the entire DAU for the newly released title is included in the month of launch.

We calculate DAU, MAU and ARPDAU for only our primary distribution platforms, such as Apple’s App Store, the Google Play Store, Amazon’s Appstore and the Mac App Store; we are not able to calculate these metrics across all of our distribution channels. In addition, the platforms that we include for purposes of this calculation have changed over time, and we expect that they will continue to change as our business evolves, but we do not expect that we will adjust prior metrics to take any such additions or deletions of distribution platforms into account. We believe that calculating these metrics for only our primary distribution platforms at a given period is generally representative of the metrics for all of our distribution platforms. Moreover, we rely on the data analytics software that we incorporate into our games to calculate and report the DAU, MAU and ARPDAU of our games, and we make certain adjustments to the analytics data to address inconsistencies between the information as reported and our DAU and MAU calculation methodology.

The table below sets forth our aggregate DAU, MAU and ARPDAU for all of our then-active smartphone titles for the periods specified, followed by a qualitative discussion of the changes in these metrics. Aggregate DAU and MAU include users of both our free-to-play and premium titles, whereas aggregate ARPDAU is calculated based only on revenues from our free-to-play games. Aggregate DAU and MAU for each period presented represents the aggregate metric for the last month of the period. For example, DAU for the three months ended June 30, 2013 is aggregate daily DAU for the month of June 2013 calculated for all active smartphone free-to-play and premium titles in that month across the distribution platforms for which we calculate the metric.


	For the Three Months Ended
	2013				2012
	March 31		June 30		March 31		June 30
	(In thousands, except aggregate ARPDAU)
Aggregate DAU		3,894		2,895		3,218		3,412
Aggregate MAU		40,056		29,359		29,814		29,034
Aggregate ARPDAU	$	0.06	$	0.08	$	0.07	$	0.08

The decrease in aggregate DAU for the three months ended June 30, 2013 as compared to the same period of the prior year was primarily the result of decreased downloads related to no new free-to-play titles being launched during the three months ended June 30, 2013, compared to two new free-to-play titles launched during the three months ended June 30, 2012, including one of the most popular titles in our history, Deer Hunter Reloaded . The ratios between DAU and MAU (that is, DAU divided by MAU) decreased due to poor player retention on both our catalog of previously released titles and recently released titles that were not generating meaningful revenues; in general, increases in the ratio between DAU and MAU indicate better player retention. Our aggregate ARPDAU for the three months ended March 31, 2013, March 31, 2012, and June 30, 2012 have been restated due to our correction to gross accounting for revenues attributable to sales to end customers through digital storefronts. Our aggregate ARPDAU for the three months ended June 30, 2013 remained flat compared to the same period of the prior year due primarily to the fact that declines in the DAU of our catalogue titles have also been coupled with corresponding declines in revenues from these titles. Future increases in our aggregate DAU, MAU and ARPDAU will depend on our ability to retain current players, attract new paying players, launch new games and expand into new markets and distribution platforms.

Significant Transactions

Acquisition of GameSpy

On August 2, 2012, we completed the acquisition of GameSpy from IGN by issuing to IGN 600,000 shares of our common stock, of which 90,000 shares will be held in escrow until November 2, 2013 as security to satisfy indemnification claims.

Deer Hunter Brand Assets

On April 1, 2012, we acquired from Atari its Deer Hunter trademark and associated domain names and also took a license to the other intellectual property associated with the Deer Hunter brand for total consideration of $5.0 million in cash.

Acquisition of Blammo

On August 1, 2011, we completed the acquisition of Blammo by entering into a Share Purchase Agreement among Glu, Blammo and the owners of Blammo’s outstanding share capital (the “Sellers”). Under the Share Purchase Agreement we purchased all of the Blammo share capital, and we (1) issued to the Sellers an aggregate 1,000,000 shares of our common stock and (2) agreed to issue to the Sellers up to an aggregate of an additional 3,312,937 shares of our common stock (the “Additional Shares”) if Blammo achieves certain baseline and upside net revenue targets during the years ending March 31, 2013 (up to 909,091 Additional Shares), March 31, 2014 (up to 1,250,000 Additional Shares) and March 31, 2015 (up to 1,153,846 Additional Shares). On May 16, 2013, we issued 742,036 shares to the former Blammo shareholders based on the amount of Net Revenue that Blammo achieved for its fiscal year ended March 31, 2013.

Critical Accounting Policies and Estimates

In connection with the error that gave rise to the restatement of our financial statements as discussed in the Explanatory Note and in Note 1A to the accompanying unaudited condensed consolidated financial statements, we have corrected our Revenue Recognition (Smartphone revenue) critical accounting policy. Please see the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K/A for the year ended December 31, 2012 for more information. Other than as set forth in the preceding sentences, management believes there were no significant changes in our Critical Accounting Policies and Estimates during the three months ended June 30, 2013 as compared to the Critical Accounting Policies and Estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K/A for the year ended December 31, 2012 filed on August 9, 2013.

Recent Accounting Pronouncements

Information with respect to Recent Accounting Pronouncements may be found in Note 1 of Notes to Unaudited Condensed Consolidated Financial Statements in this report, which information is incorporated herein by reference.

Results of Operations

The following sections discuss and analyze the changes in the significant line items in our statements of operations for the comparison periods identified.

Comparison of the Three Months Ended June 30, 2013 and 2012

Revenues


	Three Months Ended
	June 30,
	2013		2012
			(Restated)
	(in thousands)
Feature phone	$	1,423	$	3,710
Smartphone		23,022		25,554

Revenues	$	24,445	$	29,264

Our revenues decreased $4.8 million, or 16.5%, from $29.3 million (restated) for the three months ended June 30, 2012 to $24.4 million for the three months ended June 30, 2013, due to a $2.5 million decline in smartphone revenues and a $2.3 million decline in feature phone revenues. See “—Overview—Financial Results and Trends” above for further details. Our smartphone revenues do not include approximately $10.1 million of revenues as of June 30, 2013 relating primarily to offers and in-app-purchases that have been deferred over the weighted average useful lives of paying users. International revenues (defined as revenues generated from distributors, advertising service providers and carriers whose principal operations are located outside the United States or, in the case of the digital storefronts, the revenues generated by end-user purchases made outside of the United Sates) increased by $1.7 million, from $12.8 million (restated) in the three months ended June 30, 2012 to $14.5 million in the three months ended June 30, 2013. This was primarily related to a $2.2 million increase in our APAC revenues, primarily related to increased revenues from Korea and China resulting from additional revenues attributable to smartphone storefronts, which was partially offset by declining revenues in EMEA and the Americas, excluding the United States. This increase in our international revenues was offset by a decrease of $6.5 million in our United States revenues, primarily related to declining feature phone and incented offer revenues.

Smartphone Revenues


	Three Months Ended
	June 30,
	2013		2012
			(Restated)
	(In thousands)
Smartphone Revenue by Type
Micro-Transactions	$	18,943	$	18,360
Advertisements		1,287		2,640
Offers		1,157		3,047
Other		1,635		1,507

Smartphone Revenues	$	23,022	$	25,554

Our smartphone revenues decreased $2.5 million, or 9.9%, from $25.6 million (restated) in the three months ended June 30, 2012 to $23.0 million in the three months ended June 30, 2013, which was primarily related to a $1.9 million decrease in our revenues from offers which have been negatively impacted since the beginning of the second half of 2012 when we lost the ability to make certain types of offers available to our users on the Apple platform, and a $1.4 million decrease in our revenues from advertisements due to reduction in our direct advertisement campaigns at the end of the fourth quarter of 2012. This decrease was partially offset by a $583,000 million increase in micro-transactions (in-app purchases). We generate our smartphone revenues from micro-transactions, advertisements or offers, and we may change the focus of our monetization efforts among these methods within a given game over the life of the title in an attempt to maximize revenue. For example, we may elect to disable advertisements within a game if we believe doing so will encourage users to play the game longer and thus increase the chance that they will make micro-transactions or complete offers, which generally result in higher revenues for us than advertisements. We rely on a very small portion of our total users for nearly all of our smartphone revenues derived from micro-transactions purchases. Since the launch of our first free-to-play titles in the fourth quarter of 2010, the percentage of unique paying users for our largest revenue-generating free-to-play games has been approximately 1%; however, in the initial period following the launch of a game, the percentage may be higher, and the percentage of unique paying users is generally lower than 1% for our less successful titles.

Cost of Revenues


	Three Months Ended
	June 30,
	2013			2012
				(Restated)
	(in thousands)
Cost of revenues:
Platform commissions, royalties and other	$	7,670		$	7,780
Amortization of intangible assets		1,078			932

Total cost of revenues	$	8,748		$	8,712

Revenues	$	24,445		$	29,264

Gross margin		64.2	%		70.2	%

Our cost of revenues remained consistent at $8.7 million in the three months ended June 30, 2012 (restated) and 2013, respectively. During the three months ended June 30, 2013, platform commission expense increased $293,000 due to a higher volume of revenue transactions through our digital storefronts, hosting fees increased $355,000 to support our free-to-play titles, and there was a $146,000 increase in amortization of intangible assets. These increases were partially offset by a $758,000 decrease in royalties associated with a decline in royalty-burdened revenues. Revenues attributable to games based upon original intellectual property increased as a percentage of revenues from 86.0% (restated) in the three months ended June 30, 2012 to 92.9% in the three months ended June 30, 2013, primarily due to our focus on developing free-to-play games for smartphones and tablets that are based on our own intellectual property. The average royalty rate that we paid on games based on licensed intellectual property, excluding royalty impairments, increased from 38.5% (restated) in the three months ended June 30, 2012 to 47.5% in the three months ended June 30, 2013, due to renewing a number of our existing licenses at higher royalty rates and higher royalty rates for distribution of certain licensed smartphone titles. Overall royalties, including impairment of prepaid royalties and guarantees, as a percentage of total revenues decreased from 5.4% (restated) in the three months ended June 30, 2012 to 3.4% in the three months ended June 30, 2013. We expect that our gross margin will decrease slightly during the remainder of 2013, as sales of games based on third-party intellectual property are expected to increase compared to 2012, in large part due to our Glu Publishing initiative.

Research and Development Expenses


	Three Months Ended
	June 30,
	2013			2012
	(in thousands)
Research and development expenses	$	11,224		$	15,697
Percentage of revenues		45.9	%		53.6	%

Our research and development expenses decreased $4.5 million, or 28.5%, from $15.7 million in the three months ended June 30 31, 2012 to $11.2 million in the three months ended June 30, 2013. The decrease in research and development costs was primarily due to a $2.1 million decrease in stock-based compensation expense related to vesting and fair value changes of the contingent consideration to employees who are former Blammo shareholders since their earnout shares for Blammo’s 2013 fiscal year were earned as of March 31, 2013 and issued during the second quarter of 2013. Salaries and benefits decreased by $661,000 as a result of the restructurings we implemented in the fourth quarter of 2012 and first half of 2013, and our research and development headcount decreased from 513 employees at June 30, 2012 to 416 employees at June 30, 2013. In addition, variable compensation costs decreased $984,000 due to lower attainment of studio bonuses in the first half of 2013. The decrease in our research and development expenses was also due to a $302,000 decrease in localization costs and a $221,000 decrease in outside service fees due to lower external developer costs incurred in the second quarter of 2013. As a percentage of revenues, research and development expenses decreased from 53.6% (restated) in the three months ended June 30, 2012 to 45.9% in the three months ended June 30, 2013. Research and development expenses included $163,000 of stock-based compensation expense in the three months ended June 30, 2013 and $2.4 million in the three months ended June 30, 2012. We anticipate that our quarterly research and development expenses will increase slightly in absolute dollars over the remainder of 2013 as we intend to continue hiring additional games-as-a-service personnel with monetization expertise, and we expect our rate of hiring will slow dramatically after the third quarter of 2013. In addition, we may also be exposed to continued fluctuations in the fair market value of the contingent consideration issued to the Blammo employee shareholders, as the fair value of the contingent consideration will be measured during each quarter until the end of the earn-out period in March 2015.

Sales and Marketing Expenses


	Three Months Ended
	June 30,
	2013			2012
	(in thousands)
Sales and marketing expenses	$	5,143		$	4,701
Percentage of revenues		21.0	%		16.1	%

Our sales and marketing expenses increased $442,000, or 9.4%, from $4.7 million in the three months ended June 30, 2012 to $5.1 million in the three months ended June 30, 2013. The increase was primarily due to an $850,000 increase in marketing promotions associated with our free-to-play games, which was partially offset by a $241,000 decrease in salaries and benefits expenses resulting from the restructuring that we undertook in our EMEA sales and marketing offices during the first half of 2013, and a $78,000 decrease in variable compensation costs due to lower attainment of employee bonuses in the second quarter of 2013. Our sales and marketing headcount decreased from 37 employees at June 30, 2012 to 32 employees at June 30, 2013. As a percentage of revenues, sales and marketing expenses increased from 16.1% (restated) in the three months ended June 30, 2012 to 21.0% in the three months ended June 30, 2013. Sales and marketing expenses included $93,000 of stock-based compensation expense in the three months ended June 30, 2013 and $155,000 in the three months ended June 30, 2012. We expect our sales and marketing expenditures to continue to increase during 2013 in absolute dollars and as a percentage of revenues in connection with the sales and marketing initiatives we intend to undertake related to the new free-to-play games that we expect to release during 2013, particularly during the fourth quarter of 2013, including games we are publishing as part of our Glu Publishing initiative.

General and Administrative Expenses


	Three Months Ended
	June 30,
	2013			2012
	(in thousands)
General and administrative expenses	$	3,852		$	4,556
Percentage of revenues		15.8	%		15.6	%

Our general and administrative expenses decreased $704,000, or 15.5%, from $4.6 million in the three months ended June 30, 2012 to $3.9 million in the three months ended June 30, 2013. The decrease in general and administrative costs was primarily due to a $433,000 million decrease in the fair market value of contingent consideration issued to the Blammo non-employee shareholders since a portion of their earnout shares were earned as of March 31, 2013 and issued during the second quarter of 2013, a decrease of $394,000 in sales and use taxes due to a one time VAT charge in the second quarter of 2012, and a $386,000 decrease in variable compensation, primarily relating to lower attainment of executive bonuses in the second quarter of 2013. Salaries and benefits expenses remained relatively flat, despite the fact that we increased our general and administrative headcount from 65 employees at June 30, 2012 to 68 employees at June 30, 2013. The decrease in general and administrative expenses was partially offset by a $371,000 increase in professional and consulting fees associated with recruiting, legal, and accounting services and a $211,000 increase in allocated facility and overhead costs. As a percentage of revenues, general and administrative expenses increased from 15.6% (restated) in the three months ended June 30, 2012 to 15.8% in the three months ended June 30, 2013. General and administrative expenses included $480,000 of stock-based compensation expense in the three months ended June 30, 2013 and $487,000 in the three months ended June 30, 2012. We anticipate that our quarterly general and administrative expenses will increase slightly in absolute dollars over the remainder of 2013. In addition, we may also be exposed to continued fluctuations in the fair market value of the contingent consideration issued to the Blammo non-employee shareholders, as the fair value of the contingent consideration will be measured during each reporting period until the end of the earn-out period in March 2015.

Other Operating Expenses

Our restructuring charge increased from $320,000 in the three months ended June 30, 2012 to $937,000 in the three months ended June 30, 2013. Our restructuring charges for the three months ended June 30, 2013 were comprised of employee termination costs in our Brazil, San Francisco, China, Kirkland, and EMEA offices, and facility-related costs related to streamlining of our facility in Kirkland, Washington and additional costs associated with vacating our Brazil office. In addition, we recorded a non-cash adjustment of $238,000 in respect of the write-off of a cumulative translation adjustment upon the substantial liquidation of our Brazilian entity, which is recognized in the Restructuring charge on our unaudited condensed consolidated statement of operations for the three months ended June 30, 2013.

Our amortization of intangible assets remained flat at $495,000 in the three months ended June 30, 2012 and 2013, respectively.

Interest and Other Income/(Expense), Net

Interest and other income/(expense), net, decreased from net income of $210,000 in the three months ended June 30, 2012 to net income of $163,000 in the three months ended June 30, 2013. This decrease was primarily due to foreign currency losses related to the revaluation of certain assets and liabilities including accounts payable and accounts receivable.

Income Tax Provision

Our income tax benefit increased from $2.0 million in the three months ended June 30, 2012 to $2.9 million in the three months ended June 30, 2013. This change was primarily due to the release of uncertain tax positions in certain foreign jurisdictions due to the expiration of the statute of limitations, changes in the jurisdictions included in the anticipated effective tax rate computation and changes in pre-tax income in certain foreign entities. The provision for income taxes differs from the amount computed by applying the statutory U.S. federal rate principally due to the effect of our non-U.S. operations, non-deductible stock-based compensation expense, and change in foreign withholding taxes.

Our effective income tax rates for future periods will depend on a variety of factors, including changes in the deferred tax valuation allowance, as well as changes in our business such as intercompany transactions, any acquisitions, any changes in our international structure, any changes in the geographic location of our business functions or assets, changes in the geographic mix of our income, any changes in or termination of our agreements with tax authorities, changes in applicable accounting rules, applicable tax laws and regulations, rulings and interpretations thereof, developments in tax audit and other matters, and variations in our annual pre-tax income or loss. We incur certain tax expenses that do not decline proportionately with declines in our pre-tax consolidated income or loss. As a result, in absolute dollar terms, our tax expense will have a greater influence on our effective tax rate at lower levels of pre-tax income or loss than at higher levels. In addition, at lower levels of pre-tax income or loss, our effective tax rate will be more volatile. At June 30, 2013, we anticipated that the liability for uncertain tax positions, excluding interest and penalties, could decrease by approximately $755,000 within the next twelve months due to the expiration of certain statutes of limitation in foreign jurisdictions in which we do business.

Comparison of the Six Months Ended June 30, 2013 and 2012

Revenues


	Six Months Ended
	June 30,
	2013		2012
			(Restated)
	(in thousands)
Feature phone	$	3,279	$	7,875
Smartphone		45,771		47,898

Revenues	$	49,050	$	55,773

Our revenues decreased $6.7 million, or 12.1%, from $55.8 million (restated) for the six months ended June 30, 2012 to $49.1 million for the six months ended June 30, 2013, due to a $2.1 million decline in smartphone revenues and a $4.6 million decline in feature phone revenues. See “—Overview—Financial Results and Trends” above for further details. Our smartphone revenues do not include approximately $10.1 million of revenues as of June 30, 2013 relating primarily to offers and in-app-purchases that have been deferred over the weighted average useful lives of paying users. International revenues increased by $3.8 million, from $24.3 million (restated) in the six months ended June 30, 2012 to $28.1 million in the six months ended June 30, 2013. This was primarily related to a $4.5 million increase in our APAC revenues, primarily related to increased revenues from Korea and China resulting from additional revenues attributable to smartphone storefronts and OEM relationships, which was partially offset by declining revenues in EMEA and the Americas, excluding the United States. This increase in our international revenues was offset by a decrease of $10.6 million in our United States revenues, primarily related to declining feature phone and incented offer revenues.

Smartphone Revenues


	Six Months Ended
	June 30,
	2013		2012
			(Restated)
	(In thousands)
Smartphone Revenue by Type
Micro-Transactions	$	36,451	$	34,277
Advertisements		2,811		4,469
Offers		2,675		5,883
Other		3,834		3,269

Smartphone Revenues	$	45,771	$	47,898

Our smartphone revenues decreased $2.1 million, or 4.4%, from $47.9 million (restated) in the six months ended June 30, 2012 to $45.8 million in the six months ended June 30, 2013, which was primarily related to a $3.2 million decrease in our revenues from offers which have been negatively impacted since the beginning of the second half of 2012 when we lost the ability to make certain types of offers available to our users on the Apple platform, and a $1.7 million decrease in due to a reduction in our direct advertisement campaigns. This decrease was partially offset by a $2.2 million increase in micro-transactions (in-app purchases), and a $565,000 increase in premium smartphone revenues as a result of our GameSpy acquisition in third quarter of 2012.

Cost of Revenues


	Six Months Ended
	June 30,
	2013			2012
				(Restated)
	(in thousands)
Cost of revenues:
Platform commissions, royalties and other	$	15,132		$	15,302
Amortization of intangible assets		2,152			1,685

Total cost of revenues	$	17,284		$	16,987

Revenues	$	49,050		$	55,773

Gross margin		64.8	%		69.5	%

Our cost of revenues increased $297,000, or 1.7%, from $17.0 million (restated) in the six months ended June 30, 2012 to $17.3 million in the six months ended June 30, 2013. This increase was primarily due to a $802,000 increase in platform commission expense associated with a higher volume of revenue transactions through our digital storefronts, a $555,000 increase in hosting fees to support our free-to-play titles, and a $467,000 increase in amortization of intangible assets. These increases were partially offset by a $1.5 million decrease in royalties associated with a decline in royalty-burdened revenues. Revenues attributable to games based upon original intellectual property increased as a percentage of revenues from 82.2% (restated) in the six months ended June 30, 2012 to 91.1% in the six months ended June 30, 2013, primarily due to our focus on developing free-to-play games for smartphones and tablets that are based on our own intellectual property. The average royalty rate that we paid on games based on licensed intellectual property, excluding royalty impairments, increased from 34.9% (restated) in the six months ended June 30, 2012 to 44.3% in the six months ended June 30, 2013, due to renewing a number of our existing licenses at higher royalty rates and higher royalty rates for distribution of certain licensed smartphone titles. Overall royalties, including impairment of prepaid royalties and guarantees, as a percentage of total revenues decreased from 6.2% (restated) in the six months ended June 30, 2012 to 4.0% in the six months ended June 30, 2013.

Research and Development Expenses


	Six Months Ended
	June 30,
	2013			2012
	(in thousands)
Research and development expenses	$	22,854		$	30,730
Percentage of revenues		46.6	%		55.1	%

Our research and development expenses decreased $7.9 million, or 25.6%, from $30.7 million in the six months ended June 30, 2012 to $22.9 million in the six months ended June 30, 2013. The decrease in research and development costs was primarily due to a $4.7 million decrease in stock-based compensation expense related to vesting and fair value changes of the contingent consideration to employees who are former Blammo shareholders since their earnout shares for Blammo’s 2013 fiscal year were earned as of March 31, 2013 and issued during the second quarter of 2013. Salaries and benefits decreased by $593,000 as a result of the restructurings we implemented in the fourth quarter of 2012 and first half of 2013, and our research and development headcount decreased from 513 employees at June 30, 2012 to 416 employees at June 30, 2013. In addition, variable compensation costs decreased $1.3 million due to lower attainment of studio bonuses in the first half of 2013. The decrease in our research and development expenses was also due to a $347,000 decrease in localization costs and a $734,000 decrease in outside service fees due to lower external developer costs incurred in the six months ended June 30, 2013. As a percentage of revenues, research and development expenses decreased from 55.1% (restated) in the six months ended June 30, 2012 to 46.6% in the six months ended June 30, 2013. Research and development expenses included $831,000 of stock-based compensation expense in the six months ended June 30, 2013 and $5.7 million in the six months ended June 30, 2012.

Sales and Marketing Expenses


	Six Months Ended
	June 30,
	2013			2012
	(in thousands)
Sales and marketing expenses	$	10,151		$	9,076
Percentage of revenues		20.7	%		16.3	%

Our sales and marketing expenses increased $1.1 million, or 11.8%, from $9.1 million in the six months ended June 30, 2012 to $10.2 million in the six months ended June 30, 2013. The increase was primarily due to a $1.7 million increase in marketing promotions associated with our free-to-play games, which was partially offset by a $216,000 decrease in salaries and benefits expenses resulting from the restructuring that we undertook in our EMEA sales and marketing offices during the first half of 2013, and a $187,000 decrease in variable compensation costs due to lower attainment of employee bonuses in the first half of 2013. Our sales and marketing headcount decreased from 37 at June 30, 2012 to 32 at June 30, 2013. As a percentage of revenues, sales and marketing expenses increased from 16.3% (restated) in the six months ended June 30, 2012 to 20.7% in the six months ended June 30, 2013. Sales and marketing expenses included $160,000 of stock-based compensation expense in the six months ended June 30, 2013 and $270,000 in the six months ended June 30, 2012.

General and Administrative Expenses


	Six Months Ended
	June 30,
	2013			2012
	(in thousands)
General and administrative expenses	$	7,771		$	8,922
Percentage of revenues		15.8	%		16.0	%

Our general and administrative expenses decreased $1.2 million, or 12.9%, from $8.9 million in the six months ended June 30, 2012 to $7.8 million in the six months ended June 30, 2013. The decrease in general and administrative costs was primarily due to a $1.0 million decrease in the fair market value of contingent consideration issued to Blammo non-employee shareholders since a portion of their earnout shares were earned as of March 31, 2013 and issued during the second quarter of 2013, a $695,000 decrease in variable compensation, primarily relating to lower attainment of executive bonuses in the first half of 2013, and a decrease of $403,000 in sales and use taxes due to a one time VAT charge in the second quarter of 2012. Salaries and benefits expenses remained relatively flat, despite increasing our general and administrative headcount from 65 employees at June 30, 2012 to 68 employees at June 30, 2013. The decrease in general and administrative expenses was partially offset by a $640,000 increase in professional and consulting fees associated with recruiting and accounting services, and a $356,000 increase in allocated facility and overhead costs. As a percentage of revenues, general and administrative expenses decreased from 16.0% (restated) in the six months ended June 30, 2012 to 15.8% in the six months ended June 30, 2013. General and administrative expenses included $990,000 of stock-based compensation expense in the six months ended June 30, 2013 and $948,000 in the six months ended June 30, 2012.

Other Operating Expenses

Our restructuring charge increased from $320,000 in the six months ended June 30, 2012 to $1.4 million in the six months ended June 30, 2013. Our restructuring charges for the six months ended June 30, 2013 were comprised of employee termination costs in our Brazil, China, San Francisco, Kirkland, and EMEA offices, and facility-related costs related to streamlining of our facility in Kirkland, Washington and additional costs associated with vacating our Brazil office. In addition, we recorded a non-cash adjustment of $238,000 in respect of the write-off of cumulative translation adjustment upon the substantial liquidation of our Brazilian entity, which is recognized in the Restructuring charge on our unaudited condensed consolidated statement of operations for the six months ended June 30, 2013.

Our amortization of intangible assets remained flat at $990,000 in the six months ended June 30, 2012 and 2013, respectively.

Interest and Other Income/(Expense), Net

Interest and other income/(expense), net, increased from net expense of $156,000 in the six months ended June 30, 2012 to net income of $295,000 in the six months ended June 30, 2013. This increase was primarily due to foreign currency gains related to the revaluation of certain assets and liabilities including accounts payable and accounts receivable.

Income Tax Provision

Our income tax benefit increased from $1.6 million in the six months ended June 30, 2012 to $2.7 million in the six months ended June 30, 2013. This change was primarily due to the release of uncertain tax positions in certain foreign jurisdictions due to the expiration of the statute of limitations, changes in the jurisdictions included in the anticipated effective tax rate computation and changes in pre-tax income in certain foreign entities.

Liquidity and Capital Resources


	Six Months Ended June 30,
	2013			2012
				(Restated)
	(in thousands)
Consolidated Statement of Cash Flows Data:
Depreciation and amortization	$	4,534		$	3,793
Cash flows used in operating activities		(5,626	)		(2,572	)
Cash flows used in investing activities		(2,715	)		(6,149	)
Cash flows provided by financing activities		5,219			1,363

Since our inception, we have incurred recurring losses and negative annual cash flows from operating activities. As of June 30, 2013 we had an accumulated deficit of $240.7 million.

Operating Activities

In the six months ended June 30, 2013, net cash used in operating activities was $5.6 million, primarily due to a net loss of $8.4 million, a decrease in accrued compensation of $1.6 million due to the payment of bonuses accrued at December 31, 2012, a decrease in accrued royalties of $988,000, a decrease in deferred revenues of $1.6 million, and a decrease in non-current liabilities of $2.8 million. These amounts were partially offset by a decrease in accounts receivable of $1.3 million, an increase in accounts payable of $1.7 million, and adjustments for non-cash items, including depreciation expense of $1.4 million, amortization expense of $3.1 million, and stock-based compensation expense of $2.0 million.

In the six months ended June 30, 2012, net cash used in operating activities was $2.6 million, primarily due to a net loss of $9.8 million, a decrease in other long-term liabilities of $2.3 million due to the release of an uncertain tax provision upon expiration of the statute of limitations, an increase in accounts receivable of $1.3 million due to timing of cash collections and a decrease in accounts payable of $693,000. These amounts were partially offset by adjustments for non-cash items, including stock-based compensation expense of $6.9 million, amortization expense of $2.7 million, depreciation expense of $1.1 million and change in fair value of the Blammo earn-out of $1.0 million.

Investing Activities

In the six months ended June 30, 2013, we used $2.7 million of cash for investing activities resulting primarily from issuances of $1.7 million on our letters of credit associated with the sublease for our new San Francisco headquarters lease and the new office for our Griptonite studio, $785,000 of property and equipment purchases, and other investments of $200,000.

In the six months ended June 30, 2012, we used $6.1 million of cash for investing activities resulting primarily from $5.0 million used to purchase the Deer Hunter trademark and brand assets during the second quarter of 2012 and a $1.1 million increase in leasehold improvements, purchases of computer, server and networking equipment to support our free-to-play games and purchases of software.

Financing Activities

In the six months ended June 30, 2013, net cash provided by financing activities was $5.2 million due to proceeds received from option and warrant exercises and purchases under our employee stock purchase plan.

In the six months ended June 30, 2012, net cash provided by financing activities was $1.4 million due to proceeds received from option and warrant exercises and purchases under our employee stock purchase plan.

Sufficiency of Current Cash and Cash Equivalents

Our cash and cash equivalents were $19.1 million as of June 30, 2013. Cash and cash equivalents held outside of the U.S. in various foreign subsidiaries were $4.9 million as of June 30, 2013, most of which were held by our United Kingdom subsidiary. Under current tax laws and regulations, if cash and cash equivalents held outside the U.S. are distributed to the U.S. in the form of dividends or otherwise, we may be subject to additional U.S. income taxes and foreign withholding taxes. We have not provided deferred taxes on unremitted earnings attributable to foreign subsidiaries because these earnings are intended to be reinvested indefinitely.

We expect to fund our operations and satisfy our contractual obligations during 2013 primarily through our cash and cash equivalents and cash flows from operations. However, we expect to use cash in our operations during 2013 as we seek to grow our business. In addition, we expect to use approximately $1.8 million in the third quarter of 2013 for capital expenditures related to office moves for our corporate headquarters in San Francisco and our Kirkland, Washington studio. We believe our cash and cash equivalents and cash inflows will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, our cash requirements for the next 12 months may be greater than we anticipate due to, among other reasons, revenues that are lower than we currently anticipate, greater than expected operating expenses, particularly with respect to our research and development and sales and marketing initiatives, use of cash to pay upfront license fees or minimum guarantees related to our Glu Publishing business, use of cash to pay unexpected moving-related costs, use of cash to fund our foreign operations and the impact of foreign currency rate changes, unanticipated limitations or timing restrictions on our ability to access funds that are held in our non-U.S. subsidiaries or any investments or acquisitions that we may decide to pursue.

If our cash sources are insufficient to satisfy our cash requirements or if we wish to strengthen our balance sheet, we may seek to raise additional capital, potentially pursuant to our effective universal shelf registration statement. However, we may be unable to do so on terms that are favorable to us or at all, particularly given current capital market and overall economic conditions. If we require new sources of financing but they are insufficient or unavailable, we would be required to modify our operating plans to align them with available resources, which would harm our ability to grow our business.

Contractual Obligations

The following table is a summary of our contractual obligations as of June 30, 2013:


	Payments Due by Period
	Total		Less than 1 year		1-3 Years		3-5 Years		Thereafter
	(in thousands)
Operating lease obligations	$	17,960	$	2,072	$	11,318	$	4,570	$	—
Guaranteed royalties(1)		290		290		—		—		—
Uncertain tax position obligations, including interest and penalties(2)		841		—		—		—		841
Blammo earn-out (3)		273		210		63		—		—

Total contractual obligations	$	19,364	$	2,572	$	11,381	$	4,570	$	841

(1)

We have entered into license and publishing agreements with various owners of brands and other intellectual property to develop and publish games for mobile devices. Pursuant to some of these agreements, we are required to pay minimum royalties or license fees over the term of the agreement regardless of actual game sales. Future minimum royalty payments as of June 30, 2013 were $290,000, which are due over the remaining six months of 2013.

(2)

As of June 30, 2013, unrecognized tax benefits and potential interest and penalties were classified within “other long-term liabilities” on our condensed consolidated balance sheets. As of June 30, 2013, the settlement of our income tax liabilities cannot be determined; however, the liabilities are not expected to become due within the next 12 months.

(3)	As of June 30, 2013, the contingent consideration issued to the former Blammo shareholders had a fair value of $273,000. The fair value is based on the present value of probability-adjusted revenues related to the Blammo earnout for fiscal 2014 and fiscal 2015.

Off-Balance Sheet Arrangements

At June 30, 2013, we did not have any significant off-balance sheet arrangements requiring disclosure under Item 303(a)(4)(ii) of Regulation S-K, other than those listed in our contractual obligations table above.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information in this section should be read in connection with the information on financial market risk related to changes in interest rates and non-U.S. currency exchange rates in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K/A for the year ended December 31, 2012. Our market risk profile has not changed significantly during the first six months of 2013.

Interest Rate and Credit Risk

Our exposure to interest rate risk relates primarily to our investment portfolio and the potential losses arising from changes in interest rates.

We are potentially exposed to the impact of changes in interest rates as they affect interest earned on our investment portfolio. As of June 30, 2013, we had no short-term investments and substantially all $19.1 million of our cash and cash equivalents was held in operating bank accounts earning nominal interest. Accordingly, we do not believe that a 10% change in interest rates would have a significant impact on our interest income, operating results or liquidity related to these amounts.

The primary objectives of our investment activities are, in order of importance, to preserve principal, provide liquidity and maximize income without significantly increasing risk. We do not currently use or plan to use derivative financial instruments in our investment portfolio.

As of June 30, 2013 and December 31, 2012, our cash and cash equivalents were maintained by financial institutions in the United States, the United Kingdom, Brazil, Canada, China, France, Hong Kong, India, Russia, Korea and our current deposits are likely in excess of insured limits.

Our accounts receivable primarily relate to revenues earned from digital storefront operators and advertising platforms. We perform ongoing credit evaluations of our customers’ and the digital storefronts’ financial condition but generally require no collateral from them. At June 30, 2013, Apple accounted for 44.4% and PlayHaven accounted for 11.8% of total accounts receivable. At December 31, 2012, Apple accounted for 44.3%, PlayHaven accounted for 13.2% and Google accounted for 10.8% of total accounts receivable.

Foreign Currency Exchange Risk

We transact business in more than 70 countries in more than 20 different currencies, and in 2012 and the first six months of 2013, some of these currencies fluctuated significantly. Our revenues are usually denominated in the functional currency of the carrier or distributor while the operating expenses of our operations outside of the United States are maintained in their local currency, with the significant operating currencies consisting of British Pound Sterling (“GBP”), Chinese Renminbi, Brazilian Real and Russian Ruble. Although recording operating expenses in the local currency of our foreign operations mitigates some of the exposure of foreign currency fluctuations, variances among the currencies of our customers and our foreign operations relative to the United States Dollar (“USD”) could have and have had a material impact on our results of operations.

Our foreign currency exchange gains and losses have been generated primarily from fluctuations in GBP versus the USD and in the Euro versus GBP. At month-end, non-functional currency-denominated accounts receivable and intercompany balances are marked to market and unrealized gains and losses are included in other income (expense), net. Translation adjustments arising from the use of differing exchange rates are included in accumulated other comprehensive income in stockholders’ equity. We have in the past experienced, and in the future expect to experience, foreign currency exchange gains and losses on our accounts receivable and intercompany receivables and payables. Foreign currency exchange gains and losses could have a material adverse effect on our business, operating results and financial condition.

There is also additional risk if the currency is not freely or actively traded. Some currencies, such as the Chinese Renminbi, in which our Chinese operations principally transact business, are subject to limitations on conversion into other currencies, which can limit our ability to react to foreign currency devaluations.

To date, we have not engaged in exchange rate hedging activities, and we do not expect to do so in the foreseeable future.

Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we might not be able to offset these higher costs fully through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated, our disclosure controls and procedures, as defined under Rule 13a-15(e) and 15d-15 (e) under the Exchange Act, as of June 30, 2013. The term “disclosure controls and procedures,” as defined in Rules 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 SEC’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. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Based on the foregoing our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2013 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Our Chief Executive Officer and Chief Financial Officer concluded that the material weakness related to the application of revenue accounting guidance as described Item 9A – Controls and Procedures – Restated under “Management’s Report on Internal Control over Financial Reporting” included in our Form 10-K/A filed on August 9, 2013 also existed as of June 30, 2013. As a result, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2013.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected in a timely basis. The material weakness in our internal control over financial reporting as of June 30, 2013 related to the application of revenue accounting guidance to our smartphone revenues for sales through digital storefronts. Specifically, our controls surrounding the application of accounting guidance to smartphone revenues transactions did not operate as designed. This control deficiency resulted in the misstatement of our revenues and cost of revenues, including gross margin percentages, and the related balance sheet accounts and financial disclosures for the years ended December 31, 2011 and 2012 (and the restatement of the unaudited interim condensed consolidated financial statements for the quarters ended March 31, June 30, and September 30 for such years) as discussed in Note 1A and Note 14 to our consolidated financial statements included in our annual report on Form 10-K/A filed on August 9, 2013.

Notwithstanding the identified material weakness, management, based on the work performed during the restatement process described in Note 1A to the unaudited interim condensed consolidated financial statements, has concluded that the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with generally accepted accounting principles.

Remediation Plan

We are in the process of remediating this material weakness by, among other things, implementing and modifying certain accounting procedures, particularly those that involve our controls surrounding the review of contractual agreements with the Digital Storefronts and new distribution channels, and assessment of other factors that contribute to the determination of whether Glu should be considered the principal in sales transactions through those channels.

Management believes the foregoing efforts will effectively remediate the material weakness. As we continue to evaluate and work to improve our internal control over financial reporting, management may execute additional measures to address potential control deficiencies or modify the remediation plan described above. Management will continue to review and make necessary changes to the overall design of our internal controls.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On April 16, 2013, Lodsys Group, LLC, a Texas limited liability company (“Lodsys”), filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that we have been infringing two of Lodsys’ patents, and is seeking unspecified damages, including treble damages for willful infringement, interest, attorneys’ fees and such other costs as the Court may deem just and proper. On June 19, 2013, we filed an answer to Lodsys’s complaint (i) denying all of Lodsys’s claims, (ii) setting forth certain affirmative defenses to Lodsys’s claims and (iii) asserting counterclaims that we do not infringe the Lodsys patents and that the Lodsys patents are invalid. This action has only recently been filed and, accordingly, we are not in a position to assess whether any loss or adverse effect on its financial condition is probable or remote or to estimate the range of potential loss, if any.

In addition to the Lodsys matter described above, from time to time, we are subject to various claims, complaints and legal actions in the normal course of business. We do not believe that we are a party to any pending litigation, the outcome of which will have a material adverse effect on our operations, financial position or liquidity. However, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on us because of defense costs, potential negative publicity, diversion of management resources and other factors.

ITEM 1A. RISK FACTORS

Our business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occurs, our business and financial performance could be harmed, our actual results could differ materially from our expectations and the market value of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may harm our business and financial performance. Because of the risks and uncertainties discussed below, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods.

We have a history of net losses, may incur substantial net losses in the future and may not achieve profitability.

We have incurred significant losses since inception, including a net loss of $21.1 million in 2011, a net loss of $20.5 million in 2012 and a net loss of $8.4 million for the six months ended June 30, 2013. As of June 30, 2013, we had an accumulated deficit of $240.7 million. We expect our costs in 2013 to increase in absolute dollars over 2012 levels as we implement additional initiatives designed to increase revenues, such as developing games with greater complexity and higher production values, making investments related to our continued transition to becoming a games-as-a-service company, increasing the amount we spend marketing our new titles and paying upfront license fees or minimum guarantees related to our Glu Publishing business. If our revenues do not increase to offset these additional expenses, if we experience unexpected increases in operating expenses or if we are required to take additional charges related to impairments or restructurings, we will continue to incur losses and will not become profitable. In addition, our revenues increased only slightly in each of 2011 and 2012 from the preceding year, and slightly decreased in the first half of 2013 as compared to the first half of 2012. If we are unable to significantly increase our revenues or reduce our expenses, it will continue to negatively affect our operating results and our ability to achieve and sustain profitability.

We have a relatively new and evolving business model with a short operating history.

In early 2010, we changed our business model to focus on becoming a leading publisher of “free-to-play” games for smartphones, tablets and other advanced platforms. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee and to engage with various advertisements and offers that generate revenues for us. We launched our first free-to-play titles in the fourth quarter of 2010, so we have a short history operating in this business model, which limits the experience upon which we can draw when making operating decisions. In addition, we have been transitioning towards becoming a games-as-a-service company in which the majority of our future free-to-play games will be only playable online, and we may not be successful in executing on this transition. Our efforts to develop free-to-play games and transition towards becoming a games-as-a-service company may prove unsuccessful or, even if successful, it may take more time than we anticipate to achieve significant revenues because, among other reasons:

•

we may have difficulty optimizing the monetization of our games due to our relatively limited experience creating games that include micro-transaction capabilities, advertising and offers, as well as our limited experience in offering the features that are often associated with free-to-play games published by games-as-a-service companies, such as tournaments, live events and more frequent content updates;

•

we intend to continue to develop the majority of our games based upon our own intellectual property, rather than well-known licensed brands, and we may encounter difficulties in generating sufficient consumer interest in and downloads of our games, particularly since we have had relatively limited success generating significant revenues from games based on our own intellectual property;

•

many well-funded public and private companies have released, or plan to release, free-to-play games, including those provided under the games-as-a-service model, and this competition will make it more difficult for us to differentiate our games and derive significant revenues from them;

•

free-to-play games, including those delivered as a service, have a relatively limited history, and it is unclear how popular this style of game will become or remain or its revenue potential;

•

our free-to-play strategy assumes that a large number of players will download our games because they are free and that we will then be able to effectively monetize the games; however, players may not widely download our games for a variety of reasons, including poor consumer reviews or other negative publicity, ineffective or insufficient marketing efforts, lack of sufficient community features, lack of prominent storefront featuring and the relatively large file size of some of our games—our thick-client games often utilize a significant amount of the available memory on a user’s device, and due to the inherent limitations of the smartphone platforms and telecommunications networks, which only allow applications that are less than 50 megabytes to be downloaded over a carrier’s wireless network, players must download one of our thick-client games either via a wireless Internet (wifi) connection or initially to their computer and then side-loaded to their device;

•

even if our games are widely downloaded, we may fail to retain users or optimize the monetization of these games for a variety of reasons, including poor game design or quality, lack of community features, gameplay issues such as game unavailability, long load times or an unexpected termination of the game due to data server or other technical issues, or our failure to effectively respond and adapt to changing user preferences through game updates;

•

we may have difficulty hiring the additional monetization, live operations, server technology, user experience and product management personnel that we require to support our transition to becoming a games-as-a-service company, or may face difficulties in developing our GluOn games-as-a-service technology platform and incorporating it into our products;

•

we will depend on the proper and continued functioning of our own servers and third-party infrastructure to operate our connected games that are delivered as a service;

•

the billing and provisioning capabilities of some smartphones and tablets are currently not optimized to enable users to purchase games or make in-app purchases, which make it difficult for users of these smartphones and tablets to purchase our games or make in-app purchases and could reduce our addressable market, at least in the short term; and

•

the Federal Trade Commission has indicated that it intends to review issues related to in-app purchases, particularly with respect to games that are marketed primarily to minors, and the commission might issue rules significantly restricting or even prohibiting in-app purchases or name us as a defendant in a future class-action lawsuit.

If we do not achieve a sufficient return on our investment with respect to our free-to-play business model, it will negatively affect our operating results and may require us to formulate a new business strategy.

We rely on a very small portion of our total players for nearly all of our revenues that we derive from in-app purchases.

Since our free-to-play games can be downloaded and played for free, we have succeeded in generating a significant number of game installations and significant user-base growth. However, we rely on a very small portion of our total users for nearly all of our smartphone revenues derived from in-app purchases (as opposed to advertisements and incentivized offers). Since the launch of our first free-to-play titles in the fourth quarter of 2010, the percentage of unique paying users for our largest revenue-generating free-to-play games has been approximately 1%; however, in the initial period following the launch of a game, the percentage may be higher, and the percentage of unique paying users is generally lower than 1% for our less successful titles. To significantly increase our revenues, we must either increase the number of users who make in-app purchases or increase the amount that our paying players spend in our games. We have to date encountered difficulties with game monetization (for example, developing a sufficient quantity and variety of virtual goods to enable a relatively large scale of in-app purchases by an individual user). We might not succeed in our efforts to increase the monetization rates of our users, particularly if we are unsuccessful in our transition to becoming a games-as-a-service company. If we are unable to convert non-paying players into paying players or if the average amount of revenues that we generate from our users does not increase or declines, our business may not grow, our financial results will suffer, and our stock price may decline.

We derive the majority of our revenues from Apple’s App Store and the Google Play Store, and if we are unable to maintain a good relationship with each of Apple and Google or if either of these storefronts were unavailable for any prolonged period of time, our business will suffer.

The majority of our smartphone revenues have historically been derived from Apple’s iOS platform, which accounted for 58.8% of our total revenues for the six months ended June 30, 2013 compared with 57.4% of our total revenues for the six months ended June 30, 2012. We generated the majority of these iOS-related revenues from in-app purchases and sales of premium games made through the Apple App Store, which represented 50.4% of our total revenues for the six months ended June 30, 2013 compared with 42.5% of our total revenues for the six months ended June 30, 2012, with the balance of our iOS-related revenues generated from offers and advertisements in games distributed on the Apple App Store. In addition, we generated approximately 28.6% and 24.3% of our total revenues for the six months ended June 30, 2013 and 2012, respectively, from the Android platform. We generated the majority of our Android-related revenues from in-app purchases and sales of premium games made through the Google Play store, which represented 18.7% and 18.7% of our total revenues for the six months ended June 30, 2013 and 2012, respectively. We believe that we have good relationships with each of Apple and Google, which has contributed to the majority of our games being featured on their storefronts when they were commercially released. If we do not continue to receive prominent featuring, users may find it more difficult to discover our games and we may not generate significant revenues from them. We may also be required to spend significantly more on marketing campaigns to generate substantial revenues on these platforms. In addition, currently neither Apple nor Google charges a publisher when it features one of their apps. If either Apple or Google were to charge publishers to feature an app, it could cause our marketing expenses to increase considerably. Accordingly, any change or deterioration in our relationship with Apple or Google could materially harm our business and likely cause our stock price to decline.

We also rely on the continued functioning of the Apple App Store and the Google Play Store. In the past these digital storefronts have been unavailable for short periods of time or experienced issues with their in-app purchasing functionality. If either of these events recurs on a prolonged basis or other similar issues arise that impact our ability to generate revenues from these storefronts, it would have a material adverse effect on our revenues and operating results. In addition, if these storefront operators fail to provide high levels of service, our end users’ ability to access our games may be interrupted or end users may not receive the virtual currency or goods for which they have paid, which may adversely affect our brand.

The operators of digital storefronts on which we publish our free-to-play games in many cases have the unilateral ability to change and interpret the terms of our contract with them.

Unlike our legacy feature phone business in which we and the wireless carrier or other distributor negotiated the business terms related to the distribution of our feature phone games, we distribute our free-to-play games through direct-to-consumer digital storefronts, for which the distribution terms and conditions are often “click through” agreements that we are not able to negotiate with the storefront operator. For example, we are subject to each of Apple’s and Google’s standard click-through terms and conditions for application developers, which govern the promotion, distribution and operation of applications, including our games, on their storefronts. Each of Apple and Google can unilaterally change their standard terms and conditions with no prior notice to us. In addition, the agreement terms can be vague and subject to changing interpretations by the storefront operator. For example, in the second quarter of 2011, Apple began prohibiting certain types of virtual currency-incented advertising offers in games sold on the Apple App Store. These offers accounted for approximately one-third of our smartphone revenues during the three months ended June 30, 2011, and our inability to subsequently use such offers negatively impacted our smartphone revenues thereafter. Most recently, Apple informed us early in the fourth quarter of 2012 that we could no longer include links to Tapjoy’s HTML5 website in our games, which has since negatively impacted our ability to generate revenue through incented offers and will likely continue to negatively impact our revenues in future periods. Any similar changes in the future that impact our revenues could materially harm our business, and we may not receive significant or any advance warning of such change. In addition, each of Apple and Google have the right to prohibit a developer from distributing its applications on its storefront if the developer violates its standard terms and conditions. If Apple or Google or any other storefront operator determines that we are violating its standard terms and conditions, by a new interpretation or otherwise or prohibits us from distributing our games on its storefront, it would materially harm our business and likely cause our stock price to significantly decline.

The markets in which we operate are highly competitive, and many of our competitors have significantly greater resources than we do.

Developing, distributing and selling mobile games is a highly competitive business, characterized by frequent product introductions and rapidly emerging new platforms, technologies and storefronts. For end users, we compete primarily on the basis of game quality, brand and customer reviews. We compete for promotional and storefront placement based on these factors, as well as our relationship with the digital storefront owner, historical performance, perception of sales potential and relationships with licensors of brands and other intellectual property. For content and brand licensors, we compete based on royalty and other economic terms, perceptions of development quality, porting abilities, speed of execution, distribution breadth and relationships with storefront owners or carriers. We also compete for experienced and talented employees.

We compete with a continually increasing number of companies, including Zynga, DeNA, Gree, Nexon and many well-funded private companies, including Kabam, King, Rovio, Storm 8/Team Lava and Supercell. We also compete for consumer spending with large companies, such as Activision, Electronic Arts (EA Mobile), Gameloft and Take-Two Interactive, whose games for smartphones and tablets are primarily premium rather than free-to-play. In addition, given the open nature of the development and distribution for smartphones and tablets, we also compete or will compete with a vast number of small companies and individuals who are able to create and launch games and other content for these devices using relatively limited resources and with relatively limited start-up time or expertise. As an example of the competition that we face, it has been estimated that more than 150,000 active games were available on Apple’s App Store as of July 31, 2013. The proliferation of titles in these open developer channels makes it difficult for us to differentiate ourselves from other developers and to compete for end users without substantially increasing our marketing expenses and development costs.

Some of our competitors and our potential competitors have one or more advantages over us, either globally or in particular geographic markets, which include:

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significantly greater financial resources;

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greater experience with the free-to-play games and games-as-a-service business models and more effective game monetization;

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stronger brand and consumer recognition regionally or worldwide;

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greater experience integrating community features into their games, operating as a games-as-a-service company and increasing the revenues derived from their users;

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the capacity to leverage their marketing expenditures across a broader portfolio of mobile and non-mobile products;

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larger installed customer bases from related platforms, such as console gaming or social networking websites, to which they can market and sell mobile games;

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more substantial intellectual property of their own from which they can develop games without having to pay royalties;

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lower labor and development costs and better overall economies of scale;

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greater platform-specific focus, experience and expertise; and

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broader global distribution and presence.

If we are unable to compete effectively or we are not as successful as our competitors in our target markets, our sales could decline, our margins could decline and we could lose market share, any of which would materially harm our business, operating results and financial condition.

Our financial results could vary significantly from quarter to quarter and are difficult to predict, which in turn could cause volatility in our stock price.

Our revenues and operating results could vary significantly from quarter to quarter due to 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 meaningful. In addition, we may not be able to accurately predict our future revenues or results of operations. We base our current and future expense levels on our internal operating plans and sales forecasts, and our operating costs are to a large extent fixed. As a result, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenues, and even a small shortfall in revenues could disproportionately and adversely affect financial results for that quarter.

In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly results include:

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our ability to increase the number of our paying players and the amount that each paying player spends in our games;

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the popularity and monetization rates of our new games released during the quarter and the ability of games released in prior periods to sustain their popularity and monetization rates;

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the number and timing of new games released by us and our competitors, particularly those games that may represent a significant portion of revenues in a quarter, which timing can be impacted by internal development delays, shifts in product strategy and how quickly Digital Storefront operators review and approve our games for commercial release;

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changes in the prominence of storefront featuring for our games and those of our competitors;

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fluctuations in the size and rate of growth of overall consumer demand for smartphones, tablets, games and related content;

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changes in the mix of revenues derived from first party titles and third party titles;

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changes in the amount of money we spend marketing our titles in a particular quarter, as well as changes in the timing of when we incur these marketing expenses within the quarter;

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decisions by us to incur additional expenses, such as increases in research and development, or unanticipated increases in vendor-related costs, such as hosting fees;

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the timing of successful mobile device launches;

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the seasonality of our industry;

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changes in accounting rules, such as those governing recognition of revenue, including the period of time over which we recognize revenue for in-app purchases of virtual currency and goods within certain of our games;

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fluctuations in the fair market value of the contingent consideration issued to the Blammo non-employee shareholders, as the fair value of the contingent consideration will be measured during each reporting period until the end of the earn-out period in March 2015;

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the amount and timing of charges related to any future impairments of goodwill, intangible assets, prepaid royalties and guarantees; for example, in 2011, we impaired $531,000 of certain prepaid royalties and royalty guarantees, and in 2012, we impaired $3.6 million of our goodwill related to our APAC reporting unit; and

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macro-economic fluctuations in the United States and global economies, including those that impact discretionary consumer spending.

Consumer tastes are continually changing and are often unpredictable, and we compete for consumer discretionary spending against other forms of entertainment; if we fail to develop and publish new mobile games that achieve market acceptance, our sales would suffer.

Our business depends on developing and publishing mobile games that consumers will want to download and spend time and money playing. We must continue to invest significant resources in research and development, analytics and marketing to introduce new games and continue to update our successful free-to-play games, and we often must make decisions about these matters well in advance of product release to timely implement them. Our success depends, in part, on unpredictable and volatile factors beyond our control, including consumer preferences, competing games, new mobile platforms and the availability of other entertainment activities. If our games and related applications do not meet consumer expectations, or they are not brought to market in a timely and effective manner, our business, operating results and financial condition would be harmed. For example, we intend to include new categories of games (such as role-playing games and card battle games) in our planned 2013 product portfolio that often have higher monetization rates than our single-player focused action/adventure and casual games. We have limited experience creating these types of games, and if we do not succeed in these efforts, it will negatively impact our revenues and operating results for 2013 and beyond. Even if our games are successfully introduced and initially adopted, a failure to continue to update them with compelling content or a subsequent shift in the entertainment preferences of consumers could cause a decline in our games’ popularity that could materially reduce our revenues and harm our business, operating results and financial condition. Furthermore, we compete for the discretionary spending of consumers, who face a vast array of entertainment choices, including games played on personal computers and consoles, television, movies, sports and the Internet. If we are unable to sustain sufficient interest in our games compared to other forms of entertainment, our business and financial results would be seriously harmed.

If we do not successfully establish and maintain awareness of our brand and games, if we incur excessive expenses promoting and maintaining our brand or our games or if our games contains defects or objectionable content, our operating results and financial condition could be harmed.

We believe that establishing and maintaining our brand is critical to establishing a direct relationship with end users who purchase our products from direct-to-consumer channels and to maintaining our existing relationships with distributors and content licensors, as well as potentially developing new such relationships. Increasing awareness of our brand and recognition of our games is particularly important in connection with our strategic focus of developing games based on our own intellectual property. Our ability to promote the Glu brand and increase recognition of our games depends on our ability to develop high-quality, engaging games. If consumers, Digital Storefront owners and branded content owners do not perceive our existing games as high-quality or if we introduce new games that are not favorably received by them, then we may not succeed in building brand recognition and brand loyalty in the marketplace. In addition, globalizing and extending our brand and recognition of our games is costly and involves extensive management time to execute successfully, particularly as we expand our efforts to increase awareness of our brand and games among international consumers. Although we have significantly increased our sales and marketing expenditures in connection with the launch of our games, these efforts may not succeed in increasing awareness of our brand or the new games. If we fail to increase and maintain brand awareness and consumer recognition of our games, our potential revenues could be limited, our costs could increase and our business, operating results and financial condition could suffer.

In addition, if a game contains objectionable content, we could experience damage to our reputation and brand. The majority of our successful free-to-play games are in the action/adventure genre, and we expect that the majority of the games that we will release in 2013 will be in that category. Some of these games contain violence or other content that certain consumers may find objectionable. For example, Apple has assigned our Frontline Commando: D-Day game a 17-and-older rating due to its violence. In addition, Google required us to submit two versions of our Blood & Glory and Contract Killer: Zombies games, one of which did not depict blood. Despite these ratings and precautions, consumers may be offended by certain of our game content games and children to whom these games are not targeted may choose to play them nonetheless. In addition, one of our employees or an employee of an outside developer could include hidden features in one of our games without our knowledge, which might contain profanity, graphic violence, sexually explicit or otherwise objectionable material. If consumers believe that a game we published contains objectionable content, it could harm our brand, consumers could refuse to buy it or demand a refund, and could pressure the digital platform operators to no longer allow us to publish the game on their platforms. Similarly, if one of our games is introduced with defects or has playability issues, it could results in negative user reviews and damage our brand. These issues could be exacerbated if our customer service department does not timely and adequately address issues that our users have encountered with our games.

We have depended on a small number of games for a significant portion of our revenues in recent fiscal periods. If these games do not continue to succeed or we do not release highly successful new games, our revenues would decline.

In the mobile gaming industry, new games are frequently introduced, but a relatively small number of games account for a significant portion of industry sales. Similarly, a significant portion of our revenues comes from a limited number of games, although the games in that group have shifted over time. Our growth depends on our ability to consistently launch new games that generate significant revenues. For example, in the third quarter of 2012, we launched 11 new games, only two of which generated significant revenues, which, in part, contributed to our revenues declining from the second quarter of 2012. We have since that time failed to consistently release titles that generate significant revenues, which has resulted in our inability to grow our revenues on a quarterly basis. Developing and launching our games and providing future content updates requires us to invest significant time and resources with no guarantee that our efforts will result in significant revenues. If our new games are not successful or if we are not able to cost-effectively extend the lives of our successful games, our revenues could be limited and our business and operating results would suffer.

If we fail to maintain and enhance our capabilities for porting games to a broad array of mobile devices, particularly those utilizing the Android operating system, our revenues and financial results could suffer.

We derive the majority of our revenues from the sale of games for smartphones and tablets that utilize Apple’s iOS or Google’s Android operating systems. Unlike the Apple ecosystem in which Apple controls both the device (iPhone, iPod Touch and iPad) and the storefront (Apple’s App Store), the Android ecosystem is highly fragmented since a large number of OEMs manufacture and sell Android-based devices that run a variety of versions of the Android operating system, and there are many Android-based storefronts in addition to the Google Play Store. For us to sell our games to the widest possible audience of Android users, we must port our games to a significant portion of the more than 700 Android-based devices that are commercially available, many of which have different technical requirements. Since the number of Android-based smartphones and tablets shipped worldwide is growing significantly, it is important that we maintain and enhance our porting capabilities, which could require us to invest considerable resources in this area. These additional costs could harm our business, operating results and financial condition. In addition, we must continue to increase the efficiency of our porting processes or it may take us longer to port games to an equivalent number of devices, which would negatively impact our margins. If we fail to maintain or enhance our porting capabilities, our revenues and financial results could suffer.

We use a game development engine licensed from Unity Technologies to create many of our games. If we experience any prolonged technical issues with this engine or if we lose access to this engine for any reason, it could delay our game development efforts and cause us our financial results to fall below expectations for a quarterly or annual period, which would likely cause our stock price to decline.

We use a game development engine licensed from Unity Technologies to create many of our games, and we expect to continue to use this engine for the foreseeable future. Because we do not own this engine, we do not control its operation or maintenance. As a result, any prolonged technical issues with this engine might not be resolved quickly, despite the fact that we have contractual service level commitments from Unity. In addition, although Unity cannot terminate our agreement absent an uncured material breach of the agreement by Glu, we could lose access to this engine under certain circumstances, such as a natural disaster that impacts Unity or a bankruptcy event. If we experience any prolonged issues with regard to the operation of the Unity game development engine or if we lose access to this engine for any reason, it could delay our game development efforts and cause us to not meet revenue expectations for a quarterly or annual period, which would likely cause our stock price to decline. Further, if one of our competitors acquired Unity, the acquiring company would be less likely to renew our agreement, which could impact our game development efforts in the future, particularly with respect to sequels to games that were created on the Unity engine.

We derive a significant portion of our revenues from advertisements and offers that are incorporated into our free-to-play games through relationships with third parties. If we lose the ability to provide these advertisements and offers for any reason, or if any events occur that negatively impact the revenues we receive from these sources, it would negatively impact our operating results.

We derive revenues from our free-to-play games though in-app purchases, advertisements and offers. We incorporate advertisements and offers into our games by implementing third parties’ software development kits. We rely on these third parties to provide us with a sufficient inventory of advertisements and offers to meet the demand of our user base. If we exhaust the available inventory of these third parties, it will negatively impact our revenues. If our relationship with any of these third parties terminates for any reason, or if the commercial terms of our relationships do not continue to be renewed on favorable terms, we would need to locate and implement other third party solutions, which could negatively impact our revenues, at least in the short term. Furthermore, the revenues that we derive from advertisements and offers is subject to seasonality, as companies’ advertising budgets are generally highest during the fourth quarter and decline significantly in the first quarter of the following year, which negatively impacts our revenues in the first quarter (and conversely significantly increases our marketing expenses in the fourth quarter).

In addition, the actions of the storefront operators can also negatively impact the revenues that we generate from advertisements and offers. For example, in the second quarter of 2011, Apple began prohibiting certain types of virtual currency-incented advertising offers in games sold on the Apple App Store. These offers accounted for approximately one-third of our revenues during the three months ended September 30, 2011, and our inability to utilize such offers has negatively impacted our revenues. In addition, in the third quarter of 2012, Apple made changes to its terms and conditions that could, depending on how Apple interprets them, negatively impact the revenues we generate from third-party advertising service providers. Any similar changes in the future that impact our revenues that we generate from advertisements and offers could materially harm our business .

We have begun publishing, and intend to continue to publish games developed by third parties which will expose us to a number of potential operational and legal risks.

We have recently formed our Glu Publishing department that will initially focus on entering into relationships with developers of successful games in Asian markets where Glu will localize and publish those games in the United States and non-Asian markets. Our Glu Publishing business will expose us to a number of potential operational and legal risks. For example, we may be required to provide third party developers with upfront license fees or non-recoupable minimum guarantees in order to obtain the rights to publish their games, and we may need to spend significant money marketing these games after they have been commercially launched. If the games are not commercially successful because they do not appeal to a Western audience, because of our limited experience in publishing other developers’ games or for any other reason, it will negatively impact our operating results. In addition, if any of the third party developers with which we work have created their games by infringing another party’s intellectual property or otherwise violating their rights, or if these games violate applicable laws and regulations such as with respect to data collection and privacy, we would be exposed to potential legal risks by publishing these games.

We may need to raise additional capital or borrow funds to grow our business, and we may not be able to raise capital or borrow funds on terms acceptable to us or at all.

We expect to continue to use cash in our operations during 2013 as we seek to grow our business. In addition, we expect to use approximately $1.8 million in the third quarter of 2013 for capital expenditures related to office moves for our corporate headquarters in San Francisco and our Kirkland, Washington studio. As of June 30, 2013, we had $19.1 million of cash and cash equivalents. If our cash and cash equivalents and cash inflows are insufficient to meet our cash requirements or if we wish to strengthen our balance sheet, we will need to seek additional capital, potentially pursuant to our effective universal shelf registration statement, and we may be unable to do so on terms that are acceptable to us or at all. Equity financings would dilute our existing stockholders, particularly given our current stock price, and the holders of new securities may receive rights, preferences or privileges that are senior to those of existing stockholders. Alternatively, we may wish to enter into a credit facility or other debt arrangement, and we may be unable to procure one on terms that are acceptable to us, particularly in light of the current credit market conditions. The material weakness in our internal control over financial reporting that resulted from the restatement of our financial statements may make it more difficult for us to raise additional debt or equity capital. If we require new sources of financing but they are insufficient or unavailable, we would be required to modify our operating plans to align them with available resources, which would harm our ability to grow our business.

Our reported financial results could be adversely affected by changes in financial accounting standards or by the application of existing or future accounting standards to our business as it evolves.

Our reported financial results are impacted by the accounting policies promulgated by the accounting standards bodies and the methods, estimates and judgments that we use in applying our accounting policies. Due to recent economic events, the frequency of accounting policy changes may accelerate, including conversion to unified international accounting standards. Policies affecting software revenue recognition have affected, and could further significantly affect, the way we account for revenue. For example, the accounting for revenue derived from smartphone platforms and free-to-play games, particularly with regard to revenues generated from digital storefronts, is still evolving and, in some cases, uncertain. In particular, we were required to file an amendment to our Annual Report on Form 10-K for the year ended December 31, 2012 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 to restate or revise the financial statements contained in those reports (including for the year ended December 31, 2011) because we did not correctly apply the revenue accounting guidance to our smartphone revenues for sales through digital storefronts. (See Note 1A (Restatement of Financial Statements) for additional information about the restatement.) While we believe that we are now correctly accounting for our smartphone revenues, this is an area that continues to involve significant discussion among accounting professionals and which is not completely settled. It is possible that the relative application, interpretation and weighting of the factors that relate to whether we should be considered the principal in the sales transaction of games sold through digital storefronts may evolve, and we may in the future conclude that our accounting policy for smartphone revenues, as reflected in the restated financial statements, is incorrect, which could result in another restatement of affected financial statements. In addition, we currently defer revenues related to virtual goods and currency over the average playing period of paying users, which approximates the useful life of the transaction. While we believe our estimates are reasonable based on available game player information, we may revise such estimates in the future as our games’ operation periods change. Any adjustments arising from changes in the estimates of the lives of these virtual items would be applied prospectively on the basis that such changes are caused by new information indicating a change in the game player behavior patterns of our paying users. Any changes in our estimates of useful lives of these virtual items may result in our revenues being recognized on a basis different from prior periods’ and may cause our operating results to fluctuate. As we enhance, expand and diversify our business and product offerings, the application of existing or future financial accounting standards, particularly those relating to the way we account for our smartphone revenues, could have a significant adverse effect on our reported results although not necessarily on our cash flows.

If we are unable to maintain effective internal control over financial reporting, the accuracy and timeliness of our financial reporting may be adversely affected.

Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial statements. In connection with the restatement to our unaudited interim condensed consolidated financial statements in this Form 10-Q discussed in Note 1A, management, including our Chief Executive Officer and Chief Financial Officer, reassessed the effectiveness of our internal control over financial reporting as of December 31, 2012. Based on this reassessment using the guidelines established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992, management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2012 because of a material weakness related to the application of revenue accounting guidance to our smartphone revenues for sales through digital storefronts. This control deficiency resulted in the misstatement of our revenues and cost of revenues, including gross margin percentages, and the related balance sheet accounts and financial disclosures for the years ended December 31, 2011 and 2012 (and the restatement of the unaudited interim condensed consolidated financial statements for the quarters ended March 31, June 30, and September 30 for such years) as discussed in Note 1A and Note 14 to our consolidated financial statements included in our annual report on Form 10-K/A filed on August 9, 2013. If we are unable to effectively remediate this material weakness or we are otherwise unable to maintain adequate internal controls for financial reporting, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls as required pursuant to the Sarbanes-Oxley Act, it could result in another material misstatement of our financial statements that would require a restatement, investor confidence in the accuracy and timeliness of our financial reports may be impacted or the market price of our common stock could be negatively impacted.

Our acquisition activities may disrupt our ongoing business, may involve increased expenses and may present risks not contemplated at the time of the transactions.

We have acquired, and may continue to acquire, companies, products and technologies that complement our strategic direction. Acquisitions involve significant risks and uncertainties, including:

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diversion of management time and a shift of focus from operating the businesses to issues related to integration and administration;

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inability to successfully integrate the acquired technology and operations into our business and maintain uniform standards, controls, policies and procedures;

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challenges retaining the key employees, customers and other business partners of the acquired business;

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inability to realize synergies expected to result from an acquisition;

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an impairment of acquired goodwill and other intangible assets in future periods would result in a charge to earnings in the period in which the write-down occurs;

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the internal control environment of an acquired entity may not be consistent with our standards and may require significant time and resources to improve;

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in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries; and

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liability for activities of the acquired companies before the acquisition, including violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities.

In addition, if we issue equity securities as consideration in an acquisition, as we did for our acquisitions of Griptonite, Blammo and GameSpy, our current stockholders’ percentage ownership and earnings per share would be diluted. For example, our Blammo acquisition agreement provides that the former Blammo shareholders may earn up to 3,312,937 shares of our common stock if Blammo achieves certain net revenue targets during the years ending March 31, 2013, March 31, 2014 and March 31, 2015; Blammo earned 742,036 shares of a possible 909,091 shares for the year ended March 31, 2013. Because acquisitions are inherently risky, our transactions may not be successful and may, in some cases, harm our operating results or financial condition.

We rely on a combination of our own servers and third party infrastructure to operate our games. If we experience any system or network failures, cyber attacks or any other interruption to our games, it could reduce our sales, increase costs or result in a loss of revenues or end users of our games.

We rely on Digital Storefronts and other third-party networks to deliver games to our customers and on their or other third parties’ billing systems to track and account for our game downloads. We also rely on our own servers and third-party infrastructure to operate our connected games, and our reliance on such third-party infrastructure will increase as we transition to becoming a games-as-a-service company. In particular, a significant portion of our game traffic is hosted by Amazon Web Services, which service provides server redundancy and uses multiple locations on various distinct power grids. Amazon may terminate its agreement with us upon 30 days’ notice. Amazon experienced a power outage during the second quarter of 2012, which affected the playability of our games for approximately one day. While this particular event did not adversely impact our business, a similar outage of a longer duration could. In addition, we use, or plan to use, GameSpy’s services and equipment for many of our games, which is subject to a transitional data center services agreement between us and IGN, GameSpy’s former parent corporation, that terminates on August 2, 2014, unless we (or, under certain circumstances, IGN) earlier terminate the agreement. Any technical problem with, cyber attack on, or loss of access to these third parties’ or our systems, servers or other technologies could result in the inability of end users to download or play our games, prevent the completion of billing for a game or result in the loss of users’ virtual currency or other in-app purchases, interfere with access to some aspects of our games or result in the theft of end-user personal information. For example, some users of our Android-based games have experienced issues receiving the virtual currency that they purchased and paid for. In addition, if virtual assets are lost, or if users do not receive their purchased virtual currency, we may be required to issue refunds, we may receive negative publicity and game ratings, we may lose users of our games, and we may become subject to regulatory investigation or class action litigation, any of which would negatively affect our business. Any of these problems could harm our reputation or cause us to lose end users or revenues or incur substantial repair costs and distract management from operating our business.

Changes in foreign exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results.

We currently transact business in more than 70 countries in more than 20 different currencies, with Pounds Sterling and Euros being the primary international currencies in which we transact business. Conducting business in currencies other than U.S. Dollars subjects us to fluctuations in currency exchange rates that could have a negative impact on our reported operating results. We experienced significant fluctuations in currency exchange rates in 2011 and 2012, and expect to experience continued significant fluctuations in the future. We incur expenses for employee compensation and other operating expenses at our non-U.S. locations in the local currency, and an increasing percentage of our international revenue is from customers who pay us in currencies other than the U.S. dollar. Fluctuations in the exchange rates between the U.S. dollar and those other currencies could result in the dollar equivalent of these expenses being higher and/or the dollar equivalent of the foreign-denominated revenue being lower than would be the case if exchange rates were stable. This could have a negative impact on our operating results. To date, we have not engaged in exchange rate hedging activities, and we do not expect to do so in the foreseeable future.

We face additional risk if a currency is not freely or actively traded. Some currencies, such as the Chinese Renminbi in which our Chinese operations principally transact business, are subject to limitations on conversion into other currencies, which can limit our ability to react to rapid foreign currency devaluations and to repatriate funds to the United States should we require additional working capital.

We face added business, political, regulatory, operational, financial and economic risks as a result of our international operations and distribution, any of which could increase our costs and adversely affect our operating results.

International sales represented approximately 46.6% (restated) and 50.3% (restated) of our revenues in 2012 and 2011, respectively. To target international markets, we develop games that are customized for consumers in those markets. We have international offices located in a number of foreign countries including Canada, China, India and Russia. We expect to maintain our international presence, and we expect international sales will continue to be an important component of our revenues, particularly in APAC markets. Risks affecting our international operations include:

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our ability to develop games that appeal to the tastes and preferences of consumers in international markets;

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difficulties developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, language, and cultural differences;

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multiple and conflicting laws and regulations, including complications due to unexpected changes in these laws and regulations;

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our ability to develop, customize and localize games that appeal to the tastes and preferences of consumers in international markets;

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competition from local game developers that have significant market share in certain foreign markets and a better understanding of local consumer preferences;

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potential violations of the Foreign Corrupt Practices Act and local laws prohibiting improper payments to government officials or representatives of commercial partners;

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regulations that could potentially affect the content of our products and their distribution, particularly in China;

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foreign exchange controls that might prevent us from repatriating income earned in countries outside the United States, particularly China;

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potential adverse foreign tax consequences, since due to our international operations, we must pay income tax in numerous foreign jurisdictions with complex and evolving tax laws;

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political, economic and social instability;

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restrictions on the export or import of technology;

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trade and tariff restrictions and variations in tariffs, quotas, taxes and other market barriers; and

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difficulties in enforcing intellectual property rights in certain countries.

These risks could harm our international operations, which, in turn, could materially and adversely affect our business, operating results and financial condition.

If we fail to deliver our games at the same time as new mobile devices are commercially introduced, our sales may suffer.

Our business depends, in part, on the commercial introduction of new mobile devices with enhanced features, including larger, higher resolution color screens, improved audio quality, and greater processing power, memory, battery life and storage. For example, the introduction of new and more powerful versions of Apple’s iPhone and iPad and devices based on Google’s Android operating system, have helped drive the growth of the mobile games market. In addition, consumers generally purchase the majority of content, such as our games, for a new device within a few months of purchasing it. We do not control the timing of these device launches. Some manufacturers give us access to their mobile devices prior to commercial release. If one or more major manufacturers were to stop providing us access to new device models prior to commercial release, we might be unable to introduce games that are compatible with the new device when the device is first commercially released, and we might be unable to make compatible games for a substantial period following the device release. If we do not adequately build into our title plan the demand for games for a particular mobile device or experience game launch delays, we miss the opportunity to sell games when new mobile devices are shipped or our end users upgrade to a new mobile device, our revenues would likely decline and our business, operating results and financial condition would likely suffer.

Our business and growth may suffer if we are unable to hire and retain key personnel.

Our future success will depend, to a significant extent, on our ability to retain and motivate our key personnel, namely our management team, particularly Niccolo de Masi, our President and Chief Executive Officer, as well as experienced game development personnel who may experience uncertainty due to the restructurings we implemented in the fourth quarter of 2012 and first half of 2013, in which we eliminated, in the aggregate, more than 100 positions in our Kirkland, Sao Paolo and San Francisco studios. In addition, to grow our business, execute on our business strategy and replace departing employees, we must identify, hire and retain qualified personnel, particularly additional monetization, live operations, server technology, user experience and product management personnel to support our transition to becoming a games-as-a-service company. Competition for qualified management, game development and other staff can be intense. Attracting and retaining qualified personnel may be particularly difficult for us if our stock price remains relatively depressed, since individuals may elect to seek employment with other companies that they believe have better long-term prospects. Competitors have in the past and may in the future attempt to recruit our employees, and our management and key employees are not bound by agreements that could prevent them from terminating their employment at any time. In addition, we do not maintain a key-person life insurance policy on any of our officers. Our business and growth may suffer if we are unable to hire and retain key personnel.

Our business is subject to increasing governmental regulation. If we do not successfully respond to these regulations, our business may suffer.

We are subject to a number of domestic and foreign laws and regulations that affect our business. Not only are these laws constantly evolving, which could result in their being interpreted in ways that could harm our business, but legislation is also continually being introduced that may affect both the content of our products and their distribution. In the United States, for example, numerous federal and state laws have been introduced which attempt to restrict the content or distribution of games. Legislation has been adopted in several states, and proposed at the federal level, that prohibits the sale of certain games to minors. If such legislation is adopted, it could harm our business by limiting the games we are able to offer to our customers or by limiting the size of the potential market for our games. We may also be required to modify certain games or alter our marketing strategies to comply with new and possibly inconsistent regulations, which could be costly or delay the release of our games. The Federal Trade Commission has also indicated that it intends to review issues related to in-app purchases, particularly with respect to games that are marketed primarily to minors. If the Federal Trade Commission issues rules significantly restricting or even prohibiting in-app purchases, it would significantly impact our business strategy. In addition, two self-regulatory bodies in the United States (the Entertainment Software Rating Board) and the European Union ( Pan European Game Information) provide consumers with rating information on various products such as entertainment software similar to our products based on the content (for example, violence, sexually explicit content, language). Furthermore, the Chinese government has adopted measures designed to eliminate violent or obscene content in games. In response to these measures, some Chinese telecommunications operators have suspended billing their customers for certain mobile gaming platform services, including those services that do not contain offensive or unauthorized content, which could negatively impact our revenues in China. Any one or more of these factors could harm our business by limiting the products we are able to offer to our customers, by limiting the size of the potential market for our products, or by requiring costly additional differentiation between products for different territories to address varying regulations.

Furthermore, the growth and development of free-to-play gaming and the sale of virtual goods may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies such as ours. We anticipate that scrutiny and regulation of our industry will increase and that we will be required to devote legal and other resources to addressing such regulation. For example, existing laws or new laws regarding the regulation of currency and banking institutions may be interpreted to cover virtual currency or goods. If that were to occur we may be required to seek licenses, authorizations or approvals from relevant regulators, the granting of which may depend on us meeting certain capital and other requirements and we may be subject to additional regulation and oversight, all of which could significantly increase our operating costs. Changes in current laws or regulations or the imposition of new laws and regulations in the United States or elsewhere regarding these activities may dampen the growth of free-to-play gaming and impair our business.

We sometimes offer our players various types of sweepstakes, giveaways and promotional opportunities, and in October 2012, we entered into a strategic relationship with Probability PLC to offer a suite of Glu-branded mobile slot games in the United Kingdom and Italy, two of which are currently offered in the United Kingdom. We intend to continue to explore opportunities with respect to real money gambling. We are subject to laws in a number of jurisdictions concerning the operation and offering of such activities and games, many of which are still evolving and could be interpreted in ways that could harm our business. Any court ruling or other governmental action that imposes liability on providers of online services could result in criminal or civil liability and could harm our business.

In addition, because our services are available worldwide, certain foreign jurisdictions and others may claim that we are required to comply with their laws, including in jurisdictions where we have no local entity, employees or infrastructure.

The laws and regulations concerning data privacy and data security are continually evolving, and our actual or perceived failure to comply with these laws and regulations could harm our business.

We are subject to federal, state and foreign laws regarding privacy and the protection of the information that we collect regarding our users, which laws are currently in a state of flux and likely to remain so for the foreseeable future. The U.S. government, including the Federal Trade Commission and the Department of Commerce, is continuing to review the need for greater regulation over collecting information concerning consumer behavior on the Internet and on mobile devices. For example, in December 2012, the Federal Trade Commission adopted amendments to the Children’s Online Privacy Protection Act to strengthen privacy protections for children under age 13, which amendments became effective on July 1, 2013. In addition, the European Union has proposed reforms to its existing data protection legal framework. Various government and consumer agencies have also called for new regulation and changes in industry practices. For example, in February 2012, the California Attorney General announced a deal with Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research in Motion to strengthen privacy protection for users that download third-party apps to smartphones and tablet devices. In response to developments in the interpretation and understanding of regulations such as these and guidance and inquiries from the California Attorney General, we released updates to our My Dragon and Deer Hunter Reloaded games and made changes to our games in development to make our privacy policy readily accessible to players of these games as required by the California Online Privacy Protection Act. If we do not follow existing laws and regulations, as well as the rules of the smartphone platform operators, with respect to privacy-related matters, or if consumers raise any concerns about our privacy practices, even if unfounded, it could damage our reputation and operating results.

All of our games are subject to our privacy policy and our terms of service located on our corporate website. If we fail to comply with our posted privacy policy, terms of service or privacy-related laws and regulations, including with respect to the information we collect from users of our games, it could result in proceedings against us by governmental authorities or others, which could harm our business. In addition, interpreting and applying data protection laws to the mobile gaming industry is often unclear. These laws may be interpreted and applied in conflicting ways from state to state, country to country, or region to region, and in a manner that is not consistent with our current data protection practices. Complying with these varying requirements could cause us to incur additional costs and change our business practices. Further, if we fail to adequately protect our users’ privacy and data, it could result in a loss of player confidence in our services and ultimately in a loss of users, which could adversely affect our business.

In the area of information security and data protection, many states have passed laws requiring notification to users when there is a security breach for personal data, such as the 2002 amendment to California’s Information Practices Act, or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to implement. Costs to comply with these laws may increase as a result of changes in interpretation. Furthermore, any failure on our part to comply with these laws may subject us to significant liabilities.

Our stock price has fluctuated and declined significantly since our initial public offering in March 2007, and may continue to fluctuate, may not rise and may decline further .

The trading price of our common stock has fluctuated in the past and is expected to continue to fluctuate in the future, as a result of a number of factors, many of which are outside our control, such as changes in the operating performance and stock market valuations of other technology companies generally, or those in our industry in particular, such as Electronic Arts and Zynga.

In addition, The NASDAQ Global Market on which our common stock is listed has recently and in the past experienced extreme price and volume fluctuations that have affected the market prices of many companies, some of which appear to be unrelated or disproportionate to their operating performance. These broad market fluctuations could adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. Securities class action litigation against us could result in substantial costs and divert our management’s attention and resources.

Our facilities are located near known earthquake fault zones, and the occurrence of an earthquake or other natural disaster could damage our facilities and equipment, which could require us to curtail or cease operations.

Our principal offices are located in the San Francisco Bay Area, an area known for earthquakes. We are also vulnerable to damage from other types of disasters, including power loss, fires, explosions, floods, communications failures, terrorist attacks and similar events. If any natural or other disaster were to occur, our ability to operate our business at our facilities could be impaired.

If we do not adequately protect our intellectual property rights, it may be possible for third parties to obtain and improperly use our intellectual property and our business and operating results may be harmed.

Our intellectual property is essential to our business. We rely on a combination of copyright, trademark, trade secret and other intellectual property laws and contractual restrictions on disclosure to protect our intellectual property rights. To date, we have not sought patent protection, so, we will not be able to protect our technologies from independent invention by third parties. Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy or otherwise to obtain and use our technology and games, and some parties have distributed “jail broken” versions of our games where all of the content has been unlocked and made available for free. Further, some of our competitors have released games that are nearly identical to successful games released by their competitors in an effort to confuse the market and divert users from the competitor’s game to the copycat game. To the extent that these tactics are employed with respect to any of our games, it could reduce our revenues that we generate from these games. Monitoring unauthorized use of our games is difficult and costly, and we cannot be certain that the steps we have taken will prevent piracy and other unauthorized distribution and use of our technology and games, particularly in certain international jurisdictions, such as China, where the laws may not protect our intellectual property rights as fully as in the United States. In the future, we may have to litigate to enforce our intellectual property rights, which could result in substantial costs and divert our management’s attention and our resources.

In addition, although we require our third-party developers to sign agreements not to disclose or improperly use our trade secrets and acknowledging that all inventions, trade secrets, works of authorship, developments and other processes generated by them on our behalf are our property and to assign to us any ownership they may have in those works, it may still be possible for third parties to obtain and improperly use our intellectual properties without our consent. This could harm our brand, business, operating results and financial condition.

We may become involved in intellectual property disputes, which may disrupt our business and require us to pay significant damage awards.

Third parties may sue us for intellectual property infringement, or initiate proceedings to invalidate our intellectual property, which, if successful, could disrupt our business, cause us to pay significant damage awards or require us to pay licensing fees. For example, on April 16, 2013, Lodsys Group, LLC, a Texas limited liability company (“Lodsys”), filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that we have been infringing two of Lodsys’ patents, and is seeking unspecified damages, including treble damages for willful infringement, interest, attorneys’ fees and such other costs as the Court may deem just and proper. In the event of a successful claim against us, we might be enjoined from using our intellectual property or licensed intellectual property that we use in our business, we might incur significant licensing fees and we might be forced to develop alternative technologies. If we fail or are unable to develop non-infringing technology or games or to license the infringed or similar technology or games on a timely basis, we may be forced to withdraw games from the market or prevented from introducing new games. We might also incur substantial expenses in defending against third-party claims, regardless of their merit.

In addition, we use open source software in some of our games and expect to continue to use open source software in the future. We may face claims from companies that incorporate open source software into their products, claiming ownership of, or demanding release of, the source code, the open source software and/or derivative works that were developed using such software, or otherwise seeking to enforce the terms of the applicable open source license. These claims could also result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our games, any of which would have a negative effect on our business and operating results.

We may become a party to litigation and regulatory inquiries, which could result in an unfavorable outcome and have an adverse effect on our business, financial condition, results of operation and cash flows.

We may become subject to various legal proceedings, claims and regulatory inquiries that arise out of the ordinary conduct of our business and are not yet resolved and additional claims and inquiries may arise in the future. In addition, events may give occur that give rise to a potential risk of litigation, including for example, in connection with the recent restatement of our financial information. The number and significance of regulatory inquiries have increased as our business has evolved. Any proceedings, claims or inquiries initiated by or against us, whether successful or not, may be time consuming; result in costly litigation, damage awards, consent decrees, injunctive relief or increased costs of business, require us to change our business practices or products, require significant amounts of management time, result in diversion of significant operations resources or otherwise harm of business and future financial results.

Unanticipated changes in our income tax rates or exposure to additional tax liabilities may affect our future financial results.

Our future effective income tax rates may be favorably or unfavorably affected by unanticipated changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws or their interpretation. Determining our worldwide provision for income taxes requires significant judgments. The estimation process and applicable laws are inherently uncertain, and our estimates are not binding on tax authorities. Our effective tax rate could also be adversely affected by a variety of factors, many of which are beyond our control. Recent and contemplated changes to U.S. tax laws, including limitations on a taxpayer’s ability to claim and utilize foreign tax credits and defer certain tax deductions until earnings outside of the U.S. are repatriated to the U.S., could impact the tax treatment of our foreign earnings. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine whether or not our provision for income taxes is adequate. These continuous examinations may result in unforeseen tax-related liabilities, which may harm our future financial results.

We must charge, collect and/or pay taxes other than income taxes, such as payroll, value-added, sales and use, net worth, property and goods and services taxes, in both the U.S. and foreign jurisdiction. If tax authorities assert that we have taxable nexus in a jurisdiction, they may seek to impose past as well as future tax liability and/or penalties. Any such impositions could also cause significant administrative burdens and decrease our future sales. Moreover, state and federal legislatures have been considering various initiatives that could change our tax position regarding sales and use taxes.

Finally, as we change our international operations, adopt new products and new distribution models, implement changes to our operating structure or undertake intercompany transactions in light of changing tax laws, our tax expense could increase.

Some provisions in our certificate of incorporation and bylaws may deter third parties from seeking to acquire us.

Our certificate of incorporation and bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our board of directors, including the following:

•

our board of directors is classified into three classes of directors with staggered three-year terms;

•

only our chairman of the board, our lead independent director, our chief executive officer, our president or a majority of our board of directors is authorized to call a special meeting of stockholders;

•

our stockholders are able to take action only at a meeting of stockholders and not by written consent;

•

only our board of directors and not our stockholders is able to fill vacancies on our board of directors;

•

our certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; and

•

advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before a meeting of stockholders.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits listed on the Exhibit Index (following the Signatures section of this report) are incorporated by reference into this Item 6.

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.


	GLU MOBILE INC.

Date: August 9, 2013	By:	/s/ Niccolo M. de Masi
		Niccolo M. de Masi
		President and Chief Executive Officer
		(Principal Executive Officer)


Date: August 9, 2013	By:	/s/ Eric R. Ludwig
		Eric R. Ludwig
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

EXHIBIT INDEX

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

10.01

Change of Control Severance Agreement between Glu Mobile Inc. and Matthew Ricchetti, dated April 1, 2013.

8-K

001-33368

99.01

04/05/13

10.02

Change of Control Severance Agreement between Glu Mobile Inc. and Chris Akhavan, dated as of April 22, 2013.

10.03

2008 Equity Inducement Plan, as amended and restated through May 14, 2013.

8-K

001-33368

99.01

05/17/13

10.04

Non-Employee Director Compensation Program, adopted on April 10, 2013.

8-K

001-33368

99.01

04/11/13

10.05++

Amendment No. 2 to Publisher Agreement between Glu Games Inc. and Tapjoy, Inc., dated as of May 13, 2013.

10.06

Sublease between Oracle America, Inc. and Glu Mobile Inc., dated as of April 16, 2013.

8-K

001-33368

99.01

04/22/13

10.07

Lease between Talon Portfolio Services, LLC and Griptonite, Inc., dated as of June 6, 2013.

10.08

Notice of Restricted Stock Unit Award and Restricted Stock Unit Agreement under the 2007 Equity Incentive Plan

31.01

Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a).

31.02

Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a) /15d-14(a).

32.01*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).

32.02*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).

101.INS**

XBRL Report Instance Document

101.SCH**

XBRL Taxonomy Extension Schema Document

101.CAL**

XBRL Taxonomy Calculation Linkbase Document

101.LAB**

XBRL Taxonomy Label Linkbase Document

101.PRE**

XBRL Presentation Linkbase Document

101.DEF**

XBRL Taxonomy Extension Definition Linkbase Document

++	Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2 as promulgated under the Exchange Act.

This exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that Glu Mobile Inc. specifically incorporates it by reference.

Pursuant to applicable securities laws and regulations, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, are deemed not filed for purposes of section 18 of the Exchange Act and otherwise are not subject to liability under these sections.

EXHIBIT 10.02

GLU MOBILE INC.

CHANGE OF CONTROL SEVERANCE AGREEMENT

This Change of Control Severance Agreement (the “ Agreement ”) is made and entered into effective as of April 22, 2013 (the “ Effective Date ”), by and between Chris Akhavan (the “ Employee ”) and Glu Mobile Inc. (the “ Company ”).

RECITALS

A. It is expected that the Company from time to time will consider the possibility of a Change of Control (as defined below). The Board of Directors of the Company (the “ Board ”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.

B. The Board believes that it is in the best interests of the Company and its stockholders to provide the Employee with an incentive to continue his employment and to maximize the value of the Company upon a Change of Control for the benefit of its stockholders.

C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is important to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change of Control.

AGREEMENT

In consideration of the mutual covenants herein contained and the continued employment of Employee by the Company, the parties agree as follows:

1. Definitions . Unless otherwise defined elsewhere herein, the following terms referred to in this Agreement shall have the following meanings:

(a) “ Cause ” means (i) the Employee’s committing of an act of gross negligence, gross misconduct or dishonesty, or other willful act, including misappropriation, embezzlement or fraud, that materially adversely affects the Company or any of the Company’s customers, suppliers or partners, (ii) his personal dishonesty, willful misconduct in the performance of services for the Company, or breach of fiduciary duty involving personal profit, (iii) his being convicted of, or pleading no contest to, any felony or misdemeanor involving fraud, breach of trust or misappropriation or any other act that the Board reasonably believes in good faith has materially adversely affected, or upon disclosure will materially adversely affect, the Company, including the Company’s public reputation, (iv) any material breach of any agreement with the Company by him that remains uncured for thirty (30) days after written notice by the Company to him, unless that breach is incapable of cure, or any other material unauthorized use or disclosure of the Company’s confidential information or trade secrets involving personal benefit or (v) his failure to follow the lawful directions of the chief executive officer, in the scope of his employment unless he reasonably believes in good faith that these directions are not lawful and notifies the chief executive officer in writing of the reasons for his belief.

(b) “ Change of Control ” means the closing of (i) a merger or consolidation in one transaction or a series of related transactions, in which the Company’s securities held by the Company’s stockholders before the merger or consolidation represent less than 50% of the outstanding voting equity

securities of the surviving corporation after the transaction or series of related transactions, (ii) a sale or other transfer of all or substantially all of the Company’s assets as a going concern, in one transaction or a series of related transactions, followed by the distribution to the Company’s stockholders of any proceeds remaining after payment of creditors or (iii) a transfer of more than 50% of the Company’s outstanding voting equity securities by the Company’s stockholders to one or more related persons or entities other than the Company in one transaction or a series of related transactions. Notwithstanding the foregoing provisions of this definition, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.

(c) “ Code ” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

(d) “ Involuntary Termination ” means the Employee’s resignation of employment from the Company expressly based on the occurrence of any of the following conditions, without the Employee’s informed written consent, provided, however, that with respect to each of the following conditions, the Employee must (a) within 90 days following its occurrence, deliver to the Company a written notice, pursuant to Section 8(b) hereof, explaining the specific basis for the Employee’s belief that the Employee is entitled to terminate the Employee’s employment due to an Involuntary Termination, (b) give the Company an opportunity to cure any of the following within 30 days following delivery of such notice and explanation, and (c) terminate employment within fifteen days of the sooner of the expiration of the cure period set forth above or the date the Company notifies the Employee in writing that it will not cure: (i) a material reduction in his duties, position or responsibilities, or his removal from these duties, position and responsibilities, unless he is provided with a position of substantially equal or greater organizational level, duties, authority and compensation; provided, however, that a change of title, in and of itself, or a reduction of duties, position or responsibilities solely by virtue of the Company’s being acquired and made part of a larger entity will not constitute an “Involuntary Termination,” (ii) a greater than 15%reduction in his then-current annual base compensation that is not applicable to the Company’s other executive officers, or (iii) a relocation to a facility or a location more than 30 miles from his then-current location of employment. For the avoidance of doubt, Involuntary Termination shall not include a termination of employment for death or Permanent Disability.

(e) “ Permanent Disability ” has the meaning set forth in Section 22(e)(3) of the Code.

(f) “ Termination Date ” shall mean the effective date of any notice of termination delivered by one party to the other hereunder.

2. Term of Agreement . This Agreement shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied or, if earlier, on the date, prior to a Change of Control, Employee is no longer employed by the Company.

3. At-Will Employment . The Company and the Employee acknowledge that the Employee’s employment is, and shall continue to be, at-will.

4. Severance Benefits .

(a) Termination Following a Change of Control . If the Employee’s employment with the Company is terminated without Cause or is terminated as a result of an Involuntary Termination at any time within 12 months after a Change of Control and the Employee delivers to the Company within 60 days following such termination a general release of claims in favor of the Company (the release of which shall not include any release of claims pursuant to which the Employee is entitled to indemnification with respect to thereof) (the “ Release ”), then the Employee will be entitled to the following

severance benefits (payable within 60 days following the Termination Date, provided that the Release has been executed, delivered to the Company and is effective on or prior to such date, and provided further that if the 60-day period spans two calendar years, payment will be made in the second calendar year, subject to the time limitations set forth in Section 5):

(i) six months of the Employee’s then-current annual base salary, payable in a lump sum.

(ii) fifty percent of the Employee’s target annual bonus for the calendar year in which the termination without Cause or the Involuntary Termination occurs, payable in a lump sum.

(iii) in addition to the shares that are vested and exercisable in accordance with each equity award that was granted by the Company to the Employee prior to the Termination Date, each such grant shall become vested and exercisable as to an additional 36 months of each such outstanding and not fully vested equity grant;

(iv) Until the earlier of (i) the date Employee is no longer eligible to receive continuation coverage pursuant to COBRA, or (ii) six months from the Termination Date, the Company shall reimburse Employee for continuation coverage pursuant to COBRA (as defined below) as was in effect for the Employee (and any eligible dependents) on the day immediately preceding the Termination Date; provided: (A) the Employee constitutes a qualified beneficiary, as defined in Section 4980B(g)(l) of the Code; and (B) the Employee timely elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”). Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay or reimburse the Employee for the COBRA premiums without violating applicable law (including Section 2716 of the Public Health Service Act), the Company instead shall pay to the Employee a fully taxable lump sum cash payment equal to the applicable COBRA premiums (or remaining period if reimbursements had commenced prior to the date of such determination).

(b) Termination Apart from a Change of Control . If the Employee’s employment with the Company terminates for any reason (including a termination without Cause or due to an Involuntary Termination) at any time following 12 months after a Change of Control, then the Employee shall not be entitled to receive any acceleration, severance or other benefits pursuant to this Agreement, but may be eligible for those benefits (if any) as may then be established under the Company’s then-existing severance and benefits plans and policies at the time of such termination.

(c) Accrued Wages and Vacation; Expenses . Without regard to the reason for, or the timing of, Employee’s termination of employment: (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the Termination Date; (ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through the Termination Date and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly and within the period of time mandated by law.

5. Section 409A .

(a) Notwithstanding anything to the contrary in this Agreement, if the Employee is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the final regulations and any guidance promulgated thereunder (“Section 409A”) at the time of the Employee’s termination (other than due to death), then the severance payable to

the Employee, if any, pursuant to this Agreement, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”) that are payable within the first six (6) months following the Employee’s termination of employment, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of the Employee’s termination of employment. All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if the Employee dies following his or her termination but prior to the six (6) month anniversary of his or her termination, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of the Employee’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

(b) Any termination of the Employee’s employment is intended to constitute a “separation from service” as such term is defined in Treasury Regulation Section 1.409A-1.

(c) It is further intended that payments hereunder satisfy, to the greatest extent possible, the exemption from the application of Section 409A (and any state law of similar effect) provided under Treasury Regulation Section 1.409A-1(b)(4) (as a “short-term deferral”). Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations shall not constitute Deferred Compensation Separation Benefits for purposes of clause (a) above.

(d) Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that do not exceed the Section 409A Limit shall not constitute Deferred Compensation Separation Benefits for purposes of clause (a) above.

(e) The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and the Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to the Employee under Section 409A.

(f) Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which you incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

6. Limitation on Payments Under Code Section 280G . In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Employee (a) constitute “parachute payments” within the meaning of Section 280G of the Code, and (b) would be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then Employee’s benefits under this Agreement shall be either:

(i) delivered in full; or

(ii) delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, with any such reductions first being made to the equity portion of the benefits and second being made to the cash portion of the benefits,

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. If required, the payments and benefits under this Agreement shall be reduced in the following order: (A) a pro rata reduction of (i) cash payments that are subject to Section 409A as deferred compensation and (ii) cash payments not subject to Section 409A of the Code; (B) a pro rata reduction of (i) employee benefits that are subject to Section 409A as deferred compensation and (ii) employee benefits not subject to Section 409A; and (C) a pro rata cancellation of (i) accelerated vesting of stock and other equity-based awards that are subject to Section 409A as deferred compensation and (ii) stock and other equity-based awards not subject to Section 409A. In the event that acceleration of vesting of stock and other equity-based award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Employee’s stock and other equity-based awards unless the Employee elects in writing a different order for cancellation. Unless the Company and the Employee otherwise agree in writing, any determination required under this Section will be made in writing by the Company’s independent public accountants immediately prior to a Change of Control or such other person or entity to which the parties mutually agree (the “Accountants”), whose determination will be conclusive and binding upon the Employee and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Employee will furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company will bear all costs the Accountants may incur in connection with any calculations contemplated by this Section.

7. Successors .

(a) Company’s Successors . Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession, unless otherwise agreed upon in writing by the Employee and such successor. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets.

(b) Employee’s Successors . Without the written consent of the Company, Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

8. Notices .

(a) General . Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or the next business day if sent for next-day delivery by a nationally recognized courier service with all delivery charges pre-paid. In the case of the Employee, couriered notices shall be addressed to him at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its then-current corporate headquarters, and all notices shall be directed to the attention of its General Counsel.

(b) Notice of Termination . Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than thirty (30) days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing Employee’s rights hereunder.

9. Arbitration .

(a) Arbitration . The Company and the Employee each agree that any and all disputes arising out of the terms of this Agreement, the Employee’s employment by the Company, the Employee’s service as an officer or director of the Company, the Employee’s compensation and benefits, their interpretation and any of the matters herein addressed, or the termination of the Employee’s employment with the Company or any matters related thereto (“Covered Disputes”), will be subject to binding arbitration. Covered Disputes that the Company and the Employee agree to arbitrate, and thereby agree to waive any right to a trial by jury, include but are not limited to any statutory claims under local, state, or federal law, including, without limitation, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Sarbanes-Oxley Act, the Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, the Family and Medical Leave Act, the California Family Rights Act, the California Labor Code, claims of harassment, discrimination, and wrongful termination, and any statutory, constitutional, or common law claims, claims for unpaid wages, any tort, and claims for stock, stock options or other ownership interest in the Company, except that each party may, at its or his option, seek injunctive relief in court related to the improper use, disclosure or misappropriation of a party’s proprietary, confidential or trade secret information. The Company and the Employee further understand that this Agreement to arbitrate also applies to any Covered Disputes that the Company may have with the Employee.

(b) Procedure . Company and the Employee agree that any arbitration will be administered by Judicial Arbitration & Mediation Services, Inc. (“JAMS”), pursuant to its Employment Arbitration Rules & Procedures then in effect (the “JAMS Rules”) before a single arbitrator. The JAMS Rules may be found and reviewed at http://www.jamsadr.com/rules-employment-arbitration. If the Employee is unable to access these rules, the Employee will notify the Company and the Company will provide him with a hardcopy. The Arbitrator will have the power to award any remedies available under applicable law, and the Arbitrator will award attorneys’ fees and costs to the prevailing party, except as prohibited by law. The decision of the Arbitrator will be in writing. Any arbitration under this Agreement will be conducted in San Francisco County, California.

(c) Administrative Relief . The Employee understands that this Agreement does not prohibit him or her from pursuing any administrative claim with a local, state, or federal administrative body or government agency where, as a matter of law, the parties may not restrict the Employee’s ability to file such claims, including, but not limited to, the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission, the National Labor Relations Board, or the Workers’ Compensation Board.

(d) Remedy . Except as provided by this Agreement or applicable law, arbitration will be the sole, exclusive, and final remedy for any dispute between the Employee and the Company.

(e) Voluntary Nature of Agreement . Each of the Company and the Employee acknowledges and agrees that such party is executing this Agreement voluntarily and without any duress or undue influence by anyone. The Employee further acknowledges and agrees that he or she has carefully read this Agreement and has asked any questions needed for him or her to understand the terms, consequences, and binding effect of this Agreement and fully understands it, including that the Employee is waiving his or her right to a jury trial . The Employee agrees that he or she has been provided an opportunity to seek the advice of an attorney of his or her choice before signing this Agreement.

10. Miscellaneous Provisions .

(a) No Duty to Mitigate . The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.

(b) Waiver . No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by both the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision, or of the same condition or provision at another time.

(c) Integration . This Agreement and any outstanding equity agreements referenced herein represent the entire agreement and understanding between the parties as to the subject matter herein regarding severance and acceleration benefits and supersede all prior or contemporaneous agreements, whether written or oral, with respect to this Agreement (including without limitation the offer letter between the Company and the Employee).

(d) Choice of Law . The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

(e) Severability . The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(f) Employment Taxes . All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.

(g) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

[Signature Page to Change of Control Severance Agreement Follows]

IN WITNESS WHEREOF, each of the parties has executed this Change of Control Severance Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.


COMPANY:	GLU MOBILE INC.

	By:	/s/ Niccolo M. de Masi
		Niccolo M. de Masi
		President and Chief Executive Officer

	Date: June 3, 2013

EMPLOYEE:	/s/ Chris Akhavan
	Chris Akhavan

	Date: June 3, 2013

EXHIBIT 10.05

*Confidential Treatment has been requested for

the marked portions of this exhibit pursuant

to Rule 24b-2 of the Securities Act of 1934, as amended

May 7, 2013

VIA EMAIL

Chris Akhavan

Glu Games Inc.

45 Fremont Street

Suite 2800

San Francisco, CA 94105

Re: Amendment to Tapjoy Publisher Agreement (the “Amendment”)

Dear Chris:

This letter confirms that in connection with that certain Publisher Agreement by and between Glu Games Inc. (“Publisher”) and Tapjoy, Inc. (“Tapjoy”), dated March 1, 2012, as amended as of March 1, 2013 (the “Agreement”), both parties agree to the following terms:

For [*] from the date of this letter [*], Publisher agrees that it [*]. For purposes of clarification [*]. Publisher may [*], at its discretion, via email notice to legal@tapjoy.com, after which [*].

Publisher shall be entitled to [*]% in Transfer Bonus Credits during the Term of the Agreement.

Publisher shall be entitled to a [*] discount of [*]% on advertising placements made by Publisher during the Term of the Agreement.

*	Confidential treatment has been requested with respect to the information statement contained within the “[*]” marking. The marked portions have been omitted from this filing and filed separately with the Securities and Exchange Commission.

*Confidential Treatment has been requested for

the marked portions of this exhibit pursuant

to Rule 24b-2 of the Securities Act of 1934, as amended

Capitalized terms not defined in this Amendment shall have the same meanings as set forth in the Agreement. Except as set forth herein, the Agreement shall remain unchanged and in full force and effect. Please sign on the line below to agree to these terms and return the signed copy to my attention by way of email to legal@tapjoy.com no later than seven (7) days from the date hereof.

Yours truly,

TAPJOY, INC.

/s/ Alexis Klemish

Alexis Klemish

General Counsel

Acknowledged and Agreed To:

Glu Games Inc.

By:

/s/ Scott J. Leichtner

Print Name: Scott J. Leichtner

Title: VP & General Counsel

Date: May 13, 2013

*	Confidential treatment has been requested with respect to the information statement contained within the “[*]” marking. The marked portions have been omitted from this filing and filed separately with the Securities and Exchange Commission.

EXHIBIT 10.07

LEASE AGREEMENT

BETWEEN

TALON PORTFOLIO SERVICES, LLC,

A WASHINGTON LIMITED LIABILITY COMPANY,

AS GENERAL RECEIVER FOR

W2007 SEATTLE OFFICE BELLEFIELD OFFICE PARK REALTY, LLC,

A DELAWARE LIMITED LIABILITY COMPANY,

KING COUNTY CASE NO. 12-2-21253-8-SEA

AS LANDLORD,

AND

GRIPTONITE, INC.,

A WASHINGTON CORPORATION,

AS TENANT,

DATED June 6, 2013

The submission of this Lease by Landlord, its broker, agent or representative, for examination or execution by Tenant, does not constitute an option or offer to lease the Premises upon the terms and conditions contained herein or a reservation of the Premises in favor of Tenant; it being intended hereby that notwithstanding the preparation of space plans and/or tenant improvements plans, etc., and/or the expenditure by Tenant of time and/or money while engaged in negotiations in anticipation of it becoming the Tenant under this Lease, or Tenant’s forbearing pursuit of other leasing opportunities, or even Tenant’s execution of this Lease and submission of same to Landlord, that this Lease shall become effective and binding upon Landlord only upon the execution hereof by Landlord and its delivery of a fully executed counterpart hereof to Tenant. No exception to the foregoing disclaimer is intended, nor shall any be implied, from expressions of Landlord’s willingness to negotiate in good faith with respect to any of the terms and conditions contained herein.

BASIC LEASE INFORMATION


Lease Date:	June 6, 2013

Landlord:	TALON PORTFOLIO SERVICES, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA. Landlord was appointed as the general receiver for Project (as defined below) pursuant to that certain Order Appointing General Receiver issued by the Superior Court of Washington for King County on July 2, 2012 in connection with Case No. 12-2-21253-8-SEA in accordance with the provisions of Chapter 7.60 of the Revised Code of Washington.

Tenant:	GRIPTONITE, INC., a Washington corporation.

Premises:	Suite No. 100, containing approximately 17,636 rentable square feet, in the office building commonly known as the Cypress Building (the “ Building ”), and whose street address is 1500 114 ^th Avenue SE, Bellevue, Washington, subject to expansion as set forth in, and in accordance with, Exhibit K attached hereto. The Premises are outlined on the floor plan(s) attached to the Lease as Exhibit A .

Land/Project:	The land on which the Building is located (the “ Land ”) is described on Exhibit B attached hereto. The term “ Project ” shall collectively refer to the Building, the Land and the driveways, the Garage (as defined in Exhibit G attached hereto), and similar improvements and easements associated with the foregoing or the operation thereof.

Term:	Eighty-four (84) full calendar months, plus, if the Commencement Date (as defined below) occurs on other than the first day of a month, any partial month from the Commencement Date to the end of the month in which the Commencement Date falls, starting on the Commencement Date and ending at 5:00 p.m. local time on the last day of the eighty-fourth (84 ^th ) full calendar month following the Commencement Date (the “ Expiration Date ”), subject to adjustment and earlier termination as provided in the Lease, and extension of the Term as set forth in, and in accordance with, Exhibit J attached hereto.

Commencement Date:	The earliest of (i) the date on which Tenant occupies any portion of the Premises and begins conducting business therein, (ii) the date on which the Tenant Improvements (as defined in Exhibit D attached hereto) in the Premises are Substantially Completed (as defined in Exhibit D ), or (iii) the date on which the Tenant Improvements in the Premises would have been Substantially Completed but for the occurrence of any Tenant Delay (as defined in Exhibit D ).

Basic Rent:	Basic Rent shall be the following amounts for the following periods of time:

	Period During the Term	Annual Basic Rent	Monthly Installment of Basic Rent
	Commencement Date – 12 ^th full calendar month of the Term	$462,945.00	$38,578.75*

	13 ^th through the 24 ^th full calendar months of the Term	$480,581.00	$40,048.42

[Cypress Building]

[Griptonite, Inc.]


	Period During the Term	Annual Basic Rent	Monthly Installment of Basic Rent
	25 ^th through the 36 ^th full calendar months of the Term	$498,217.00	$41,518.08

	37th through the 48th full calendar months of the Term	$515,853.00	$42,987.75

	49th through the 60th full calendar months of the Term	$533,489.00	$44,457.42*

	61st through the 72nd full calendar months of the Term	$551,125.00	$45,927.08

	73rd full calendar month of the Term to the Expiration Date	$568,761.00	$47,396.75

	*Subject to abatement for the first four (4) full calendar months of the Term, and the forty-ninth (49 ^th ) through fifty-first (51 ^st ) full calendar months of the Term, on the terms, and subject to the conditions set forth in Exhibit H attached hereto.

Security Deposit:	None

Rent:	Basic Rent, Additional Rent (as defined below), and all other sums that Tenant may owe to Landlord or otherwise be required to pay under the Lease.

Permitted Use:	General office use only.

Tenant’s Proportionate Share:	3.4743%, which is the percentage obtained by dividing (a) the number of rentable square feet in the Premises as stated above by (b) 507,607, the number of rentable square feet in the Project. Landlord and Tenant stipulate that the number of rentable square feet in the Premises and in the Project set forth above is conclusive and shall be binding upon them.

Base Year:	The calendar year 2014.

[Cypress Building]

[Griptonite, Inc.]



Initial Liability Insurance Amount:		Three Million Dollars ($3,000,000.00)

Tenant’s Address:		Prior to the Commencement Date: Griptonite, Inc. c/o Glu Mobile Inc. 45 Fremont Street, Suite 2800 San Francisco, CA 94105 Attention: General Counsel

		Following the Commencement Date: Griptonite, Inc. 1500 11 ^th Avenue SE, Suite 100 Bellevue, Washington 98004 Attention: General Manager With a copy to: Glu Mobile Inc. 45 Fremont Street, Suite 2800 San Francisco, CA 94105 Attention: General Counsel With a courtesy copy (as set forth in Section 24(f)) to: legal@glu.com .

Landlord’s Address:		For all Notices: Talon Portfolio Services, LLC 1800 Ninth Avenue, Suite 1600 Seattle, Washington 98101 Attention: Lease Administration

		With a copy to: Pircher, Nichols & Meeks 1925 Century Park East, Suite 1700 Los Angeles, California 90067-2512 Attention: Real Estate Notices (SCS/KMH)

Landlord’s Address:		For Payment of Rent: Talon Portfolio Services, LLC P.O. Box 730732 Dallas, Texas 75373-0732

Guarantor:		Glu Mobile Inc., a Delaware corporation

iii

[Cypress Building]

[Griptonite, Inc.]

TABLE OF CONTENTS


	Page

1. Definitions and Basic Provisions		1

2. Lease Grant		1

3. Tender of Possession		1

(a) General		1
(b) Delay in Substantial Completion		2

4. Rent		3

(a) Payment		3
(b) Operating Costs; Taxes		3

5. Delinquent Payment; Handling Charges		7

6. Letter of Credit		8

(a) In General		8
(b) Reduction of L-C Amount		8

7. Landlord’s Obligations		9

(a) Services		9
(b) Excess Utility Use		9
(c) Landlord’s Repairs		10
(d) Restoration of Services; Abatement		10

8. Improvements; Alterations; Repairs; Maintenance		10

(a) Improvements; Alterations		12
(b) Repairs; Maintenance		12
(c) Performance of Work		13
(d) Mechanic’s Liens		13

9. Use		13

10. Assignment and Subletting		14

(a) Transfers		15
(b) Consent Standards		15
(c) Request for Consent		15
(d) Conditions to Consent		15
(e) Attornment by Subtenants		15
(f) Cancellation		16
(g) Additional Compensation		16
(h) Permitted Transfers		16

11. Insurance; Waivers; Subrogation; Indemnity		17

(a) Tenant’s Insurance		17
(b) Landlord’s Insurance		17
(c) No Subrogation; Waiver of Property Claims		18
(d) Waiver		19
(e) Indemnities		19

12. Subordination; Attornment; Notice to Landlord’s Mortgagee		19

(a) Subordination		20
(b) Attornment		20
(c) Notice to Landlord’s Mortgagee		20
(d) Landlord’s Mortgagee’s Protection Provisions		20
(e) Existing Lender		21

13. Rules and Regulations		21

(i)

[Cypress Building]

[Griptonite, Inc.]



14. Condemnation			21

(a) Total Taking			21
(b) Partial Taking – Tenant’s Rights			21
(c) Partial Taking – Landlord’s Rights			22
(d) Temporary Taking			22
(e) Award			22

15. Fire or Other Casualty			22

(a) Repair Estimate			22
(b) Tenant’s Rights			22
(c) Landlord’s Rights			22
(d) Repair Obligation			22
(e) Abatement of Rent			23

16. Personal Property Taxes			23

17. Events of Default			23

(a) Payment Default			23
(b) Abandonment			23
(c) Subordination			23
(d) Estoppel			23
(e) Insurance			23
(f) Mechanic’s Liens			23
(g) Misrepresentation			23
(h) OFAC/FCPA Representation			24
(i) Other Defaults			24
(j) Insolvency			24

18. Remedies			24

(a) Termination of Lease			24
(b) Termination of Possession			25
(c) Perform Acts on Behalf of Tenant			25

19. Payment by Tenant; Non-Waiver; Cumulative Remedies			25

(a) Payment by Tenant			25
(b) No Waiver			25
(c) Cumulative Remedies			25

20. Surrender of Premises			25

21. Holding Over			26

22. Certain Rights Reserved by Landlord			26

(a) Building Operations			26
(b) Security			27
(c) Current and Prospective Insurers, Purchasers, Investors and Mortgagees			27
(d) Prospective Tenants			27

23. Substitution Space			27

24. Miscellaneous			28

(a) Landlord Transfer			28
(b) Landlord’s Liability			28
(c) Force Majeure			29
(d) Brokerage			29
(e) Estoppel Certificates			29
(f) Notices			29
(g) Separability			29
(h) Amendments; Binding Effect; No Electronic Records			30
(i) Quiet Enjoyment			30
(j) No Merger			30

(ii)

[Cypress Building]

[Griptonite, Inc.]


(k) Entire Agreement			30
(l) Waiver of Jury Trial			30
(m) Governing Law			30
(n) Recording			30
(o) Water or Mold Notification			30
(p) Joint and Several Liability			30
(q) Financial Reports			31
(r) Landlord’s Fees			31
(s) Confidentiality			31
(t) Authority			31
(u) Hazardous Materials			31
(v) List of Exhibits			32
(w) OFAC/FCPA Representation			32
(x) Survival of Obligations			32
(y) Reasonable Efforts			33
(z) Landlord Default			33
(aa) Business Days			33
(bb) Terms; Captions			33

25. Signage			33

(a) Interior Signage			33
(b) Monument Sign			34
(c) Building Exterior Signage			34

26. Telecommunications and Communications			35

(a) Tenant’s Telecommunications Providers			35
(b) Cable Work			35
(c) Landlord’s Reserved Rights			35
(d) Removal Obligations			335

27. Building Upgrades			36

(iii)

[Cypress Building]

[Griptonite, Inc.]

INDEX


	Page(s)

Abated Rent		Exhibit H
Abatement Period		Exhibit H
Additional Rent		3
Affiliate		1
Alterations		10
Anticipated Delivery Date		Exhibit K
Approved Working Drawings		Exhibit D
Basic Lease Information		1
blocked person		30
Building		i
Building’s Structure		1
Building’s Systems		1
Cable Problems		34
Cable Work		33
Cable(s)		33
Casualty		20
Claims		18
Common Areas		1
Comparison Buildings		Exhibit J
Comparison Leases		Exhibit J
Construction Drawings		Exhibit D
Contractor		Exhibit D
Damage Notice		20
Default Rate		7
Disabilities Acts		13
Economic Terms		Exhibit K
Election Date		Exhibit K
Eligible Institution		8
Estimated Delivery Date		1
Event of Default		22
Evergreen Clause		7
Exercise Notice		Exhibit J
Expiration Date		i
Extension Option		Exhibit J
Final Space Plan		Exhibit D
First Offer Notice		Exhibit K
First Opportunity Period		Exhibit K
First Opportunity Space		Exhibit J
GAAP		16
Garage		Exhibit G
Guarantor		Exhibit I
Hazardous Materials		30
HVAC		9
include		1
includes		1
including		1
Land		i
Landlord		1, Exhibit I
Landlord Party		1
Landlord’s Mortgagee		18
Law		1
Laws		1
Lease		1, Exhibit I
Letter of Credit		7
LOC Amount		7
Money Rates		23
Mortgage		18
Moving Allowance		Exhibit D

(iv)

[Cypress Building]

[Griptonite, Inc.]


	Page(s)

Objection Notice		6
Objection Period		6
Objectionable Name		32
Operating Costs		3
Operating Costs and Tax Statement		5
Operating Costs Excess		3
Option Term		Exhibit J
Original Tenant		32
Permitted Transfer		15
Permitted Transferee		15
Primary Lease		18
Prime Rate		23
Prohibited Person		31
Project		i
Property Management Office		Exhibit C
Punch List Items		Exhibit D
Punch-list Items		Exhibit E
Qualified Appraiser		Exhibit J
Repair Period		21
Required Improvements		11
Review		6
Review Notice		6
Right of First Opportunity		Exhibit K
SDNs		30
Signage Monument		32
Specificatinos		Exhibit D
Substantial Completion		Exhibit D
Superior Rights		Exhibit K
Taking		20
Tangible Net Worth		16
Tax Excess		4
Taxes		4
Telecommunications Services		33
Temporary Space		2
Temporary Space Commencement Date		2
Temporary Space Expiration Date		2
Temporary Space Term		2
Tenant		1, 22, Exhibit I
Tenant Delay		Exhibit D
Tenant Delays		Exhibit D
Tenant Improvements		Exhibit D
Tenant Parties		1
Tenant Party		1
Tenant’s Parking Spaces		Exhibit G
Tenant’s Accountant		6
Tenant’s Election Notice		Exhibit K
Tenant’s Off-Premises Equipment		1
Termination Date		1
Termination Notice		1
Termination Option		1
The Law of Real Estate Agency		27
Transfer		13
Underlying Documents		3
Working Drawings		Exhibit D

(v)

[Cypress Building]

[Griptonite, Inc.]

LEASE

This Lease Agreement (this “ Lease ”) is entered into as of June 6, 2013, between TALON PORTFOLIO SERVICES, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA (“ Landlord ”), and GRIPTONITE, INC., a Washington corporation (“ Tenant ”).

1. Definitions and Basic Provisions. The definitions and basic provisions set forth in the Basic Lease Information (the “ Basic Lease Information ”) are incorporated herein by reference for all purposes. Additionally, the following terms shall have the following meanings when used in this Lease: “ Affiliate ” means any person or entity which, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the party in question; “ Building’s Structure ” means the Building’s exterior walls, roof, elevator shafts, footings, foundations, structural portions of load-bearing walls, structural floors and subfloors, and structural columns and beams; “ Building’s Systems ” means the Building’s HVAC (as defined below), security, life-safety, plumbing, electrical, and mechanical systems; without limitation, “ include ”, “ includes ” or “ including ” shall be deemed, as the context indicates, to be followed by the words “but (is/are) not limited to” or “without limitation”; “ Laws ” means all federal, state, and local laws, codes, ordinances, rules, requirements and regulations, all court orders, governmental directives, and governmental orders and all interpretations of the foregoing, and all restrictive covenants and conditions affecting the Project, and “ Law ” means any of the foregoing; “ Tenant’s Off-Premises Equipment ” means any of Tenant’s equipment or other property that may be located on the grounds of the Project (other than inside the Premises); and “ Tenant Parties ” means all of the following persons: Tenant; any assignees claiming by, through, or under Tenant; any subtenants claiming by, through, or under Tenant; and any of their respective agents, contractors, employees, licensees, guests and invitees, and “ Tenant Party ” means any of the foregoing. “ Landlord Parties ” means all of the following persons: Landlord, Landlord’s Mortgagees (as defined below), and any of their respective partners, members, directors, officers, trustees, shareholders, successors and assigns, agents, employees, independent contractors, licensees, guests and invitees, and “ Landlord Party ” means any of the foregoing.

2. Lease Grant . Subject to the terms of this Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the Premises. Tenant shall also have the non-exclusive right to use in common with Landlord and the other tenants of the Project those portions of the Project that are provided by Landlord for use in common with Landlord and the other tenants of the Project, such as entrances, lobbies, restrooms, ground floor corridors, elevators and elevator foyers, loading and unloading areas, plazas, ramps, drives, stairs, and access ways and service ways (collectively, the “ Common Areas ”).

3. Tender of Possession .

(a) General . Landlord and Tenant presently anticipate that possession of the Premises will be tendered to Tenant in the condition required by this Lease on or about September 30, 2013 (the “Estimated Delivery Date”). If Landlord is unable to tender possession of the Premises in such condition to Tenant by the Estimated Delivery Date, then (a) the validity of this Lease shall not be affected or impaired thereby, (b) Landlord shall not be in default hereunder or be liable for damages therefor, and (c) Tenant shall accept possession of the Premises when Landlord tenders possession thereof to Tenant. By occupying the Premises, Tenant shall be deemed to have accepted the Premises in their condition as of the date of such occupancy, subject to the performance of punch-list items that remain to be performed by Landlord, if any. Prior to occupying the Premises, Tenant shall execute and deliver to Landlord a letter substantially in the form of Exhibit E attached hereto confirming (1) the Commencement Date and the Expiration Date of the initial Term, (2) that Tenant has accepted the Premises, and (3) that Landlord has performed all of its obligations with respect to the Premises (except for punch-list items specified in such letter); however, the failure of the parties to execute such letter shall not defer the Commencement Date or otherwise invalidate this Lease. Occupancy of the Premises by Tenant prior to the Commencement Date shall be subject to all of the provisions of this Lease including those requiring the payment of Basic Rent and Additional Rent (each as defined below).

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(b) Delay in Substantial Completion . In the event that the Tenant Improvements in the Premises are not Substantially Completed by September 30, 2013, then Landlord shall, subject to the terms and conditions set forth in this Section 3(b), temporarily provide to Tenant approximately 13,600 rentable square feet of space in the building commonly known as the Lozier Building in the Project (the “ Temporary Space ”) (a diagram of which is attached hereto as Exhibit A-1 ), for the conduct of general office use in accordance with the terms of the Lease only.

(1) In the event that Landlord’s failure to cause the Tenant Improvements in the Premises to be Substantially Completed by September 30, 2013, was not due in any part to Tenant Delay (as that term is defined in the Tenant Work Letter), then the term of Tenant’s lease of the Temporary Space (the “ Temporary Space Term ”) shall commence upon October 1, 2013 (the “ Temporary Space Commencement Date ”), and shall expire on the date (the “ Temporary Space Expiration Date ”) that is the earlier to occur of (i) the date which is two (2) weeks following the occurrence of the Commencement Date with respect to the Premises under this Lease, and (ii) September 30, 2014. During the Temporary Space Term Tenant shall have no obligation to pay Basic Rent with respect to the Temporary Space, and Tenant shall have no obligation to pay Tenant’s Proportionate Share of increases in Operating Costs and Taxes with respect to the Temporary Space (and in addition, Tenant shall be entitled to the Additional Moving Allowance on the terms and conditions set forth in Section 2 of the Tenant Work Letter).

(2) If, on the other hand, Landlord’s failure to cause the Tenant Improvements in the Premises to be Substantially Completed by September 30, 2013, was due, in whole or in part, to Tenant Delay, then the Commencement Date of this Lease shall be deemed to occur on October 1, 2013. In addition, the term of Tenant’s lease of the Temporary Space (the “ Temporary Space Term ”) shall also commence upon October 1, 2013 (the “ Temporary Space Commencement Date ”), and shall expire on the date (the “ Temporary Space Expiration Date ”) that is the earlier to occur of (i) the date which is two (2) weeks following the date of the Substantial Completion of the Tenant Improvements in the Premises, and (ii) September 30, 2014. During the Temporary Space Term Tenant shall pay monthly Basic Rent in an amount equal to $1,285.96 per day (i.e., $38,578.75 divided by 30), which payment obligation shall subject to the abatement of Basic Rent during the first four (4) full calendar months of the Term as set forth in Exhibit H attached hereto, and Tenant shall be obligated to pay Tenant’s Proportionate Share (based on the number of rentable square feet in the Temporary Space) of increases in Operating Costs and Tax Excess (if any) with respect to the Temporary Space.

(3) In connection with Tenant’s occupancy of the Temporary Premises under terms of Section 3(b)(2), above, in the event that Landlord reasonably determines that Landlord’s failure to cause the Tenant Improvements in the Premises to be Substantially Completed by September 30, 2013, was not due solely to Tenant Delays, but was also due in part to delays other than Tenant Delays (for purposes of this Section 3(b)(3), “ Landlord Delays ”), then the parties shall reasonably and mutually determine the number of days of such delay that were due to Landlord Delays, and Tenant shall receive an abatement of Basic Rent (which shall be in addition to the abatement of Basic Rent provided in Exhibit H of this Lease) on a day-for-day basis for each day of such Landlord Delay in an amount equal to $1,285.96 per day (i.e., $38,578.75 divided by 30).

Tenant’s possession of the Temporary Space shall be subject to the terms and conditions of the Lease as though such Temporary Space were the Premises, provided that (A) Tenant shall have no right to assign, sublease or otherwise transfer its interest with respect to the Temporary Space, (B) the Temporary Space shall be delivered to Tenant is “broom clean” condition, and otherwise Tenant shall accept the Temporary Space in its existing “as is” condition, (C) Tenant shall not make any alterations or improvements to the Temporary Space or any portion thereof, without Landlord’s prior written approval, which approval may be withheld in Landlord’s sole discretion, (D) the terms of the Tenant Work Letter shall be inapplicable to the Temporary Space, and (E) Landlord shall have no obligation to provide or pay for improvements of any kind with respect to the Temporary Space. If Tenant fails to vacate and surrender the Temporary Space to Landlord, in accordance with the terms and conditions of this Lease on or before the Temporary Space Expiration Date, Tenant shall be deemed to be holding over in such Temporary Space pursuant to the terms of Article 21 of this Lease except that Basic Rent, on a per square foot basis of the Temporary Space, payable with respect to the Temporary Space shall be equal to twice the then-

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applicable Basic Rent, on a per square foot basis, applicable to the Premises under this Lease (without regard to any abatement of Basic Rent); provided, however, nothing contained herein shall be construed as consent by Landlord to any holding over by Tenant in the Temporary Space, and Landlord expressly reserves the right to require Tenant to surrender possession of the Temporary Space to Landlord upon the terms and conditions set forth in this Lease. In the event that in the event that Landlord reasonably anticipates that the Tenant Improvements in the Premises will not be Substantially Completed by September 30, 2013, Landlord shall provide Tenant with written notice of the same on or before September 1, 2013.

4. Rent .

(a) Payment . Tenant shall timely pay Rent to Landlord, without notice, demand, deduction or setoff (except as otherwise expressly provided herein), by good and sufficient check drawn on a national banking association delivered to Landlord’s address provided for in the Basic Lease Information, by wire transfer as provided for in the Basic Lease Information, or to such other address or by wiring instructions provided in a notice delivered by Landlord to Tenant, accompanied by all applicable state and local sales or use taxes. The obligations of Tenant to pay Rent and other sums to Landlord and the obligations of Landlord under this Lease are independent obligations. Subject to the provisions of Exhibit H attached hereto, Basic Rent, adjusted as herein provided, shall be payable monthly in advance. The monthly installment of Basic Rent for the first calendar month of the Term for which Basic Rent is due to Landlord hereunder shall be payable contemporaneously with the execution of this Lease; thereafter, Basic Rent shall be payable on the first day of each month beginning on the first day of the second full calendar month of the Term for which Basic Rent is due to Landlord. The monthly Basic Rent for any partial month at the beginning of the Term shall equal the product of 1/365 of the annual Basic Rent in effect during the partial month and the number of days in the partial month and shall be due on the Commencement Date. Payments of Basic Rent for any fractional calendar month at the end of the Term shall be similarly prorated. Tenant shall pay Additional Rent at the same time and in the same manner as Basic Rent.

(b) Operating Costs; Taxes.

(1) Tenant shall pay to Landlord Tenant’s Proportionate Share of any increase in Operating Costs (as defined below) for each calendar year and partial calendar year falling within the Term over the Operating Costs for the Base Year (the “ Operating Costs Excess ”). Landlord may make a good faith estimate of Tenant’s Proportionate Share of the Operating Costs Excess to be due by Tenant for any calendar year or part thereof during the Term. During each calendar year or partial calendar year of the Term (after the Base Year), Tenant shall pay to Landlord, in advance concurrently with each monthly installment of Basic Rent, an amount equal to the estimated Tenant’s Proportionate Share of the Operating Costs Excess for such calendar year or part thereof divided by the number of months therein. From time to time (but no more frequently than once during any period of twelve (12) consecutive months), Landlord may estimate and re-estimate Tenant’s Proportionate Share of the Operating Costs Excess to be due by Tenant and deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the monthly installments of Tenant’s Proportionate Share of the Operating Costs Excess payable by Tenant shall be appropriately adjusted in accordance with such estimations. Any amounts paid based on such an estimate shall be subject to adjustment as herein provided when actual Operating Costs are available for each calendar year. “ Additional Rent ,” as used herein, shall mean, collectively, Tenant’s Proportionate Share of the Operating Costs Excess plus Tenant’s Proportionate Share of the Tax Excess (as defined below).

(2) The term “ Operating Costs ” means all expenses and disbursements (subject to the limitations set forth below) that Landlord incurs in connection with the ownership, operation, maintenance, repair and replacement of the Project, determined in accordance with sound accounting principles consistently applied, including the following costs: (A) wages and salaries of all on-site employees at or below the grade of general manager engaged in the operation, maintenance or security of the Project (together with Landlord’s reasonable allocation of expenses of off-site employees at or below the grade of senior building manager who perform a portion of their services in connection with the operation, maintenance or security of the Project), including taxes, insurance and benefits relating thereto; (B) all supplies and materials used in the operation, maintenance, repair, replacement and security of the Project; (C) costs for improvements made to the Project that, although capital in nature, are expected to reduce the normal operating costs (including all utility costs) of the Project or to

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enhance safety or security of the Property or its occupants, as amortized using a commercially reasonable interest rate over the time period reasonably estimated by Landlord to recover the costs thereof taking into consideration the anticipated cost savings, as determined by Landlord using its good faith, commercially reasonable judgment, as well as capital improvements made in order to comply with any Law hereafter promulgated by any governmental authority or any interpretation hereafter rendered with respect to any existing Law, to promote safety or to maintain the quality of the Project, as amortized using a commercially reasonable interest rate over the useful economic life of such improvements as determined by Landlord in its reasonable discretion; (D) cost of all utilities, except the cost of utilities reimbursable to Landlord by the Project’s tenants other than pursuant to a provision similar to this Section 4(b); (E) insurance expenses; (F) repairs, replacements, and general maintenance of the Project; (G) fair market rental and other costs with respect to the management office for the Building; (H) service, maintenance and management contracts with independent contractors for the operation, maintenance, management, repair, replacement, or security of the Project (including alarm service, window cleaning, and elevator maintenance); (I) Garage operation, repair, restoration and maintenance; and (J) payments made or charges incurred under any reciprocal easement agreement, transportation management agreement, cost-sharing agreement or other covenant, condition, restriction or similar document affecting or benefiting the Property whether now or hereafter in effect (collectively, the “ Underlying Documents ”).

Operating Costs shall not include costs for (i) capital improvements made to the Building, other than capital improvements described in Section 4(b)(2)(C) above and except for items that are generally considered maintenance and repair items, such as painting of common areas, replacement of carpet in elevator lobbies, and the like; (ii) repair, replacements and general maintenance paid by proceeds of insurance or by Tenant or other third parties; (iii) interest, amortization or other payments on loans to Landlord, except loans made to Landlord for capital improvements described in Section 4(b)(2)(C) above; (iv) depreciation; (v) leasing commissions; (vi) legal expenses for services, other than those that benefit the Project tenants generally (e.g., tax disputes); (vii) renovating or otherwise improving space for occupants of the Project or vacant space in the Project; (viii) Taxes; and (ix) federal income taxes imposed on or measured by the income of Landlord from the operation of the Project; (x) depreciation or amortization on the Building or the Project or components, systems or equipment therein; (xi) reserves; (xii) overhead and profit increment paid to Landlord or to subsidiaries or Affiliates of Landlord for goods and/or services in or to the Building and/or the Project to the extent the same exceeds the overhead and profit increment applied with respect to similar goods and/or services rendered by unaffiliated third parties on a competitive basis at Comparison Buildings; (xiii) services furnished to other tenants in the Building, but not to Tenant; (xiv) costs associated with maintaining Landlord as a corporation, partnership or other entity; (xv) fines or penalties arising out of any late payments by Landlord, Landlord’s violation of applicable Laws or its lease obligations or otherwise arising out of the negligence or willful misconduct of other tenants or of Landlord or Landlord’s employees, agents, contractors vendors; (xvi) charitable and political contributions; (xvii) costs to remedy any noncompliance of the Building with applicable Laws to the extent the same are effective and interpreted by applicable governmental entities to apply thereto as of the Reference Date; (xviii) management and administrative fees [which shall not be deemed to include the costs described in clauses (A) or (G) above of this Section 4(b)(2)], whether based on gross rentals or other method, exceeding three percent (3%) of annual gross rentals from the Project; (xix) insurance deductibles and/or SIR amounts exceeding Ten Thousand and No/100 Dollars ($10,000.00) per claim; (xx) any expenses incurred by Landlord for use of any portions of the Building to accommodate events including, but not limited to shows, promotions, kiosks, displays, filming, photography, private events or parties, ceremonies, and advertising beyond the normal expenses otherwise attributable to providing Building services, such as lighting and HVAC to public portions of the Building as part of normal Building operations during normal business hours; (xxi) costs arising from the gross negligence or willful misconduct of Landlord or its agents, employees, vendors, contractors, or providers of materials or services; and (xxii) costs incurred to comply with laws relating to the removal of hazardous material (as defined under applicable law) which was in existence in the Building or on the Project prior to the Lease Commencement Date, and was of such a nature that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions that it then existed in the Building or on the Project, would have then required the removal of such hazardous material or other remedial or containment action with respect thereto; and costs incurred to remove, remedy, contain, or treat hazardous material, which hazardous material is brought into the Building or onto the

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Project after the date hereof by Landlord or any other tenant of the Project and is of such a nature, at that time, that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions, that it then exists in the Building or on the Project, would have then required the removal of such hazardous material or other remedial or containment action with respect thereto. Operating Costs for the Base Year only shall not include market-wide labor-rate increases due to extraordinary circumstances, including boycotts and strikes; utility rate increases due to extraordinary circumstances, including conservation surcharges, boycotts, embargoes or other shortages; or amortized costs relating to capital improvements to the extent such costs would occur only in such Base Year (and prior years) and not in subsequent years.

(3) Tenant shall also pay Tenant’s Proportionate Share of any increase in Taxes for each calendar year and partial calendar year falling within the Term over the Taxes for the Base Year (the “Tax Excess”). Tenant shall pay Tenant’s Proportionate Share of the Tax Excess in the same manner as provided above for Tenant’s Proportionate Share of the Operating Costs Excess (both on an estimated and actual basis as provided therein). “Taxes” means taxes, assessments, and governmental charges or fees whether federal, state, county or municipal, and whether they be by taxing districts or authorities presently taxing or by others, subsequently created or otherwise, and any other taxes and assessments (including nongovernmental assessments for common charges under a restrictive covenant or other private agreement that are not treated as part of Operating Costs) now or hereafter attributable to the Project (or its operation), excluding, however, penalties and interest thereon. Notwithstanding anything to the contrary contained in this Lease, there shall be excluded from Taxes any excess profits taxes, franchise taxes, gift taxes, inheritance and succession taxes, estate taxes, documentary transfer taxes, federal or state income, corporate, capital stock, or capital gains taxes, penalties incurred as a result of Landlord’s failure to pay taxes or to file any tax or informational returns and other taxes to the extent applicable to Landlord’s general or net income (as opposed to rents, receipts, or income attributable to operations at the Project); provided, that if the present method of taxation changes so that in lieu of or in addition to the whole or any part of any Taxes, there is levied on Landlord a capital tax directly on the rents received therefrom or a franchise tax, assessment, or charge based, in whole or in part, upon such rents for the Project, then all such taxes, assessments, or charges, or the part thereof so based, shall be deemed to be included within the term “Taxes” for purposes hereof. If an assessment is payable in installments, Taxes for the year shall include the amount of the installment and any interest due and payable during that year. For purposes of computing Taxes, any special assessment shall be deemed to have been paid in the maximum number of installments permitted by Law, and Taxes shall be deemed to include all interest that would have been payable in connection therewith as a result of paying such special assessment in the maximum number of installments permitted by Law. For all other Taxes, the Taxes for that year shall, at Landlord’s election, include either the amount accrued, assessed or otherwise imposed for the year or the amount due and payable for that year, provided that Landlord’s election shall be applied consistently throughout the Term. If there is a change in Taxes for any year of the Term, then Taxes for that year will be retroactively adjusted and Landlord shall provide Tenant, as applicable, with a credit or a statement of any deficiency based on the adjustment. Tenant shall pay any such deficiency within thirty (30) days after receipt of the statement from Landlord. Taxes shall include the costs of consultants retained in an effort to lower taxes and all costs incurred in disputing any taxes or in seeking to lower the tax valuation of the Project. For property tax purposes, Tenant waives all rights to protest or appeal the appraised value of the Premises, as well as the Project, and all rights to receive notices of re-appraisement.

(4) By April 1 of each calendar year, or as soon thereafter as practicable, Landlord shall furnish to Tenant a statement of Operating Costs for the previous year, in each case adjusted as provided in Section 4(b)(5) below, and of the Taxes for the previous year (the “ Operating Costs and Tax Statement ”). If Tenant’s estimated payments of Tenant’s Share of the Operating Costs Excess and/or Tax Excess, as the case may be, under this Section 4(b) for the year covered by the Operating Costs and Tax Statement exceed Tenant’s Proportionate Share of the Operating Costs Excess and/or Tax Excess, as the case may be, as indicated in the Operating Costs and Tax Statement, then Landlord shall promptly credit or reimburse Tenant for such applicable excess; likewise, if Tenant’s estimated payments of Tenant’s Proportionate Share of the Operating Costs Excess or Tax Excess, as the case may be, under this Section 4(b) for such year are less than Tenant’s Proportionate Share of the Operating Costs Excess and/or Tax Excess, as the case may be, as indicated in the Operating Costs and Tax

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Statement, then Tenant shall pay Landlord such deficiency within thirty (30) days after receipt of the Operating Costs and Tax Statement. No delay in providing any Operating Costs and Tax Statement shall be deemed a default by Landlord or a waiver of Landlord’s right to require payment of Tenant’s Obligations for actual or estimated Operating Costs Excess or Tax Excess. Notwithstanding the immediately preceding sentence, Tenant shall not be responsible for Tenant’s Proportionate Share of increases in Operating Costs and Taxes attributable to any calendar year which are first billed to Tenant more than two (2) calendar years after the calendar year in which such Operating Costs and/or Taxes were incurred, provided that in any event Tenant shall be responsible for Tenant’s Proportionate Share of increases in Operating Costs and Taxes levied by any governmental authority or by any public utility companies at any time and which are attributable to any calendar year occurring during the Term.

(5) With respect to any calendar year or partial calendar year in which the Building is not occupied to the extent of ninety-five percent (95%) of the rentable area thereof, or Landlord is not supplying services to ninety-five percent (95%) of the rentable area thereof, the Operating Costs for such period that vary with the occupancy of the Building shall, for the purposes hereof, be increased to the amount that would have been incurred had the Building been occupied to the extent of ninety-five percent (95%) of the rentable area thereof and Landlord had been supplying services to ninety-five percent (95%) of the rentable area thereof. If a category of Operating Costs is first incurred in a calendar year after the Base Year, then for purposes of calculating the Operating Costs Excess for such calendar year (and the following calendar years) the Operating Costs for the Base Year shall be deemed to be increased to include the amount that Landlord reasonably estimates would have been incurred by Landlord for such category of Operating Costs in the Base Year if Landlord had incurred such category of Operating Costs in the Base Year. Conversely, if in a calendar year subsequent to the Base Year, Landlord no longer incurs a category of Operating Costs, then for purposes of calculating the Operating Costs Excess for such calendar year (and the following calendar year), Operating Costs for such Base Year shall be deemed to be decreased by the amount that Landlord actually incurred for such category of Operating Costs in the Base Year. The adjustments to the Operating Costs for the Base Year provided for in the preceding two sentences shall not be deemed to require a recalculation of the Operating Costs Excess for any calendar year prior to the calendar year in question.

(6) Tenant may once, within ninety (90) days after receiving the Operating Costs and Tax Statement, give Landlord notice (the “ Review Notice ”) that Tenant intends to have Landlord’s records of the Operating Costs and Taxes for the calendar year covered by the Operating Costs and Tax Statement reviewed (the “ Review ”) for the sole purpose of determining whether the Operating Costs and Tax Statement is accurate; provided that as a condition to Tenant’s exercise of its right of Review set forth in this Section 4(b)(6), Tenant shall not be permitted to withhold payment of, and Tenant shall timely pay to Landlord, the full amount as required by the provisions of this Section 4 in accordance with such Operating Costs and Tax Statement. However, such payment may be made under protest pending the outcome of the Review. If Tenant retains an agent to review Landlord’s records, the agent shall be with a CPA firm licensed to do business in the State of Washington (working on a non-contingency fee basis) and its fees shall not be contingent in whole or in part, upon the outcome of the review (“ Tenant’s Accountant ”). Within a reasonable time after receipt of the Review Notice, Landlord shall make available to Tenant’s Accountant during normal business hours all pertinent records with respect to the Operating Costs and Tax Statement for the calendar year that is the subject of the Review Notice and that are reasonably necessary for Tenant’s Accountant to conduct the Review. If any records are maintained at a location other than the office of the Building, Tenant’s Accountant may either inspect the records at such other location or Tenant may pay for the reasonable cost of copying and shipping the records. Except as otherwise expressly hereinafter provided, Tenant shall be solely responsible for all costs, expenses and fees incurred for the Review. Within sixty (60) days after the records are made available to Tenant’s Accountant (the “ Objection Period ”), Tenant shall have the right to give Landlord notice (an “ Objection Notice ”) stating in reasonable detail any objection to Landlord’s Operating Costs and Tax Statement for that year. If Tenant fails to provide Landlord with a Review Notice with respect to the Operating Costs and Tax Statement for any calendar year within the ninety (90) day period described above, or fails to give Landlord an Objection Notice within the sixty (60) day period described above, Tenant shall be deemed to have approved the Operating Costs and Tax Statement and shall be barred from raising any claims regarding the Operating Costs and Tax Statement for that year. If Landlord agrees (such agreement not to be unreasonably

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withheld, conditioned or delayed) with Tenant’s Objection Notice, then Landlord shall credit the amount of any overpayment by Tenant in respect of Operating Costs and Taxes against the Rent next payable under this Lease; provided, that if the Term shall have expired, then any overpayment for which Tenant may otherwise have received a credit shall be refunded to Tenant within thirty (30) days after receipt of said certification at Tenant’s last known address after deducting the amount of Rent and any other payments due. If Landlord disagrees with Tenant’s Objection Notice, then Landlord shall give to Tenant notice thereof within thirty (30) days after Landlord’s receipt of Tenant’s Objection Notice, which notice shall set forth in reasonable detail the reasons for such disagreement, and Landlord and Tenant shall attempt to resolve the disagreement. If Landlord and Tenant cannot mutually agree on the resolution of the disagreement within thirty (30) days after Tenant’s receipt of Landlord’s notice of disagreement, then Landlord and Tenant shall jointly choose an independent certified public accountant located in, or in the vicinity of, Seattle, Washington who has not represented either Landlord, Tenant, or their respective Affiliates, in the preceding five (5) years to resolve the disagreement, whose determination shall be binding on the parties hereto. If the parties are unable to agree upon such independent certified public accountant, then either Landlord or Tenant shall have the right to petition for the appointment of the independent accountant by the Presiding Judge of the Superior Court of King County, Washington and the decision of such Judge (and the determination of the accountant appointed by such Judge) shall be final and binding upon the parties, and not subject to appeal of any kind. If the final determination shall disclose that the Operating Costs and Tax Statement for the calendar year in question were overstated by more than five percent (5%), then Landlord shall reimburse Tenant, within thirty (30) days after Landlord receives notice of such final determination, for the reasonable costs of the independent certification or reimburse Tenant (as applicable) the cost of Tenant’s accountant’s review, up to a maximum of Two Thousand Five Hundred and 00/100 Dollars ($2,500.00) per review (but each party shall pay the cost of its respective attorneys’ fees); otherwise, the cost of the audit and arbitration shall be paid by Tenant. If Operating Costs and/or Taxes for the calendar year are less than reported, Landlord shall provide Tenant with a credit against the payment of Rent next due in the amount of the overpayment by Tenant; provided, however, if the Term shall have expired, then any overpayment for which Tenant may otherwise have received a credit shall be refunded to Tenant within thirty (30) days after receipt of said certification at Tenant’s last known address after deducting the amount of Rent and any other payments due. Likewise, if Landlord and Tenant determine that Operating Costs and/or Taxes for the calendar year are greater than reported, Tenant shall pay Landlord the amount of any underpayment in Tenant’s Proportionate Share thereof within thirty (30) days. Tenant acknowledges and agrees that any records reviewed under this provision constitute confidential information of Landlord that shall not be disclosed to anyone other than Tenant’s Accountant and the principals of Tenant who receive the results of such Review. Before making any records available for review, Landlord may require Tenant and Tenant’s Accountant to execute a reasonable confidentiality agreement, in which event Tenant shall cause the same to be executed and delivered to Landlord within ten (10) days after receiving it from Landlord, and if Tenant fails to do so, the Objection Period shall be reduced by one (1) day for each day by which such execution and delivery follows the expiration of such thirty (30)-day period.

5. Delinquent Payment; Handling Charges . All past due payments required of Tenant hereunder that are not received by Landlord on or before five (5) days after the date the payment is due (i) shall bear interest from the date due until paid at the lesser of eight percent (8%) per annum or the maximum lawful rate of interest (such lesser amount is referred to herein as the “ Default Rate ”); and (ii) Landlord, in addition to all other rights and remedies available to it, may charge Tenant a fee equal to five percent (5%)of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenant’s delinquency. In no event, however, shall the charges permitted under this Section 5 or elsewhere in this Lease, to the extent they are considered to be interest under applicable Law, exceed the maximum lawful rate of interest. Notwithstanding the foregoing, the late fee referenced above shall not be charged with respect to the first occurrence (but shall be charged with respect to any subsequent occurrence) during any twelve (12)-month period in which Tenant fails to make payment when due, until five (5) days after Landlord delivers written notice of such delinquency to Tenant.

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6. Letter of Credit .

(a) In General . Contemporaneously with the execution of this Lease, Tenant shall deposit with Landlord a letter of credit from an Eligible Institution (as defined below) substantially identical in form and substance to the form of Exhibit L attached hereto or as otherwise approved by Landlord, payable upon presentation of a sight draft without more (the “ Letter of Credit ”). The beneficiary under the Letter of Credit shall be shown as Talon Portfolio Services, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA, its successors and assigns” or otherwise as specified by Landlord. The initial amount of the Letter of Credit (the “ L-C Amount ”) shall be $500,000.00. Tenant shall renew the Letter of Credit from time to time, at least thirty (30) days prior to expiration thereof, and deliver to Landlord a new Letter of Credit or an amendment or endorsement to the Letter of Credit or any other evidence required by Landlord that the Letter of Credit has been renewed for at least an additional one (1) year period (with respect to each renewal). The Letter of Credit shall be held as security for the full, timely and faithful performance of Tenant’s covenants and obligations under this Lease, it being expressly understood and agreed that (a) the Letter of Credit does not constitute a measure of Landlord’s damages in the event of Tenant’s default, and (b) the Letter of Credit is not being provided as an equivalent or in lieu of any security deposit, but rather to assure Landlord of a means of third-party security apart from and completely independent of Tenant’s assets and creditworthiness. The Letter of Credit shall not be mortgaged, assigned or encumbered in any manner whatsoever by Tenant. Such Letter of Credit shall (1) be transferable and assignable by Landlord, more than once, at Landlord’s option and (2) include an automatic renewal clause (an “ Evergreen Clause ”) and require notice of non-renewal ninety (90) days in advance of any automatic renewal date, subject to the provisions of this Lease concerning the expiration of the Term of this Lease. All charges, fees and costs related to such Letter of Credit (including, without limitation, as a result of any transfer by Landlord) shall be borne by Tenant. Upon the occurrence of an Event of Default, Landlord shall have the right, at its option, to draw on the Letter of Credit and to apply all or any part thereof to the payment of the items for which the Letter of Credit was established or to apply the Letter of Credit to the satisfaction of Tenant’s obligations under this Lease in such order, proportion or priority as Landlord may reasonably determine. In addition to any other right Landlord may have to draw upon the Letter of Credit, Landlord shall have the additional rights to draw in full the Letter of Credit (regardless of whether this Lease is in default): (A) with respect to any Letter of Credit containing an Evergreen Clause, if Landlord has received a notice from the issuing bank that the Letter of Credit will not be renewed and a substitute Letter of Credit is not provided at least thirty (30) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (B) with respect to any Letter of Credit with a stated expiration date, if Landlord has not received a notice from the issuing bank that it has renewed the Letter of Credit at least ninety (90) days prior to the date on which such Letter of Credit is scheduled to expire or a substitute Letter of Credit is not provided at least thirty (30) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (C) upon receipt of notice from the issuing bank that the Letter of Credit will be terminated (except if a substitute Letter of Credit is provided by Tenant within ten (10) days following Landlord’s written demand therefore, with no other notice or cure or grace period being applicable thereto, notwithstanding anything in this Lease to the contrary), or (D) if Landlord receives information that the bank issuing the Letter of Credit is no longer an Eligible Institution. Notwithstanding anything to the contrary contained in the above, Landlord is not obligated to draw any Letter of Credit upon the happening of an event specified in (A), (B), (C) or (D) above and shall not be liable for any losses sustained by Tenant due to the insolvency of the bank issuing the Letter of Credit if Landlord has not drawn the Letter of Credit. Any amount of the Letter of Credit that is drawn upon by Landlord, but not used or applied by Landlord, shall be held by Landlord and subject to the terms set forth below, deemed a security deposit pursuant to this Section 6. The use, application or retention of the Letter of Credit, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided in this Lease, or by law, it being understood that Landlord shall not first be required to proceed against the Letter of Credit. Tenant agrees and acknowledges that (i) the Letter of Credit constitutes a separate and independent contract between Landlord and the issuing bank, (ii) Tenant is not a third party beneficiary of such contract, (iii) Tenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof, and (iv) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, Tenant is placed into receivership or conservatorship, and/or there is an event of a receivership, conservatorship or a bankruptcy filing by, or on behalf of, Tenant, neither Tenant, any trustee, receiver or conservator, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise. For the purposes of this Section 6, the term “ Eligible Institutio n” shall mean a depository institution or trust company insured by the Federal Deposit Insurance Corporation the long term unsecured debt obligations of which are rated at least “AA-” by Fitch and Standard & Poors and “Aa2” by Moody’s. Landlord acknowledges and agrees that as of date of this Lease, Silicon Valley Bank qualifies as an Eligible Institution.

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(b) Reduction of L-C Amount . To the extent that Tenant is not in default under this Lease (beyond the applicable notice and cure period set forth in this Lease), Tenant shall have the right to reduce the L-C Amount as follows:


Date of Reduction	Amount of Reduction		Remaining L-C Amount
First day of the 13 ^th full calendar month of the initial Term	$	66,000.00	$	434,000.00
First day of the 25 ^th full calendar month of the initial Term	$	66,000.00	$	368,000.00
First day of the 37 ^th full calendar month of the initial Term	$	66,000.00	$	302,000.00
First day of the 49 ^th full calendar month of the initial Term	$	66,000.00	$	236,000.00
First day of the 61 ^st full calendar month of the initial Term	$	66,000.00	$	170,000.00
First day of the 73 ^rd full calendar month of the initial Term	$	66,000.00	$	104,000.00

To the extent that Tenant is not in default under this Lease (beyond the applicable notice and cure period set forth in this Lease), Tenant shall have the right to reduce the L-C Amount as set forth above via the delivery to Landlord of either (x) an amendment to the existing L-C (in form and content reasonably acceptable to Landlord) modifying the L-C Amount to the amount then required under this Section 6, or (y) an entirely new L-C (in the form and content otherwise required in this Section 6) in the total L-C Amount then required under this Section 6.

7. Landlord’s Obligations .

(a) Services . Landlord shall use all reasonable efforts to furnish to Tenant (1) domestic water at those points of supply provided for general use of tenants of the Building; (2) heated and refrigerated air-conditioning (“ HVAC ”); (3) janitorial service to the Premises on weekdays, other than holidays, for Building-standard installations and such window washing as may from time to time be reasonably required; (4) passenger elevators for ingress and egress to the floor on which the Premises are located, in common with other tenants, provided that Landlord may reasonably limit the number of operating elevators during nonbusiness hours and holidays; and (5) electrical current during normal business hours for equipment that does not require more than 110 volts and whose electrical energy consumption does not exceed normal office usage. Subject to the provisions of Section 15 below, Landlord shall maintain the Common Areas of the Building in first class order and condition in a manner consistent with that of the Comparison Buildings (as that term is defined in Exhibit J), except for damage caused by a Tenant Party. If Tenant desires HVAC (A) at any time other than between 7:00 a.m. and 6:00 p.m. on weekdays (other than Holidays), and 8:00 a.m. to 12:00 p.m. on Saturdays, or (B) on Sunday or holidays (i.e., “after-hours”), then such services shall be supplied to Tenant on weekdays upon the request of Tenant delivered to Landlord before 2:00 p.m. and on Sundays and holidays upon request of Tenant delivered to Landlord before 2:00 p.m. on the Business Day preceding such extra usage (alternatively, Tenant shall have the right to request, not later than thirty (30) days prior to the Commencement Date, in connection with the initial Tenant Improvements installed in the Premises, that Landlord install, at Tenant’s sole cost and expense,

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an HVAC “on/off” system within the Premises that can be controlled directly by Tenant to turn after-hour HVAC on and off; provided, however, all aspects of such on/off system shall be designated by Landlord and shall be compatible with the Building systems and equipment), and Tenant shall pay to Landlord the cost of such services at the Building’s then-prevailing rates then charged by Landlord within thirty (30) days after Landlord has delivered to Tenant an invoice therefor. As of the date of this Lease, the current rate for after-hours HVAC service is $35.00 per hour (subject to change from time-to-time). The costs incurred by Landlord in providing after-hours HVAC service to Tenant shall include Landlord’s actual costs (without markup) for electricity, water, sewage, water treatment, labor, metering, filtering, and maintenance reasonably allocated by Landlord to providing such service. “Holidays” means New Year’s Day, Martin Luther King Jr. Day, President’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

(b) Excess Utility Use . Landlord shall not be required to furnish electrical current for equipment that requires more than 110 volts or other equipment whose electrical energy consumption exceeds normal office usage. If Tenant’s requirements for or consumption of electricity exceed the electricity to be provided by Landlord as described in Section 7(a) above, Landlord shall, at Tenant’s expense, make reasonable efforts to supply such service through the then-existing feeders and risers serving the Building and the Premises, and Tenant shall pay to Landlord the cost of such service within thirty (30) days after Landlord has delivered to Tenant an invoice therefor, together with reasonable supporting evidence. Landlord may determine the amount of such additional consumption and potential consumption by any verifiable method, including installation of a separate meter in the Premises installed, maintained, and read by Landlord, at Tenant’s expense. Tenant shall not install any electrical equipment requiring special wiring or requiring voltage in excess of 110 volts unless approved in advance by Landlord, which approval shall not be unreasonably withheld. Tenant shall not install any electrical equipment requiring voltage in excess of Building capacity unless approved in advance by Landlord, which approval may be withheld in Landlord’s sole discretion. The use of electricity in the Premises shall not exceed the capacity of existing feeders and risers to, or wiring in, the Premises. Any risers or wiring required to meet Tenant’s excess electrical requirements shall, upon Tenant’s written request, be installed by Landlord, at Tenant’s cost, if, in Landlord’s commercially reasonable judgment, the same are necessary and shall not cause permanent damage to the Building or the Premises, cause or create a dangerous or hazardous condition, entail excessive or unreasonable alterations, repairs, or expenses, or interfere with or disturb other tenants of the Building. If Tenant uses machines or equipment in the Premises that affect the temperature otherwise maintained by the air-conditioning system or otherwise overload any utility, Landlord may install supplemental air-conditioning units or other supplemental equipment in the Premises, and the cost thereof, including the cost of installation, operation, use, and maintenance, in each case plus an administrative fee of three percent (3%) of such cost, shall be paid by Tenant to Landlord within thirty (30) days after Landlord has delivered to Tenant an invoice therefor, together with reasonable supporting evidence.

(c) Landlord’s Repairs . Landlord shall repair and maintain in good order, repair and condition, the cost of which shall be included in Operating Costs to the extent permitted in Section 4 above, the Building’s Structure, the Building’s Systems and the common areas of the Building and Project (but not including any non-base building facilities installed in the Premises); provided, however, to the extent such maintenance and repairs are caused by the willful act, neglect, fault of or omission of any duty by any Tenant Party, Tenant shall pay to Landlord as additional Rent, the commercially reasonable cost of such maintenance and repairs, which payment shall be made by Tenant to Landlord within thirty (30) days after Tenant’s receipt of an invoice therefor, together with reasonable supporting evidence. Except as set forth in Section 7(d) below, 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 or failing to make any repairs, alterations or improvements in or to any portion of the Project. Tenant hereby waives and releases any right to make repairs at Landlord’s expense under any Law now or hereafter in effect.

(d) Restoration of Services ; Abatement. Landlord shall use reasonable efforts to restore any service required of it that becomes unavailable; however, such unavailability shall not render Landlord liable for any damages caused thereby, be a constructive eviction of Tenant, constitute a breach of any implied warranty, constitute a breach of any covenant (provided Landlord uses such reasonable efforts), or, except as provided in the next sentence, entitle Tenant to any abatement of Tenant’s obligations hereunder. If, however, Tenant

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is prevented from using the Premises because of the unavailability of any such service for a period of five (5) consecutive Business Days following Landlord’s receipt from Tenant of a written notice regarding such unavailability, the restoration of which is within Landlord’s reasonable control, and such unavailability was not caused by a Tenant Party, a governmental directive or cause beyond Landlord’s control, then Tenant shall, as its exclusive remedy, be entitled to a reasonable abatement of Rent for each consecutive day (after such five (5) Business Day period) that Tenant is so prevented from using the Premises.

(e) Supplemental HVAC System . Subject to the terms of this Section 7(e), Tenant shall have the right to install one (1) additional supplemental HVAC system in the Premises, at Tenant’s sole cost and expense, for the purpose of providing supplemental air-conditioning to the server room located in the Premises (the “ Supplemental HVAC System ”). In the event such Supplemental HVAC System is not installed in conjunction with the Tenant Improvements, then the installation of such system shall be governed by the terms of Section 8(a) of this Lease and Tenant shall utilize the same HVAC subcontractor used by Landlord for HVAC working in the Building. All aspects of the Supplemental HVAC System (including, but not limited to, the plans and specifications therefor and any connection to the Building’s chilled or condenser water system) shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed, unless the structural aspects of the Building, the Building systems, the exterior appearance of the Building and/or the certificate of occupancy issued for the Building or the Premises will be affected and/or the installation of the Supplemental HVAC System will violate any applicable Laws, in which event Landlord’s approval may be withheld in Landlord’s sole and absolute discretion. If the Supplemental HVAC System requires condenser water, then the condenser portion of same shall be located in the specific location within the Building (and which shall not be located in the Premises) designated by Landlord. Landlord shall designate a pathway for the connection between the condenser portion of the Supplemental HVAC System and the portion of the Supplemental HVAC System located in the Premises. Tenant shall install, in connection with the installation of the Supplemental HVAC System, meters or submeters to separately meter any utility service consumed by the Supplemental HVAC System, including, without limitation, condenser water and electricity, and Tenant shall pay to Landlord (or directly to the applicable utility, at Landlord’s option) the actual cost of the separately metered utility services consumed by the Supplemental HVAC System. The Supplemental HVAC System shall be and become part of the Premises and the property of Landlord, and shall be surrendered to Landlord upon the expiration or earlier termination on this Lease. Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the monitoring, operation, repair and replacement of the Supplemental HVAC System. Tenant shall also be obligated to maintain, repair, and replace, as necessary, any meters or sub-meters installed pursuant to this Section 7(e). In no event shall the Supplemental HVAC System be permitted to interfere with Landlord’s operation of the Building. Any reimbursements owing by Tenant to Landlord pursuant to this Section 7(e) shall be payable by Tenant within thirty (30) days of Tenant’s receipt of an invoice therefor.

(f) Battery Back-Up System . Subject to the terms of this Section 7(f), Tenant shall have the right to install one (1) standard battery back-up system (e.g., a Universal Power Supply or “UPS”) in the Premises, at Tenant’s sole cost and expense, for the purpose of providing emergency electrical power to the server room located in the Premises (the “ Battery Back-Up System ”). In the event such Battery Back-Up System is not installed in conjunction with the Tenant Improvements, then the installation of such system shall be governed by the terms of Section 8(a) of this Lease. All aspects of the Battery Back-Up System shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed, unless the structural aspects of the Building, the Building systems, the exterior appearance of the Building and/or the certificate of occupancy issued for the Building or the Premises will be affected and/or the installation of the Battery Back-Up System will violate any applicable Laws, in which event Landlord’s approval may be withheld in Landlord’s sole and absolute discretion. Upon the expiration or earlier termination of this Lease, Tenant shall either (A) remove the entire Battery Back-Up System and repair all damage to the Building resulting from such removal and restore all affected areas of the Premises and Building to their condition existing prior to the installation of the Battery Back-Up System (reasonable wear and tear excepted), all at Tenant’s sole cost and expense, or (B) surrender the entire Battery Back-Up System to Landlord upon the expiration or earlier termination of this Lease, in which case Tenant shall have no obligation to remove the Battery Back-Up System and the Battery Back-Up System shall be and become part of the Premises and the property of Landlord. Such surrender

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shall be at no cost to Landlord and Tenant shall cause the Battery Back-Up System shall be free and clear of all liens and claims by third-parties on the date of such surrender, but otherwise in its then as-is condition, without representation or warranty. In the event that Tenant fails to remove the entire Battery Back-Up System on or prior to the expiration or earlier termination of this Lease, Tenant shall be deemed to have elected option (B) above. Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the monitoring, operation, repair and replacement of the Battery Back-Up System. Tenant shall also be obligated to maintain, repair, and replace, as necessary, any meters or sub-meters installed pursuant to this Section 7(f). In no event shall the Battery Back-Up System be permitted to interfere with Landlord’s operation of the Building. Any reimbursements owing by Tenant to Landlord pursuant to this Section 7(f) shall be payable by Tenant within thirty (30) days of Tenant’s receipt of an invoice therefor.

8. Improvements; Alterations; Repairs; Maintenance .

(a) Improvements; Alterations . All alterations, improvements, betterments and other physical additions in or to the Premises (collectively, “ Alterations ”) shall be installed at Tenant’s expense only in accordance with plans and specifications that have been previously submitted to and approved by Landlord, which approval shall be governed by the provisions set forth in this Section 8(a), and otherwise in accordance with the provisions hereof, except with respect to the Tenant Improvements (as defined in Tenant Work Letter attached hereto as Exhibit D ), which shall be governed by the terms and conditions thereof, Cables (as defined below), which shall be installed, maintained, replaced and removed in accordance with the terms and conditions of Section 25 below, and Tenant’s signage, which shall be installed, maintained, replaced and removed in accordance with the terms and conditions of Section 25, below. Except as provided in this Lease, no Alterations may be made without Landlord’s prior written consent to such Alterations and the plans and specifications, and the construction means and methods, therefor, which shall not be unreasonably withheld or delayed; however, Landlord may withhold its consent to any alteration or addition that would adversely affect (in the reasonable discretion of Landlord) the (1) Building’s Structure or the Building’s Systems (including the Building’s restrooms or mechanical rooms), (2) exterior appearance of the Building, (3) appearance of the Common Areas or elevator lobby areas, or (4) provision of services to other occupants of the Building. Notwithstanding the foregoing, Tenant shall be permitted to make Alterations following ten (10) business days’ notice to Landlord, but without Landlord’s prior consent, to the extent that such Alterations do not (i) adversely affect the systems and equipment of the Building, exterior appearance of the Building, or structural aspects of the Building, (ii) adversely affect the value of the Premises or Building, (iii) require a building or construction permit, or (iv) cost more than Fifty Thousand and 00/100 Dollars ($50,000.00) for a particular job of work. If Landlord consents to Alterations, Landlord may impose such conditions with respect thereto as are reasonably appropriate, including (A) requiring Tenant to furnish (i) Landlord with commercially reasonable evidence that Tenant has sufficient funds to pay all costs to be incurred in connection with such work, (ii) commercially reasonable levels of insurance against liabilities that may arise out of such work, and (iii) plans and specifications, and permits for such work, and (B) requiring Tenant to remove any and all such Alterations (including fixtures) in or to the Premises prior to the expiration or earlier termination of this Lease at Tenant’s sole cost and expense. Tenant’s plans and specifications and construction means and methods shall be subject to Landlord’s written approval, such approval not to be unreasonably withheld, conditioned or delayed. All Alterations are subject to removal and restoration in accordance with the provisions of Section 20(b) below. Tenant shall furnish to Landlord any documents and information requested by Landlord in connection with the exercise of its rights hereunder. Landlord may hire outside consultants to review such documents and information furnished to Landlord and Tenant shall reimburse Landlord for the cost thereof, including reasonable attorneys’ fees, within thirty (30) days after receipt from Landlord of an invoice therefor, together with reasonable supporting evidence, up to a maximum total aggregate of Five Thousand Dollars ($5,000.00) per occurrence. Tenant shall not paint or install lighting or decorations, signs, window or door lettering, or advertising media of any type visible from the exterior of the Premises without the prior written consent of Landlord, which consent may be withheld in Landlord’s sole and absolute discretion. All Alterations shall be constructed, maintained, and used by Tenant, at its risk and expense, in accordance with all Laws, the Underlying Documents and the Landlord’s then current contractor rules and regulations; Landlord’s consent to or approval of any Alterations (or the plans therefor) shall not constitute a representation or warranty by Landlord, nor Landlord’s acceptance, that the same comply with sound architectural and/or engineering practices, or with all applicable Laws or with the Underlying Documents, and Tenant shall be

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solely responsible for ensuring all such compliance. If, as a result of Tenant’s use of the Premises or the making of any Alterations to the Premises and/or installation of any Tenant Improvements pursuant to this Section 8(a), Section 25 below, or the Tenant Work Letter, respectively, any Alterations shall be required to be made to any part of the Premises or the Project to comply with the requirements of any applicable Law, including the requirements of the Disabilities Act (as defined below), the Occupational Safety & Health Administration (OSHA), or the orders or requirements imposed by any health officer, fire marshal or building inspector, or the Underlying Documents, Tenant shall be solely responsible for the costs incurred to effect such compliance (collectively, the “ Required Improvements ”); provided, however, that if it is determined that any Required Improvements will be imposed due to the Alterations, Tenant may, in its sole discretion, elect not to perform the Alterations in question. If the required Alteration will not affect the Building’s Structure or the Building’s Systems, Tenant shall perform such work subject to this Section 8(a). If the required Alteration will affect the Building’s Structure or the Building’s Systems, Landlord shall have the right to perform such work and Tenant shall reimburse Landlord in an amount equal to Landlord’s commercially reasonable out of pocket costs plus three percent (3%) for overhead, which shall be payable within thirty (30) days of Landlord’s receipt of any invoice therefor, together with reasonable supporting evidence.

(b) Repairs; Maintenance . Tenant shall at its sole expense maintain the Premises in a clean, safe, and operable condition, and shall not permit or allow to remain any waste or damage to any portion of the Premises. Additionally, Tenant, at its sole expense, shall repair, replace and maintain in good condition and in accordance with all Laws, the Underlying Documents and the equipment manufacturer’s suggested service programs, all portions of the Premises, Tenant’s Off-Premises Equipment and all areas, improvements and systems exclusively serving the Premises. Tenant shall repair or replace, subject to Landlord’s direction and supervision, any damage to the Building caused by a Tenant Party. If Tenant fails to make such repairs or replacements within thirty (30) days after the occurrence of such damage, then Landlord may make the same at Tenant’s cost. If any such damage occurs outside the Premises, then Landlord may elect to repair such damage at Tenant’s expense using Landlord’s usual contractor for such work and at competitive rates, rather than having Tenant repair such damage. The cost of all maintenance, repair or replacement work performed by Landlord under this Section 8 shall be paid by Tenant to Landlord within thirty (30) days after Landlord has invoiced Tenant therefor, together with reasonable supporting evidence.

(c) Performance of Work . All work described in this Section 8 shall be performed only by Landlord’s usual contractor for such work at competitive rates or by contractors and subcontractors approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall cause all contractors and subcontractors to procure and maintain insurance coverage naming Landlord, Landlord’s property management company, Landlord’s asset management company and such other persons or entities as Landlord may designate in writing to Tenant from time to time as additional insureds using ISO additional insured endorsement CG 20 11 (or a substitute form reasonably satisfactory to Landlord providing equivalent coverage), and under the commercial umbrella, if any, against such risks, in such amounts, and with such companies as Landlord may reasonably require. Tenant shall provide Landlord with the identities, mailing addresses and telephone numbers of all persons performing work or supplying materials prior to beginning such construction, and Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable Laws. All such work shall be performed in accordance with all Laws, the Underlying Documents and in a good and workmanlike manner so as not to damage the Building (including the Premises, the Building’s Structure and the Building’s Systems). All such work that may affect the Building’s Structure or the Building’s Systems must be approved by the Building’s engineer of record, at Tenant’s expense and, at Landlord’s election, must be performed by Landlord’s usual contractor for such work at competitive rates. All work affecting the roof of the Building must be performed by Landlord’s roofing contractor at competitive rates and no such work will be permitted if it would void or reduce the warranty on the roof.

(d) Mechanic’s Liens . All work performed, materials furnished, or obligations incurred by or at the request of a Tenant Party shall be deemed authorized and ordered by Tenant only, and Tenant shall not permit any mechanic’s liens to be filed against the Premises or the Project in connection therewith. Upon completion of any such work, Tenant shall deliver to Landlord final lien waivers from all contractors, subcontractors and materialmen who performed such work. If such a lien is filed, then Tenant shall, within ten (10) days after

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Landlord has delivered notice of the filing thereof to Tenant (or such earlier time period as may be necessary to prevent the forfeiture of the Premises, the Project or any interest of Landlord therein or the imposition of a civil or criminal fine with respect thereto), either (1) pay the amount of the lien and cause the lien to be released of record, or (2) diligently contest such lien and deliver to Landlord a bond or other security reasonably satisfactory to Landlord. If Tenant fails to timely take either such action, then Landlord may pay the lien claim, and any amounts so paid, including expenses and interest, shall be paid by Tenant to Landlord within thirty (30) days after Landlord has invoiced Tenant therefor, together with reasonable supporting evidence. Landlord and Tenant acknowledge and agree that their relationship is and shall be solely that of “landlord-tenant” (thereby excluding a relationship of “owner-contractor,” “owner-agent” or other similar relationships). Accordingly, all materialmen, contractors, artisans, mechanics, laborers and any other persons now or hereafter contracting with Tenant, any contractor or subcontractor of Tenant or with any other Tenant Party for the furnishing of any labor, services, materials, supplies or equipment with respect to any portion of the Premises, at any time from the date hereof until the end of the Term, are hereby charged with notice that they look exclusively to Tenant to obtain payment for same. Nothing herein shall be deemed a consent by Landlord to any liens being placed upon the Premises, the Project or Landlord’s interest therein due to any work performed by or for Tenant or deemed to give any contractor or subcontractor or materialman any right or interest in any funds held by Landlord to reimburse Tenant for any portion of the cost of such work. Tenant shall defend, indemnify and hold harmless Landlord and its agents and representatives from and against all claims, demands, causes of action, suits, judgments, damages and expenses (including attorneys’ fees) in any way arising from or relating to the failure by any Tenant Party to pay for any work performed, materials furnished, or obligations incurred by or at the request of a Tenant Party. This indemnity provision shall survive termination or expiration of this Lease.

9. Use . Tenant shall use the Premises only for the Permitted Use and shall comply with, and cause each other Tenant Party to comply with, all Laws and Underlying Documents relating to the use, condition, access to, and occupancy of the Premises and will not commit waste, overload the Building’s Structure or the Building’s Systems or subject the Premises to use that would damage the Premises. The population density within the Premises as a whole shall at no time be in excess of the population density set forth in the space prepared by JPC Architects and attached to that certain letter agreement dated April 23, 2013, by and between Landlord and Tenant. Tenant shall not conduct second or third shift operations within the Premises; however, Landlord acknowledges the working hours of Tenant’s employees are not strictly limited to normal business hours, and that Tenant is therefore permitted to conduct business from the Premises both before and after normal business hours. Notwithstanding anything in this Lease to the contrary, as between Landlord and Tenant, (a) Tenant shall bear the risk of complying with Title III of the Americans With Disabilities Act of 1990, any Laws governing handicapped access or architectural barriers, and all rules, regulations, and guidelines promulgated under such Laws, as amended from time to time (the “ Disabilities Acts ”) in the Premises, and (b) Landlord shall bear the risk of complying with the Disabilities Acts in the Common Areas of the Building, other than compliance that is necessitated by the (1) use of the Premises for other than the Permitted Use, (2) as a result of any Alterations made by or on behalf of a Tenant Party (all of which risk and responsibility shall be borne by Tenant), or (3) as a result of any trade fixtures, furniture, equipment or other personal property to be installed in the Premises. The Premises shall not be used for any use that is disreputable, creates extraordinary fire or other hazards, or results in an increased rate of insurance on the Building or its contents, or for the storage of any Hazardous Materials (other than typical office supplies [e.g., photocopier toner] and then only in compliance with all Laws). Tenant shall not use any substantial portion of the Premises for a “call center,” any other telemarketing use, or any credit processing use. If, because of a Tenant Party’s acts or because Tenant vacates the Premises, the rate of insurance on the Building or its contents increases, then such acts shall be an Event of Default, Tenant shall pay to Landlord the amount of such increase within thirty (30) days after Tenant’s receipt of an invoice therefor, together with reasonable supporting evidence, and acceptance of such payment shall not waive any of Landlord’s other rights. Tenant shall conduct its business and control each other Tenant Party so as not to create any nuisance or unreasonably interfere with other tenants or Landlord in its management of the Building.

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10. Assignment and Subletting .

(a) Transfers . Except as provided in Section 10(h) below, Tenant shall not, without the prior written consent of Landlord, (1) assign, transfer, or encumber this Lease or any estate or interest herein, whether directly, indirectly or by operation of law, (2) permit any other entity to become Tenant hereunder by merger, consolidation, or other reorganization, (3) if Tenant is an entity other than a corporation whose stock is publicly traded, permit the transfer of an ownership interest in Tenant so as to result in a change in the current control of Tenant, (4) sublet any portion of the Premises, (5) grant any license, concession, or other right of occupancy of any portion of the Premises, or (6) permit the use of the Premises by any parties other than Tenant (any of the events listed in clauses (1) through (6) of this Section 10(a) above being a “ Transfer ”).

(b) Consent Standards . Landlord shall not unreasonably withhold its consent to any assignment or subletting of the Premises, provided that (1) the proposed transferee (A) is creditworthy, (B) has a good reputation in the business community, (C) will use the Premises for the Permitted Use (thus, excluding, without limitation, uses for credit processing and telemarketing) and will not use the Premises in any manner that would conflict with any exclusive use agreement or other similar agreement entered into by Landlord with any other tenant of the Building or Project, (D) will not use the Premises, Building or Project in a manner that would materially increase the pedestrian or vehicular traffic to the Premises, Building or Project, (E) is not a governmental entity, or subdivision or agency thereof or person that is or may be entitled to claim sovereign immunity, (F) is not another occupant of the Building or Project (provided, however, the terms of this item (F) shall only apply to the extent that Landlord has reasonably comparable space in the Project available to lease to such transferee), (G) is not a person or entity with whom Landlord is then, or has been within the six-month period prior to the time Tenant seeks to enter into such assignment or subletting, negotiating to lease space in the Building or Project or any Affiliate of any such person or entity, and (H) has been approved by all of Landlord’s Mortgagees (as defined below) having the right to approve the proposed transferee, and (2) payment for the Transfer is not determined in whole or in part based upon the net income or profits of the proposed transferee; otherwise, Landlord may withhold its consent in its sole discretion. Additionally, Landlord may withhold its consent in its sole discretion to any proposed Transfer if any Event of Default by Tenant then exists.

(c) Request for Consent . If Tenant requests Landlord’s consent to a Transfer, then, at least fifteen (15) business days prior to the effective date of the proposed Transfer, Tenant shall provide Landlord with a written description of all terms and conditions of the proposed Transfer, copies of the proposed documentation, and the following information about the proposed transferee: name and address; reasonably satisfactory information about its business and business history; its proposed use of the Premises; banking, financial, and other credit information; general references sufficient to enable Landlord to determine the proposed transferee’s creditworthiness and character and such additional information as Landlord may reasonably request. Concurrently with Tenant’s notice of any request for consent to a Transfer, Tenant shall pay to Landlord a fee of One Thousand Dollars ($1,000.00) to defray Landlord’s expenses in reviewing such request, and Tenant shall also reimburse Landlord within thirty (30) days after Landlord has delivered to Tenant an invoice therefor, together with reasonable supporting documentation for its reasonable attorneys’ fees incurred in connection with considering any request for consent to a Transfer, and such attorneys’ fees shall not exceed the amount of Two Thousand Five Hundred and No/100 Dollars ($2,500.00) in the aggregate for any particular Transfer, but such limitation of fees shall only apply to the extent such Transfer is in the ordinary course of business. Landlord and Tenant hereby agree that a proposed Transfer shall not be considered “in the ordinary course of business” if such Transfer involves the review of documentation by Landlord on more than two (2) occasions per requested Transfer.

(d) Conditions to Consent . If Landlord consents to a proposed Transfer, then the proposed transferee shall deliver to Landlord a written agreement whereby it expressly assumes Tenant’s obligations hereunder; however, any transferee of less than all of the space in the Premises shall be liable only for obligations under this Lease that are properly allocable to the space subject to the Transfer for the period of the Transfer. No Transfer shall release Tenant from its obligations under this Lease, but rather Tenant and its transferee shall be jointly and severally liable therefor; provided, however, that if Tenant is nonetheless deemed to be a surety by remaining liable hereunder, Tenant hereby waives all applicable suretyship defenses. Landlord’s consent to any Transfer shall not waive Landlord’s rights as to any subsequent

[Cypress Building]

[Griptonite, Inc.]

Transfers. If an Event of Default occurs while the Premises or any part thereof are subject to a Transfer, then Landlord, in addition to its other remedies, may collect directly from such transferee all rents becoming due to Tenant and apply such rents against Rent. Tenant authorizes its transferees to make payments of rent directly to Landlord upon receipt of notice from Landlord to do so following the occurrence of an Event of Default hereunder. Tenant shall pay for the cost of any demising walls or other improvements necessitated by a proposed subletting or assignment.

(e) Attornment by Subtenants . Each sublease by Tenant hereunder shall be subject and subordinate to this Lease and to the matters to which this Lease is or shall be subordinate, and each subtenant by entering into a sublease is deemed to have agreed that in the event of termination, reentry or dispossession by Landlord under this Lease, Landlord may, at its option, take over all of the right, title and interest of Tenant, as sublandlord, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then-executory provisions of such sublease, except that Landlord shall not be (1) liable for any previous act or omission of Tenant under such sublease, (2) subject to any counterclaim, offset or defense that such subtenant might have against Tenant, (3) bound by any previous modification of such sublease not approved by Landlord or by any rent or additional rent or advance rent which such subtenant might have paid for more than the current month to Tenant, and all such rent shall remain due and owing, notwithstanding such advance payment, (4) bound by any security or advance rental deposit made by such subtenant that is not delivered or paid over to Landlord and with respect to which such subtenant shall look solely to Tenant for refund or reimbursement, or (5) obligated to perform any work in the subleased space or to prepare it for occupancy, and in connection with such attornment, the subtenant shall execute and deliver to Landlord any instruments Landlord may reasonably request to evidence and confirm such attornment. Each subtenant or licensee of Tenant shall be deemed, automatically upon and as a condition of its occupying or using the Premises or any part thereof, to have agreed to be bound by the terms and conditions set forth in this Section 10(e). The provisions of this Section 10(e) shall be self-operative, and no further instrument shall be required to give effect to this provision.

(f) Cancellation . In the event of a proposed assignment of this Lease (other than to a Permitted Transferee as set forth in Section 10(h), below), Landlord may, within thirty (30) days after submission of Tenant’s written request for Landlord’s consent to such assignment, cancel this Lease as of the date the proposed Transfer is to be effective. In the event of a proposed subleasing (other than to a Permitted Transferee as set forth in Section 10(h), below) that has a term that is equal to the remainder (or substantially the remainder) of the term of this Lease, Landlord may, within thirty (30) days after submission of Tenant’s written request for Landlord’s consent to such sublease, cancel this Lease upon written notice to Tenant (a “ Recapture Notice ”) with respect to the portion of the Premises that was proposed to be subleased as of the date the proposed Transfer is to be effective. However, if Landlord delivers a Recapture Notice to Tenant, Tenant may, within ten (10) days after Tenant’s receipt of the Recapture Notice, deliver written notice to Landlord indicating that Tenant is rescinding its request for consent to the proposed Transfer, in which case such Transfer shall not be consummated and this Lease shall remain in full force and effect as to the portion of the Premises that was the subject of the Transfer. Tenant’s failure to so notify Landlord in writing within said ten (10) day period shall be deemed to constitute Tenant’s election to allow the Recapture Notice to be effective. If Landlord cancels this Lease as to any portion of the Premises, then this Lease shall cease for such portion of the Premises and Tenant shall pay to Landlord all Rent accrued through the cancellation date relating to the portion of the Premises covered by the proposed Transfer. Thereafter, Landlord may lease such portion of the Premises to the prospective transferee (or to any other person) without liability to Tenant.

(g) Additional Compensation . At Landlord’s option, Tenant shall pay to Landlord, within thirty (30) days after receipt thereof, fifty percent (50%) of the excess of (1) all compensation received by Tenant for a Transfer less the actual out-of-pocket costs reasonably incurred by Tenant with unaffiliated third parties (i.e., brokerage commissions, marketing costs and tenant finish work) and other economic concessions or services provided to the transferee, in connection with such Transfer over (2) the Rent allocable to the portion of the Premises covered thereby.

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(h) Permitted Transfers . Notwithstanding Section 10(a) above, Tenant may Transfer all or part of its interest in this Lease or all or part of the Premises (each a “ Permitted Transfer ”) to the following types of entities (each a “ Permitted Transferee ”) without the written consent of Landlord so long as (1) Tenant’s obligations hereunder are assumed by such entity; and (2) the Tangible Net Worth (as defined below) of such entity is not less than the Tangible Net Worth of Tenant as of the date hereof:

(1) an Affiliate of Tenant (including without limitation Glu Mobile Inc., the parent corporation of Tenant);

(2) any corporation, limited partnership, limited liability partnership, limited liability company or other business entity in which or with which Tenant, or its corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions governing merger and consolidation of business entities; or

(3) any corporation, limited partnership, limited liability partnership, limited liability company or other business entity acquiring all or substantially all of Tenant’s assets.

Tenant shall promptly notify Landlord of any such Permitted Transfer. Tenant shall remain liable for the performance of all of the obligations of Tenant (unless Tenant no longer exists because of a merger, consolidation, or acquisition) hereunder, and the Permitted Transferee shall expressly assume in a writing for the benefit of Landlord in a commercially reasonable instrument executed and delivered to Landlord at least ten (10) days prior to the effective date of the assignment, all of the obligations of Tenant hereunder. Additionally, the Permitted Transferee shall comply with all of the terms and conditions of this Lease, including the Permitted Use, and the use of the Premises by the Permitted Transferee may not violate any other agreements affecting the Premises, the Building or the Project, including the Underlying Documents, Landlord or other tenants of the Building or the Project. No later than thirty (30) days after the effective date of any Permitted Transfer, Tenant agrees to furnish Landlord with (i) copies of the instrument effecting any of the foregoing Transfers, (ii) documentation establishing Tenant’s satisfaction of the requirements set forth above applicable to any such Transfer, and (iii) evidence of insurance as required under this Lease with respect to the Permitted Transferee. The occurrence of a Permitted Transfer shall not waive Landlord’s rights as to any subsequent Transfers. “ Tangible Net Worth ” means the excess of total assets over total liabilities, in each case as determined in accordance with generally accepted accounting principles consistently applied (“ GAAP ”), excluding, however, from the determination of total assets all assets that would be classified as intangible assets under GAAP, including goodwill, licenses, patents, trademarks, trade names, copyrights, and franchises. Any subsequent Transfer by a Permitted Transferee shall be subject to the terms of this Section 10. Notwithstanding anything to the contrary set forth elsewhere in this Lease, the provisions of Sections 10(a), (b), (c) and (g) shall not apply to any Permitted Transfers.

11. Insurance; Waivers; Subrogation; Indemnity .

(a) Tenant’s Insurance . Effective as of the earlier of (1) the date Tenant first enters upon or occupies the Premises, or (2) the Commencement Date, and continuing throughout the Term, Tenant shall maintain the following insurance policies: (A) commercial general liability insurance on the current ISO CG 00 01 12 04 occurrence form or equivalent reasonably acceptable to Landlord in amounts of Three Million Dollars ($3,000,000.00) per occurrence, Three Million Dollars ($3,000,000.00) personal injury and advertising injury, Three Million Dollars ($3,000,000.00) products-completed operations aggregate and Three Million Dollars ($3,000,000.00) general aggregate, with defense costs provided in addition to policy limits (limits requirements may be met through a combination of primary and excess policies, including an umbrella form of policy insuring Tenant), and Landlord, Landlord’s property management company, Landlord’s asset management company and, if requested in writing by Landlord, any of Landlord’s Mortgagees and such other persons and entities as Landlord may from time to time designate shall be included as Additional Insureds using ISO additional insured endorsement CG 20 11 (or a substitute form reasonably acceptable to Landlord providing equivalent coverage), and under the commercial umbrella policy, if any, against liability for personal injury, bodily injury (including mental anguish and death) or property damage or destruction (including loss of use thereof) arising from the use and occupancy of the Premises, the Building and all areas appurtenant thereto, including the Garage and (without implying any consent by Landlord to the installation thereof) the installation, operation, maintenance, repair or removal of Tenant’s Off-Premises Equipment (and Tenant shall provide an endorsement or policy excerpt showing that Tenant’s coverage is primary and any insurance carried by Landlord

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shall be excess and non-contributing), (B) primary “special form” perils property damage insurance under ISO special clauses of loss form (ISO form CP 10 30 or equivalent) covering the full value of all alterations, additions and improvements and betterments in the Premises, including the Tenant Improvements and other Alterations, naming Landlord and each of Landlord’s Mortgagees as additional loss payees as their interests may appear, (C) primary “special form” perils property damage insurance under ISO special clauses of loss form (ISO form CP 10 30 or equivalent) covering the full value of all furniture, trade fixtures, electronic data and media, business records, and personal property (including property of Tenant or others) in the Premises or otherwise placed in the Project by or on behalf of a Tenant Party (including Tenant’s Off-Premises Equipment), without deduction for depreciation, (E) workers’ compensation insurance as required by the State of Washington, together with employers’ liability insurance of at least One Million Dollars ($1,000,000.00) for each accident for bodily injury by accident, One Million Dollars ($1,000,000.00) each employee for bodily injury by disease, and One Million Dollars ($1,000,000.00) policy limit for bodily injury by disease, (F) business income with extra expense insurance (ISO form CP 00 30, or equivalent acceptable to Landlord) in an amount reasonably acceptable to Landlord, and (G) business automobile insurance, and if necessary, commercial umbrella insurance, with a limit of not less than Three Million Dollars ($3,000,000.00) each accident, which automobile insurance shall cover liability arising out of any automobile (including owned, hired and non-owned automobiles), and Landlord, Landlord’s property management company, Landlord’s asset management company and, if requested in writing by Landlord, any of Landlord’s Mortgagees and such other persons and entities having an insurable interest as Landlord may from time to time designate shall be included as Additional Insureds using a form reasonably acceptable to Landlord (and Tenant shall provide an endorsement or policy excerpt showing that Tenant’s coverage is primary and any insurance carried by Landlord shall be excess and non-contributing). Tenant’s insurance shall provide primary coverage to Landlord when any policy issued to Landlord provides duplicate or similar coverage, and in such circumstance Landlord’s policy will be excess over Tenant’s policy. Tenant shall furnish to Landlord certificates of such insurance (including copies of endorsements) at least ten (10) days prior to the earlier of the Commencement Date or the date Tenant first enters upon or occupies the Premises, and at least fifteen (15) days prior to each renewal of said insurance. Tenant’s insurance companies shall be required to notify Tenant at least thirty (30) days before cancellation of any such insurance policies (ten [10] days in the event of nonpayment of premiums), and Tenant shall promptly provide such notification to Landlord. Tenant shall carry and maintain during the Term, at its expense such increased amounts of insurance required to be carried under this Section 11(a), and such other types and amounts of insurance covering the Premises and Tenant’s operation therein, as may be reasonably requested by Landlord from time to time, but not in excess of the amounts and types of insurance then being required by landlords of the Comparison Buildings (but in no event may Landlord make such a request more than once during the Initial Term and once during the Option Term). All such insurance policies shall be in form, and issued by companies with an A.M. Best rating of A-VII or better, reasonably satisfactory to Landlord. If Tenant fails to comply with the foregoing insurance requirements or to deliver to Landlord the certificates or evidence of coverage required herein within ten (10) business days after Landlord’s written request, Landlord, in addition to any other remedy available pursuant to this Lease or otherwise, may, but shall not be obligated to, obtain such insurance and Tenant shall pay to Landlord within thirty (30) days after Tenant’s receipt of an invoice from Landlord, together with reasonable supporting evidence, the premium costs thereof, plus an administrative fee of three percent (3%) of such cost.

(b) Landlord’s Insurance . Throughout the Term, Landlord shall maintain, as a minimum, the following insurance policies: (1) property insurance for at least ninety percent (90%) of the Building’s replacement value (excluding property required to be insured by Tenant and the costs of excavation, foundations, underground utilities and footings), less a commercially reasonable deductible and/or self-insured retention if Landlord so chooses, and (2) commercial general liability insurance in an amount of not less than Three Million Dollars ($3,000,000.00) general aggregate for damages because of personal injury, bodily injury or death, or property damages or destruction (including loss of use thereof). Landlord may, but is not obligated to, maintain such other insurance and additional coverages as it may deem appropriate or as required by any of Landlord’s Mortgagees. The cost of all insurance carried by Landlord with respect to the Project shall be included in Operating Costs. The foregoing insurance policies and any other insurance carried by Landlord shall be for the sole benefit of Landlord and under Landlord’s sole control, and Tenant shall have no right or claim to any proceeds thereof or any other rights thereunder.

[Cypress Building]

[Griptonite, Inc.]

(c) No Subrogation ; Waiver of Property Claims. Each of Landlord and Tenant waives any claim it might have against the other for any damage to, or theft, destruction, loss, or loss of use of, any property, to the extent the same is insured against under any insurance policy of the types described in this Section 11 that covers the Project, the Premises, Landlord’s or Tenant’s fixtures, personal property, leasehold improvements, or business (or if the insurance required under this Lease had been carried, would have been insured against), regardless of whether the negligence of the other party caused such loss or damage. Additionally, each of Landlord and Tenant waives any claim it may have against the other for any loss to the extent such loss or damage is caused by a terrorist act. Each party shall cause its insurance carrier to endorse all applicable policies waiving the carrier’s rights of recovery under subrogation or otherwise against the other party. For the purposes of this Section 11(c), any deductible with respect to a party’s insurance shall be deemed covered by, and recoverable by such party under, valid and collectible policies of insurance.

(d) Waiver . Tenant agrees that Landlord Parties shall not be liable for, and are hereby released from any responsibility for, any damage to person or property (or resulting from the loss of use thereof) that is sustained by any Tenant Party or any person claiming by, through or under any Tenant Party, including any such damage caused by any active or passive act, omission or neglect of any Landlord Party or by any act or omission for which liability without fault or strict liability may be imposed, except only, with respect to Landlord, (1) to the extent such damage is caused by the negligence or willful misconduct of any Landlord Party and the repair of such damage is not for any reason (other than Tenant’s failure to carry insurance required under Section 11(a) above) covered by the insurance required to be carried by Tenant under this Lease, or (2) to the extent such limitation on liability is prohibited by applicable Law. Nothing in this Section 11(d) shall limit the provisions of Section 11(c) above or Section 24(b) below.

(e) Indemnities . Subject to the limitations set forth in this Section 11(e) below, Tenant shall defend, indemnify, and hold harmless the Landlord Parties from and against all claims, losses, demands, liabilities, actions, penalties, judgments, damages, costs and expenses (including reasonable attorneys’ fees) (collectively, “ Claims ”) suffered or imposed upon or against any Landlord Party arising from or in connection with (1) any act, omission or negligence of Tenant or any person claiming by, through or under any Tenant Party, (2) occurring in the Premises, or (3) arising out of the installation, operation, maintenance, repair or removal of any property of any Tenant Party located in or about the Project, including Tenant’s Off-Premises Equipment, if any, and (4) any breach by Tenant of any representation, covenant or other term contained in this Lease, whether occurring before, during or after the expiration of the Term. The foregoing indemnity is intended to apply regardless of any active or passive negligence or fault of the Landlord Parties, even when Landlord or its representatives and agents are jointly, comparatively, contributively, or concurrently negligent with Tenant, and regardless of whether liability without fault or strict liability may be imposed upon the Landlord Parties; however, with respect to any Landlord Party, Tenant’s obligations hereunder shall not apply (i) to the extent any Claim arises from the gross negligence or willful misconduct of any Landlord Party and is not for any reason (other than Tenant’s failure to carry the insurance required under Section 11(a) above) paid for by the insurance required to be carried by Tenant hereunder, or (ii) to the extent such obligations are prohibited by applicable Law. Notwithstanding the foregoing, in the event of the concurrent negligence of any of the Tenant Parties on the one hand and that of any of the Landlord Parties on the other hand, which concurrent negligence results in injury or damage to persons or property and relates to the construction, alteration, repair, addition to, subtraction from, improvement to or maintenance of the Premises, Common Areas or any other portion of the Project, Tenant’s obligation to indemnify the Landlord Parties as set forth in this Section 11(e) shall be limited to the extent of Tenant’s negligence, and that of the Tenant Parties, including Tenant’s proportional share of costs, attorneys’ fees, and expenses incurred in connection with any Claims arising from such injury or damage. Landlord shall defend, indemnify, and hold harmless Tenant from and against all Claims (A) incurred by Tenant in Common Areas to the extent caused by the negligence or willful misconduct of a Landlord Party, or (B) arising from any breach by Landlord of any representation, covenant or other term contained in this Lease, whether occurring before, during or after the expiration of the Term; and such Claims are not for any reason (other than Tenant’s failure to carry the insurance required under Section 11(a) above) paid for by the insurance required to be carried by Tenant hereunder

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or otherwise covered by Tenant’s indemnity obligation set forth in this Section 11(e). The indemnities set forth in this Lease shall survive termination or expiration of this Lease and shall not terminate or be waived, diminished or affected in any manner by any abatement or apportionment of Rent under any provision of this Lease. If any proceeding is filed for which indemnity is required hereunder, the indemnifying party agrees, upon request therefor, to defend the indemnified party in such proceeding at its sole cost utilizing counsel reasonably satisfactory to the indemnified party to the extent that the indemnifying party’s insurance policy permits such approval of counsel by the indemnified party. The indemnities set forth herein are intended to specifically cover actions brought by the indemnifying party’s own employees. Such indemnities are specifically and expressly intended to constitute waivers by the indemnifying party of its immunity, if any, under Washington’s Industrial Insurance Act (Title 51 RCW, as amended, and under any substitute or replacement statute), to the extent necessary to provide the other party with a full and complete indemnity from claims made by the indemnifying party and its employees, to the extent provided herein. This waiver and agreement was specifically negotiated by Landlord and Tenant and is solely for the benefit of Landlord and Tenant and their successors and assigns and is not intended as a waiver of Tenant’s rights of immunity under said industrial insurance for any other purpose.

12. Subordination; Attornment; Notice to Landlord’s Mortgagee .

(a) Subordination . This Lease shall be subordinate to any deed of trust, mortgage, or other security instrument (each, a “ Mortgage ”), or any ground lease, master lease, or primary lease (each, a “ Primary Lease ”), that now or hereafter covers all or any part of the Premises (the mortgagee under any such Mortgage, beneficiary under any such deed of trust or other security instrument, or the lessor under any such Primary Lease is referred to herein as a “ Landlord’s Mortgagee ”), provided that upon any foreclosure of any such Mortgage or delivery of a deed in lieu thereof, or upon any termination of a Primary Lease, Landlord’s successor shall agree to accept this Lease and not disturb Tenant’s occupancy, so long as Tenant timely pays the Rent and observes and performs the terms, covenants and provisions of this Lease to be observed or performed by Tenant. Any Landlord’s Mortgagee may elect, at any time, unilaterally, to make this Lease superior to its Mortgage, Primary Lease, or other interest in the Premises by so notifying Tenant in writing. The provisions of this Section 12(a) shall be self-operative and no further instrument of subordination shall be required; however, in confirmation of such subordination, Tenant shall execute and return to Landlord (or such other person designated by Landlord) within ten (10) days after request therefor such documentation, in recordable form if required, as a Landlord’s Mortgagee may reasonably request to evidence the subordination of this Lease to such Landlord’s Mortgagee’s Mortgage or Primary Lease (including a subordination, non-disturbance and attornment agreement) or, if the Landlord’s Mortgagee so elects, the subordination of such Landlord’s Mortgagee’s Mortgage or Primary Lease to this Lease.

(b) Attornment . Tenant shall attorn to any person succeeding to Landlord’s interest in the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, upon such person’s request, and shall execute such agreements confirming such attornment as such person may reasonably request.

(c) Notice to Landlord’s Mortgagee . Tenant shall not seek to enforce any remedy it may have for any default on the part of Landlord without first giving written notice by certified mail, return receipt requested, specifying the default in reasonable detail, to any Landlord’s Mortgagee whose address has been given to Tenant, and affording such Landlord’s Mortgagee a reasonable opportunity to perform Landlord’s obligations hereunder.

(d) Landlord’s Mortgagee’s Protection Provisions . If a Landlord’s Mortgagee or any successor in interest thereto shall succeed to the interest of Landlord under this Lease, neither such Landlord’s Mortgagee nor any such successor in interest shall be: (1) liable for any act or omission of any prior lessor (including Landlord); (2) bound by, or subject to any offset rights with respect to, any Rent that Tenant might have paid for more than the current month to any prior lessor (including Landlord), and all such Rent shall remain due and owing, notwithstanding such advance payment, except to the extent that any such advance payment has been delivered or paid over to such Landlord’s Mortgagee or successor in interest; (3) bound by any Security Deposit or advance rental deposit made by Tenant that is not delivered or paid over to such Landlord’s Mortgagee or successor in interest and with respect to which Tenant shall look solely to Landlord for refund or reimbursement; (4) bound by any termination, amendment

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or modification of this Lease made without such Landlord’s Mortgagee’s consent and written approval, except for those terminations, amendments and modifications permitted to be made by Landlord without such Landlord’s Mortgagee’s consent pursuant to the terms of the loan and/or lease documents between Landlord and such Landlord’s Mortgagee; (5) subject to the defenses or counterclaims that Tenant might have against any prior lessor (including Landlord); (6) subject to the credits or offsets that Tenant might have against any prior lessor (including Landlord) except for those offset rights (A) that do not pertain to any Rent that Tenant might have paid for more than the current month to any prior lessor (including Landlord), (B) that are expressly provided in this Lease, (C) that relate to periods of time following the acquisition of the Building by such Landlord’s Mortgagee or successor in interest, and (D) for which Tenant has provided written notice to such Landlord’s Mortgagee and provided such Landlord’s Mortgagee a reasonable opportunity to cure the event giving rise to such offset event; and (7) bound by any covenant to perform (including any covenant to complete) any renovation or construction in the Premises or to pay any sums to Tenant in connection therewith, in either case arising or accruing prior to the date of the conveyance of Landlord’s interest in this Lease. Neither a Landlord’s Mortgagee nor any successor in interest thereto shall have any liability or responsibility under or pursuant to the terms of this Lease or otherwise prior to the date such Landlord’s Mortgagee or successor in interest succeeds to the interest of Landlord under this Lease or after such Landlord’s Mortgagee or successor in interest ceases to own an interest in the Project. Nothing in this Lease shall be construed to require a Landlord’s Mortgagee or successor in interest thereto to see to the application of the proceeds of any loan, and Tenant’s agreements set forth herein shall not be impaired on account of any modification of the documents evidencing and securing any loan.

(e) Existing Lender . Landlord shall use commercially reasonable efforts to obtain from the existing Landlord’s Mortgagee and deliver to Tenant, within sixty (60) days following the full execution and delivery of this Lease by Landlord and Tenant, a subordination, non-disturbance and attornment agreement in the form attached hereto as Exhibit N , executed by such Landlord’s Mortgagee and Landlord.

13. Rules and Regulations . Tenant shall comply with the rules and regulations of the Project that are attached hereto as Exhibit C . Landlord may, from time to time, change such rules and regulations for the safety, care, or cleanliness of the Project and related facilities, provided that such changes are applicable to all tenants of the Project, will not unreasonably interfere with Tenant’s use of the Premises, and are enforced by Landlord in a nondiscriminatory manner. Tenant shall be responsible for the compliance with such rules and regulations by each Tenant Party (and any modification thereto of which Tenant has received notice).

14. Condemnation .

(a) Total Taking . If the entire Building or Premises are taken by right of eminent domain or conveyed in lieu thereof (a “ Taking ”), this Lease shall terminate as of the date of the Taking.

(b) Partial Taking – Tenant’s Rights . If any part of the Building becomes subject to a Taking and such Taking will prevent Tenant from conducting on a permanent basis its business in the Premises in a manner reasonably comparable to that conducted immediately before such Taking, then Tenant may terminate this Lease as of the date of such Taking by giving notice to Landlord within thirty (30) days after the Taking, and Basic Rent and Additional Rent shall be apportioned as of the date of such Taking. If Tenant does not terminate this Lease, then Basic Rent and Additional Rent shall be abated on a reasonable basis as to that portion of the Premises rendered untenantable by the Taking.

(c) Partial Taking – Landlord’s Rights . If any material portion, but less than all, of the Building becomes subject to a Taking, or if Landlord is required to pay any of the proceeds arising from a Taking to a Landlord’s Mortgagee, then Landlord may terminate this Lease by delivering notice thereof to Tenant within thirty (30) days after such Taking, and Basic Rent and Additional Rent shall be apportioned as of the date of such Taking. If Landlord does not so terminate this Lease, then this Lease will continue, but if any portion of the Premises has been taken, Rent shall abate as provided in the last sentence of Section 14(b) above.

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(d) Temporary Taking . If all or any portion of the Premises becomes subject to a Taking for a limited period of time, this Lease shall remain in full force and effect and Tenant shall continue to perform all of the terms, conditions and covenants of this Lease, including the payment of Basic Rent, Additional Rent and all other amounts required hereunder. If any such temporary Taking terminates prior to the expiration of the Term, Tenant shall restore the Premises as nearly as possible to the condition prior to such temporary Taking, at Tenant’s sole cost and expense. Landlord shall be entitled to receive the entire award for any such temporary Taking, except that Tenant shall be entitled to receive the portion of such award that (1) compensates Tenant for its loss of use of the Premises within the Term and (2) reimburses Tenant for the reasonable out-of-pocket costs actually incurred by Tenant to restore the Premises as required by this Section 14(d).

(e) Award . If any Taking occurs, then Landlord shall receive the entire award or other compensation for the Land, the Building, and other improvements taken; however, Tenant may separately pursue a claim (to the extent it will not reduce Landlord’s award) against the condemnor for the value of Tenant’s personal property that Tenant is entitled to remove under this Lease, moving costs, loss of business, the unamortized cost of any Alterations or other improvements installed by Tenant and affixed to the Premises, the value of Tenant’s leasehold estate under this Lease, and other claims it may have.

15. Fire or Other Casualty .

(a) Repair Estimate . If the Premises or the Building are damaged by fire or other casualty (a “Casualty”), Landlord shall, within ninety (90) days after such Casualty, deliver to Tenant a good faith estimate (the “ Damage Notice ”) of the time needed to repair the damage caused by such Casualty.

(b) Tenant’s Rights . If a material portion of the Premises or the Building is damaged by Casualty such that Tenant is prevented from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately prior to such Casualty and Landlord estimates in the Damage Notice that the damage caused by such Casualty cannot be repaired within two hundred seventy (270) days after the commencement of repairs (the “ Repair Period ”), then Tenant may terminate this Lease by delivering written notice to Landlord of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant.

(c) Landlord’s Rights . If a Casualty damages the Premises or a material portion of the Building and (1) Landlord estimates in the Damage Notice that the damage to the Premises cannot be repaired within the Repair Period; (2) the damage to the Premises exceeds fifty percent (50%) of the replacement cost thereof (excluding foundations and footings), as estimated by Landlord, and such damage occurs during the last two (2) years of the Term; (3) regardless of the extent of damage to the Premises, the damage is not fully covered by Landlord’s insurance policies or Landlord makes a good faith determination that restoring the Building would be uneconomical; or (4) Landlord is required to pay any insurance proceeds arising out of the Casualty to a Landlord’s Mortgagee, then Landlord may terminate this Lease by giving written notice of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant.

(d) Repair Obligation . If neither party elects to terminate this Lease following a Casualty, then Landlord shall, within a reasonable time after such Casualty, begin to repair the Premises and shall proceed with reasonable diligence to restore the Premises to substantially the same condition as had existed immediately prior to such Casualty; provided, however, that Landlord shall not be required to repair or replace any alterations, additions, improvements or betterments within the Premises, including any Tenant Improvements or other Alterations (which shall be promptly and with due diligence repaired and restored by Tenant at Tenant’s sole cost and expense), or any furniture, equipment, trade fixtures or personal property of Tenant or others in the Premises or the Building. If this Lease is terminated under the provisions of this Section 15, Landlord shall be entitled to the full proceeds of the insurance policies providing coverage for all alterations, additions, improvements and betterments in the Premises, including the Tenant Improvements and all other Alterations (and, if Tenant has failed to maintain insurance on such items as required by this Lease, Tenant shall pay Landlord an amount equal to the proceeds Landlord would have received had Tenant maintained insurance on such items as required by this Lease).

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(e) Abatement of Rent . If the Premises or the Building are damaged by Casualty, Rent for the portion of the Premises rendered untenantable by the damage shall be abated in the proportion of the rentable square footage of the Premises made untenantable thereby to the total rentable square footage of the Premises from the date of damage until the completion of Landlord’s repairs (or until the date of termination of this Lease by Landlord or Tenant as provided above, as the case may be) unless a Tenant Party caused such damage, in which case Tenant shall continue to pay Rent without abatement.

16. Personal Property Taxes . Tenant shall be liable for all taxes levied or assessed against personal property, furniture, or fixtures placed by Tenant in the Premises or in or on the Building or Project and on the value of the leasehold improvements in the Premises to the extent that the same exceed Landlord’s then current standard improvement package items or allowances (and if the taxing authorities do not separately assess said leasehold improvements, Landlord may make a reasonable allocation of the taxes allocated to the Project to give effect to this sentence) . If any taxes for which Tenant is liable are levied or assessed against Landlord or Landlord’s property and Landlord elects to pay the same, or if the assessed value of Landlord’s property is increased by inclusion of Tenant’s personal property, furniture or fixtures and Landlord elects to pay the taxes based on such increase, then Tenant shall pay to Landlord, within thirty (30) days following request therefor (together with reasonable supporting documentation setting forth the amount of such taxes and/or Tenant’s allocation of the same), the part of such taxes for which Tenant is primarily liable hereunder; however, Landlord shall not pay such amount if Tenant notifies Landlord that it will contest the validity or amount of such taxes before Landlord makes such payment, and thereafter diligently proceeds with such contest in accordance with Law and if the nonpayment thereof does not pose a threat of loss or seizure of the Project or interest of Landlord therein or impose any fee or penalty against Landlord.

17. Events of Default . Each of the following occurrences shall be an “ Event of Default ”:

(a) Payment Default . Tenant’s failure to pay Rent within five (5) days after Landlord has delivered notice to Tenant that the same is due; however, an Event of Default shall occur hereunder without any obligation of Landlord to give any notice if Tenant fails to pay Rent when due and, during the twelve (12)-month interval preceding such failure, Landlord has given Tenant notice of failure to pay Rent on one (1) or more occasions;

(b) Abandonment . Tenant abandons the Premises or any substantial portion thereof;

(c) Subordination . Tenant fails to provide any documentation evidencing subordination of this Lease after request therefor pursuant to Section 12(a) above and such failure continues for five (5) days after Tenant’s receipt of a second request for such documentation from Landlord’s or Landlord’s Mortgagee’s;

(d) Estoppel . Tenant fails to provide any estoppel certificate or guarantor’s statement requested by Landlord pursuant to Section 24(e) below such failure continues for five (5) days after Tenant’s receipt of Landlord’s second request for such estoppel certificate;

(e) Insurance . Tenant fails to procure, maintain and deliver to Landlord evidence of the insurance policies and coverages as required under Section 11(a) above if such failure continues for ten (10) business days after Tenant’s receipt of Landlord’s notice of such failure;

(f) Mechanic’s Liens . Tenant fails to pay and release of record, or diligently contest and bond around, any mechanic’s lien filed against the Premises or the Project for any work performed, materials furnished, or obligation incurred by or at the request of Tenant, within the time and in the manner required by Section 8(d) above;

(g) Misrepresentation . Any material misrepresentation herein, or material misrepresentation or omission in any financial statements or other materials provided by Tenant or any guarantor of Tenant’s obligations hereunder in connection with negotiating this Lease or in connection with any Transfer under Section 10 above;

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(h) OFAC/FCPA Representation . Tenant is or becomes in breach of Section 24(w) below.

(i) Other Defaults . Except as otherwise provided in this Section 17 or elsewhere in this Lease, Tenant’s failure to perform, comply with, or observe any other agreement or obligation of Tenant under this Lease and the continuance of such failure for a period of more than thirty (30) days after Landlord has delivered to Tenant notice thereof or such shorter period expressly provided elsewhere in this Lease (provided, if the nature of Tenant’s failure is such that more time is reasonably required in order to cure, an Event of Default shall not be deemed to have occurred and such failure may be cured if Tenant commences to cure such failure within such period and thereafter reasonably and diligently pursues the cure thereof to completion, such period in no event to exceed ninety (90) days from the date of Landlord’s original default notice); and

(j) Insolvency . The filing of a petition by or against Tenant (the term “ Tenant ” shall include, for the purpose of this Section 17(j), any guarantor of Tenant’s obligations hereunder) (1) in any bankruptcy or other insolvency proceeding; (2) seeking any relief under any state or federal debtor relief law; (3) for the appointment of a liquidator or receiver for all or substantially all of Tenant’s property or for Tenant’s interest in this Lease; (4) for the reorganization or modification of Tenant’s capital structure; or (5) in any assignment for the benefit of creditors proceeding; however, if such a petition is filed against Tenant, then such filing shall not be an Event of Default unless Tenant fails to have the proceedings initiated by such petition dismissed within ninety (90) days after the filing thereof.

18. Remedies . Upon any Event of Default, Landlord may, in addition to all other rights and remedies afforded Landlord hereunder or by law or equity, take any one or more of the following actions:

(a) Termination of Lease . Terminate this Lease by giving Tenant notice thereof, in which event Tenant shall pay to Landlord the sum of (1) all Rent accrued hereunder through the date of termination, (2) all amounts due under Section 19(a) below, and (3) an amount equal to (A) the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a per annum rate equal to the “ Prime Rate ” as published on the date this Lease is terminated by The Wall Street Journal , Northwest Edition, in its listing of “ Money Rates ” plus one percent (1%), minus (B) the then-present fair rental value of the Premises for such period, similarly discounted.

(b) Termination of Possession . Terminate Tenant’s right to possess the Premises without terminating this Lease by giving notice thereof to Tenant, in which event Tenant shall pay to Landlord (1) all Rent and other amounts accrued hereunder to the date of termination of possession, (2) all amounts due from time to time under Section 19(a) below, and (3) all Rent and other net sums required hereunder to be paid by Tenant during the remainder of the Term, diminished by any net sums thereafter received by Landlord through reletting the Premises during such period, after deducting all costs incurred by Landlord in reletting the Premises. If Landlord elects to proceed under this Section 18(b), Landlord may remove all of Tenant’s property from the Premises and store the same in a public warehouse or elsewhere at the commercially reasonable cost of, and for the account of, Tenant, without becoming guilty of trespass, or liable for any loss or damage that may be occasioned thereby. Landlord shall use commercially reasonable efforts to relet the Premises on such terms as Landlord in its sole discretion may determine (including a lease term different from the Term, rental concessions, and alterations to, and improvement of, the Premises); however, Landlord shall not be obligated to relet the Premises before leasing other portions of the Building or Project and Landlord shall not be obligated to accept any prospective tenant proposed by Tenant unless such proposed tenant meets all of Landlord’s then-existing leasing criteria. Landlord shall not be liable for, nor shall Tenant’s obligations hereunder be diminished because of, Landlord’s failure to relet the Premises or to collect rent due for such reletting. Tenant shall not be entitled to the excess of any consideration obtained by reletting over the Rent due hereunder. Reentry by Landlord in the Premises shall not affect Tenant’s obligations hereunder for the unexpired Term; rather, Landlord may, from time to time, bring an action against Tenant to collect amounts due by Tenant, without the necessity of Landlord’s waiting until the expiration of the Term. Unless Landlord delivers written notice to Tenant expressly stating that it has elected to terminate this Lease, all actions taken by Landlord to dispossess or exclude Tenant from the Premises shall be deemed to be taken under this Section 18(b). If Landlord elects to proceed under this Section 18(b), it may at any time elect to terminate this Lease under Section 18(a) above.

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(c) Perform Acts on Behalf of Tenant . Perform any act Tenant is obligated to perform under the terms of this Lease (and enter upon the Premises in connection therewith if necessary) in Tenant’s name and on Tenant’s behalf, without being liable for any claim for damages therefor, and Tenant shall reimburse Landlord on demand for any commercially reasonable expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations under this Lease (including collection costs and legal expenses), plus interest thereon at the Default Rate.

19. Payment by Tenant; Non-Waiver; Cumulative Remedies .

(a) Payment by Tenant . Upon any Event of Default, Tenant shall pay to Landlord all commercially reasonable costs incurred by Landlord (including court costs and reasonable attorneys’ fees and expenses) in (1) obtaining possession of the Premises, (2) removing and storing Tenant’s or any other occupant’s property, (3) repairing, restoring, altering, remodeling, or otherwise putting the Premises into condition acceptable to a new tenant, (4) if Tenant is dispossessed of the Premises and this Lease is not terminated, reletting all or any part of the Premises (including brokerage commissions, cost of tenant finish work, and other costs incidental to such reletting), (5) performing Tenant’s obligations that Tenant failed to perform, and (6) enforcing, or advising Landlord of, its rights, remedies, and recourses arising out of the default. To the full extent permitted by Law, Landlord and Tenant agree that the federal and state courts of the State of Washington shall have exclusive jurisdiction over any matter relating to or arising from this Lease and the parties’ rights and obligations under this Lease.

(b) No Waiver . Landlord’s acceptance of Rent following an Event of Default shall not waive Landlord’s rights regarding such Event of Default. No waiver by Landlord of any violation or breach of any of the terms contained herein shall waive Landlord’s rights regarding any future violation of such term. Landlord’s acceptance of any partial payment of Rent shall not waive Landlord’s rights with regard to the remaining portion of the Rent that is due, regardless of any endorsement or other statement on any instrument delivered in payment of Rent or any writing delivered in connection therewith; accordingly, Landlord’s acceptance of a partial payment of Rent shall not constitute an accord and satisfaction of the full amount of the Rent that is due.

(c) Cumulative Remedies . Any and all remedies set forth in this Lease: (1) shall be in addition to any and all other remedies Landlord may have at law or in equity, (2) shall be cumulative, and (3) may be pursued successively or concurrently as Landlord may elect. The exercise of any remedy by Landlord shall not be deemed an election of remedies or preclude Landlord from exercising any other remedies in the future.

20. Surrender of Premises . No act by Landlord shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless it is in writing and signed by Landlord. At the expiration or termination of this Lease, Tenant shall deliver to Landlord the Premises with all improvements located therein in good repair and condition, free of Hazardous Materials placed on the Premises during the Term, with all Cables removed if requested by Landlord under the provisions of Section 25 below, broom-clean, reasonable wear and tear (and condemnation and Casualty damage not caused by Tenant, as to which Sections 14 and 15 above, respectively, shall control) excepted, and shall deliver to Landlord all keys to the Premises. Provided that no Event of Default then exists, Tenant may remove all unattached trade fixtures, furniture, and personal property placed in the Premises or elsewhere in the Building or Project (including Tenant’s Off-Premises Equipment, if any) by Tenant (but Tenant may not remove any such item that was paid for, in whole or in part, by Landlord unless Landlord requires such removal). Additionally, at Landlord’s option, Tenant shall remove such alterations, additions, improvements, trade fixtures, personal property, equipment (including Tenant’s Off-Premises Equipment, if any), and furniture as Landlord may request; however, Tenant shall not be required to remove any alteration, addition or improvement to the Premises or the Project if Landlord has specifically agreed in writing that the alteration, addition or improvement in question need not be removed; and provided further, that Tenant shall not be required to remove any of the Tenant Improvements (other than Cables, which Tenant shall be required to remove on the terms set forth in Section 26(b), below). Tenant shall repair all damage caused by such removal. All items not so removed shall, at Landlord’s

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option, become the property of Landlord without additional payment to Tenant or credit against Rent be deemed to have been abandoned by Tenant and may be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord without notice to Tenant and without any obligation to account for such items. The provisions of this Section 20 shall survive the expiration or earlier termination of the Term.

21. Holding Over . If Tenant, or anyone claiming under Tenant, fails to vacate and surrender the Premises to Landlord at the end of the Term, then Tenant shall be a tenant at sufferance and, in addition to all other damages and remedies to which Landlord may be entitled for such holding over Tenant shall pay Rent at a monthly rate equal to one and one-half (1 ¹ / ₂ ) times the sum of the Basic Rent plus Additional Rent payable during the last calendar month of the Term for the entire holdover period, calculated and pro-rated on a daily basis, and Tenant shall otherwise continue to be subject to all of Tenant’s obligations under this Lease. No holding over by Tenant after the end of the Term shall be construed to extend this Lease. If Tenant fails to vacate and surrender the Premises to Landlord at the end of the Term, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all losses, costs (including reasonable attorneys’ fees) and liabilities resulting from such failure, including any claims made by any succeeding tenant founded upon such failure to vacate and surrender the Premises to Landlord, and any lost profits to Landlord resulting therefrom. In the event that, prior to the expiration or earlier termination of this Lease, Landlord enters into a third-party lease for all or any portion of the Premises following the expiration or earlier termination of this Lease, Landlord shall use commercially reasonable efforts to deliver to a courtesy notice of the same to Tenant; provided, however, in no event shall any failure by Landlord to provide such notice be deemed a waiver of any of tenant’s obligations or liabilities under this Section 21. In addition, in the event of any holding over, or potential holding over, of the Premises by Tenant, Tenant may elect to send a written notice to Landlord (specifically referencing this Section 21) requesting whether Landlord has entered into a third-party lease for the Premises following the expiration or earlier termination of this Lease, and Landlord shall, within ten (10) business days of its receipt of such notice from Tenant, notify Tenant whether or not Landlord has entered into a third-party lease as of the date of such notice for the Premises following the expiration or earlier termination of this Lease; provided, however, in no event shall any such notice by Tenant to Landlord, or any subsequent notice from Landlord to Tenant (or any failure by Landlord to provide such notice) be deemed a waiver of any of tenant’s obligations or liabilities under this Section 21. Notwithstanding the foregoing, any holding over with the express written consent of Landlord granted to Tenant not less than six (6) months prior to the scheduled expiration of the Term shall constitute this Lease a lease from month to month (and shall not constitute a renewal of this Lease for any further term or an extension of the Term), and Tenant shall pay Rent at a monthly rate equal to (a) for the first thirty (30) days of such holding over, one hundred twenty-five percent (125%) of the sum of the Basic Rent plus the Additional Rent payable during the last calendar month of the Term, calculated and prorated on a daily basis; and (b) thereafter, one hundred fifty percent (150%) of the sum of the Basic Rent plus the Additional Rent payable during the last calendar month of the Term, calculated and pro-rated on a daily basis, and Tenant shall otherwise be subject to all of the terms and conditions of this Lease. The provisions of this Section 21 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. The provisions of this Section 21 shall survive the expiration or earlier termination of the Term.

22. Certain Rights Reserved by Landlord . Provided that the exercise of such rights does not materially and unreasonably interfere with Tenant’s access to or occupancy of the Premises, Landlord shall have the following rights:

(a) Building Operations . To decorate and to make inspections, repairs, alterations, additions, changes, or improvements, whether structural or otherwise, in and about the Project, or any part thereof, to enter upon the Premises (after giving Tenant reasonable prior notice thereof, which may be oral notice, except in cases of real or apparent emergency, in which case no notice shall be required) and during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building; to interrupt or temporarily suspend Building services and facilities; to change the name of the Building; and to change the arrangement and location of entrances or passageways, doors, doorways, corridors, elevators, stairs, restrooms, or other public parts of the Building. Noise, dust or vibration or other incidents of construction, shall in no way constitute a constructive eviction of Tenant, affect this Lease or impose any liability on Landlord.

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(b) Security . To take such reasonable measures as Landlord deems advisable for the security of the Building and its occupants; evacuating the Building for cause, suspected cause, or for drill purposes; temporarily denying access to the Building; and closing the Building after normal business hours and on Sundays and Holidays, subject, however, to Tenant’s right to enter when the Building is closed after normal business hours under such reasonable regulations as Landlord may prescribe from time to time;

(c) Current and Prospective Insurers, Purchasers, Investors and Mortgagees . To enter the Premises or any portion thereof at all reasonable hours upon at least twenty-four (24) hours’ prior notice (which may be written, delivered by e-mail or oral) to show the Premises or any portion thereof to current or prospective insurers, purchasers, investors or mortgagees and their respective brokers; and

(d) Prospective Tenants . At any time during the last twelve (12) months of the Term (or earlier if Tenant has notified Landlord in writing that it does not desire to renew the Term) or at any time following the occurrence of an Event of Default, to enter the Premises or any portion thereof at all reasonable hours to show the Premises or any portion thereof to prospective tenants and their brokers.

(e) General Terms Applicable to Landlord’s Right to Enter the Premises . In connection with any entry by Landlord into the Premises, a representative of Tenant shall accompany Landlord in connection with any such entry to the Premises; provided, however, the foregoing shall not apply in the case of an emergency where a representative of Tenant is not available to accompany Landlord. In addition, Tenant may, by written notice to Landlord, designate certain areas of the Premises as “Secured Areas” should Tenant require such areas for the purpose of securing certain valuable property or confidential information. In no event, however, shall Tenant shall any right to add locks or to change or otherwise modify any of the locks to any such Secured Areas. Subject to Landlord providing Tenant with reasonable prior notice, Landlord may not enter such Secured Areas, except in the event of an emergency (in which case no prior notice shall be required, but Landlord shall promptly inform Tenant of such entry as soon as reasonably practical thereafter), to perform an inspection, or perform any of Landlord’s duties or work required hereunder, in which case Landlord shall provide Tenant with reasonable notice of the specific date and time of entry (except in the case of an emergency). Tenant acknowledges that janitorial services will not be supplied to any Secured Areas, and that no adjustment of rent will be made as a result of any reduction in janitorial services as a result of any such designation. Notwithstanding anything to the contrary in this Lease, including in this Section 22, Landlord may enter the Premises at any time, without prior notice and without any obligation regarding a representative of Tenant accompanying Landlord, to (i) perform required services, including janitorial; (ii) take possession of the Premises or any portion thereof according to Section 18(b) above; (iii) exercise any of its other rights under Section 18 above; or (iv) post notices of nonresponsibility. Upon entry, Landlord may take such steps, including temporary closure of the Premises or any portion thereof, as are reasonably required to accomplish the purposes set forth in this Section 22. Landlord shall at all times have a key with which to unlock all the doors in the Premises. In an emergency, Landlord shall have the right to use any means Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises by Landlord as provided herein shall not be deemed to be a forcible or unlawful entry into or detainer of, or a constructive eviction of Tenant from, any portion of the Premises, and Tenant shall not be entitled to any damages or abatement of Rent in connection with such entry.

23. Substitution Space . Landlord may, at Landlord’s expense, relocate Tenant within the Project to space that is comparable in size, utility and condition to the Premises. Such comparable space shall also have exterior views that are reasonably comparable to those of the Premises, and Landlord shall at Landlord’s sole cost and expense, cause the comparable space to be improved with tenant improvements at least equal in quality to those in the Premises. If Landlord relocates Tenant, Landlord shall reimburse Tenant for Tenant’s reasonable out-of-pocket expenses for moving Tenant’s furniture, equipment, and supplies from the Premises to the relocation space and for reprinting Tenant’s stationery of the same quality and quantity as Tenant’s stationery supply on hand immediately before Landlord’s notice to Tenant of the exercise of this relocation right, as well as commercially reasonable costs actually paid by Tenant to third parties for making changes to Tenant’s address on its online presence, including without limitation its website, online portals, and social media profiles. Landlord shall give Tenant not less than six (6) month’s prior written notice of any such relocation. In the event of

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such a relocation, if the comparable space contains less rentable square footage than the then-existing Premises, Tenant’s rental obligations with respect to the comparable space shall be proportionately reduced to reflect such smaller rentable square footage (including, without limitation, an appropriate reduction of the Tenant’s Proportionate Share). In no event shall Tenant’s Rent be increased unless Tenant has requested a space larger than the Premises at the time of notice of relocation or unless Tenant has then currently been in negotiations with Landlord for expansion space. In addition, in the event that as of the date of Landlord’s notice of such relocation to Tenant, or as of the date of the proposed relocation of the Premises, the Premises comprises seventy-five percent (75%) or more of the rentable square footage of the Building, then Landlord shall no right under the terms of this Section 23 to relocate the Premises. Upon such relocation, the relocation space shall be deemed to be the Premises, and the terms of this Lease shall remain in full force and shall apply to the relocation space. No amendment or other instrument shall be necessary to effectuate the relocation contemplated by this Section 23; however, if requested by Landlord, Tenant shall execute an appropriate amendment document within fifteen (15) days after Landlord’s written request therefor. If Tenant fails to execute such relocation amendment within such time period, or if Tenant fails to relocate within the time period stated in Landlord’s relocation notice to Tenant (or, if such relocation space is not available on the date specified in Landlord’s relocation notice, as soon thereafter as the relocation space becomes available and is tendered to Tenant in the condition required by this Lease), then, in addition to Landlord’s other remedies set forth in this Lease, at law and/or in equity, Landlord may terminate this Lease by notifying Tenant thereof at least sixty (60) days prior to the termination date contained in Landlord’s termination notice. Time is of the essence with respect to Tenant’s obligations under this Section 23.

24. Miscellaneous .

(a) Landlord Transfer . Landlord may transfer any portion of the Project and any of its rights under this Lease, in the Project and in any other property referred to herein. If Landlord assigns its rights under this Lease, then Landlord shall thereby be released from any further obligations hereunder arising after the date of transfer, provided that the assignee assumes in writing Landlord’s obligations hereunder arising from and after the transfer date.

(b) Landlord’s Liability . The liability of the Landlord Parties to Tenant (or any person or entity claiming by, through or under Tenant) under the terms of this Lease or any matter relating to or arising out of the occupancy or use of the Premises and/or other areas of the Project shall be limited to Tenant’s actual direct, but not consequential, damages therefor and shall be recoverable only from the interest of Landlord in the Project. Tenant agrees to look solely to Landlord’s interest in the Project for the recovery of any judgment against any Landlord Party. No Landlord Party shall be personally liable for any such judgment, award or deficiency after execution thereon and Tenant hereby waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability contained in this Section 24(b) shall apply equally and inure to the benefit of the Landlord Parties, present and future advisors, beneficiaries, participants, representatives and their respective constituent partners, members, shareholders, trustees, heirs, successors and assigns. Under no circumstances shall any present or future general or limited partner of Landlord (if Landlord is a partnership), member of Landlord (if Landlord is a limited liability company) or trustee or beneficiary (if Landlord or any partner or member of Landlord is a trust) have any liability for the performance of Landlord’s obligations under this Lease, nor shall negative capital account of any constituent partner or member in Landlord (or in a constituent member or partner of Landlord) nor any obligation of any constituent member or partner of Landlord (or in any other constituent member or partner of Landlord) to restore a negative capital account or to contribute or loan capital to Landlord (or to any constituent member or partner of Landlord), at any time be deemed to be the property or an asset of Landlord or such other constituent member or partner (and neither Tenant nor any of its successors or assigns shall have any right to collect, enforce or proceed against or with respect to any such negative capital account of such a member’s or partner’s obligation to restore or contribute). Notwithstanding any contrary provision herein, no Landlord Party shall be liable for any injury or damage to, or interference with, Tenant’s business, including loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, or for any form of special or consequential damage, in each case however occurring. The foregoing shall be in addition to, and not in limitation of, any further limitation of liability that might otherwise apply. Notwithstanding the foregoing, none of the provisions of this Section 24(b) shall be deemed to release any insurance carrier that insures Landlord’s liability to Tenant or to third parties from any obligation to make any

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payment to Tenant pursuant to any such insurance policy, it being agreed that any release of Landlord for any obligation to Tenant is not intended to and does not release Landlord’s insurance carrier from the obligation of paying such loss on Landlord’s behalf. The provisions of this Section 24(b) shall survive the expiration or earlier termination of the Term.

(c) Force Majeure . Other than for Tenant’s obligations under this Lease that can be performed by the payment of money (e.g., payment of Rent and maintenance of insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, terrorist acts or activities, Laws or restrictions, or any other causes of any kind whatsoever that are beyond the control of such party; provided, however, that nothing in this Section 24(c) shall (1) permit Tenant to holdover in the Premises after the expiration or earlier termination of this Lease, or (2) excuse any obligation to pay Rent, any of Tenant’s obligations under Section 9 above, or Section 24(u) below, or any of Tenant’s obligations whose nonperformance would interfere with any other occupant’s use, occupancy or enjoyment of its respective premises or the Project.

(d) Brokerage . Neither Landlord nor Tenant has dealt with any broker or agent in connection with the negotiation or execution of this Lease, other than Studley, Inc. and Washington Partners (collectively, representing Tenant), whose commissions (if any) shall be paid by Landlord pursuant to separate written agreements. Each party acknowledges receipt of a copy of the pamphlet described in RCW 18.86.030(f) entitled “ The Law of Real Estate Agency ,” as required by Washington Law. Tenant and Landlord shall each indemnify the other against all costs, expenses, attorneys’ fees, liens and other liability for commissions or other compensation claimed by any broker or agent claiming the same by, through, or under the indemnifying party.

(e) Estoppel Certificates . From time to time, Tenant shall furnish to any person designated by Landlord (which may include Landlord), within ten (10) days after Landlord’s request therefor, an estoppel certificate signed by Tenant in favor of such party, confirming and containing such factual certifications and representations as to this Lease as may be reasonably requested, and a written statement from each guarantor of Tenant’s obligations under this Lease consenting, ratifying and confirming its guaranty is in full force and effect. Unless otherwise required by a Landlord’s Mortgagee or a prospective purchaser or mortgagee of, or investor in, the Project, the form of estoppel certificate to be signed by Tenant and statement to be made by each such guarantor shall be in the form attached hereto as Exhibit F . If Tenant does not deliver to Landlord such signed estoppel certificate and/or statement within such required time period, Landlord, Landlord’s Mortgagee and any prospective purchaser, mortgagee or investor, may conclusively presume and rely upon the following facts: (1) this Lease and the guaranty thereof, if any, is in full force and effect; (2) the terms and provisions of this Lease have not been changed except as otherwise represented by Landlord; (3) not more than one (1) monthly installment of Basic Rent and other charges have been paid in advance; (4) there are no claims against Landlord nor any defenses or rights of offset against collection of Rent or other charges; and (5) Landlord is not in default under this Lease. In such event, Tenant shall be estopped from denying the truth of the presumed facts.

(f) Notices . Except to as otherwise expressly provided in this Lease to the contrary, all notices, consents, approvals, requests and other communications given pursuant to this Lease shall be in writing and shall be (1) mailed by first-class, United States Mail, postage prepaid, certified, with return receipt requested, and addressed to the parties hereto at the address specified in the Basic Lease Information, (2) hand delivered to the intended addressee, or (3) sent by a nationally recognized overnight courier service; and in any case Landlord shall use commercially reasonable efforts to send a courtesy copy of any such notice via e-mail to Tenant at legal@glu.com (or such other e-mail address as my be specified in a written notice from Tenant to Landlord from time to time). All notices shall be effective upon delivery to the address of the addressee (even if such addressee refuses delivery thereof). The parties hereto may change their addresses by giving notice thereof to the other in conformity with this provision.

(g) Separability . If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future Laws, then the remainder of this Lease shall not be affected thereby and in lieu of such clause or provision, there shall be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible, which clause or provision shall be legal, valid, and enforceable.

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[Griptonite, Inc.]

(h) Amendments; Binding Effect; No Electronic Records . This Lease may not be amended except by instrument in writing signed by Landlord and Tenant. No provision of this Lease shall be deemed to have been waived by Landlord or Tenant unless such waiver is in writing signed by such party, and no custom or practice that may evolve between the parties in the administration of the terms hereof shall waive or diminish the right of Landlord to insist upon the performance by Tenant in strict accordance with the terms hereof. The terms and conditions contained in this Lease shall inure to the benefit of and be binding upon the parties hereto, and upon their respective successors in interest and legal representatives, except as otherwise herein expressly provided. This Lease is for the sole benefit of Landlord and Tenant, and, other than Landlord’s Mortgagee, no third-party shall be deemed a third-party beneficiary hereof.

(i) Quiet Enjoyment . Provided Tenant has performed all of its obligations hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance from Landlord or any party claiming by, through, or under Landlord, but not otherwise, subject to the terms and conditions of this Lease. It is understood and agreed that this covenant and any and all other covenants of Landlord contained in this Lease shall be binding upon Landlord and its successors only with respect to breaches occurring during its and their respective ownership of the Landlord’s interest hereunder.

(j) No Merger . There shall be no merger of the leasehold estate hereby created with the fee estate in the Premises or any part thereof if the same person acquires or holds, directly or indirectly, this Lease or any interest in this Lease and the fee estate in the leasehold Premises or any interest in such fee estate.

(k) Entire Agreement . This Lease constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all oral statements and prior writings relating thereto. Except for those set forth in this Lease, no representations, warranties, or agreements have been made by Landlord or Tenant to the other with respect to this Lease or the obligations of Landlord or Tenant in connection therewith. The normal rule of construction that any ambiguities be resolved against the drafting party shall not apply to the interpretation of this Lease or any exhibits or amendments hereto.

(l) Waiver of Jury Trial . TO THE MAXIMUM EXTENT PERMITTED BY LAW, LANDLORD AND TENANT EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LITIGATION OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE ARISING OUT OF OR WITH RESPECT TO THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

(m) Governing Law . This Lease shall be governed by and construed in accordance with the Laws of the State of Washington.

(n) Recording . Tenant shall not record this Lease or any memorandum of this Lease without the prior consent of Landlord, which consent may be withheld or denied in the sole and absolute discretion of Landlord, and any recordation by Tenant shall be a material breach of this Lease that cannot be cured. Tenant grants to Landlord a power of attorney to execute and record a release releasing any such recorded instrument of record that was recorded without the prior consent of Landlord.

(o) Water or Mold Notification . To the extent Tenant or its agents or employees discover any water leakage, water damage or mold in or about the Premises or Project, Tenant shall promptly notify Landlord thereof.

(p) Joint and Several Liability . If Tenant is comprised of more than one party, each such party shall be jointly and severally liable for Tenant’s obligations under this Lease. All unperformed obligations of Tenant hereunder not fully performed at the end of the Term shall survive the end of the Term, including payment obligations with respect to Rent, all indemnity obligations and all obligations concerning the condition and repair of the Premises.

[Cypress Building]

[Griptonite, Inc.]

(q) Financial Reports . Within fifteen (15) days after Landlord’s request, Tenant will furnish Tenant’s most recent audited financial statements (including any notes to them) to Landlord, or, if no such audited statements have been prepared, such other financial statements (and notes to them) as may have been prepared by an independent certified public accountant or, failing those, Tenant’s internally prepared financial statements; provided, however, so long as the Tenant under this Lease remains Griptonite, Inc., and Griptonite, Inc. continues to be a wholly-owned subsidiary of Glu Mobile Inc., and Griptonite, Inc.’s financial statements are consolidated with the financial statements of Glu Mobile Inc., then Tenant may satisfy its obligations hereunder by providing to Landlord Glu Mobile Inc.’s most recent financial statements, which may be Glu Mobile Inc.’s annual and quarterly reports if Glu Mobile is then a publicly traded company. If Tenant is a publicly traded corporation, Tenant may satisfy its obligations hereunder by providing to Landlord Tenant’s most recent annual and quarterly reports. Landlord will not disclose any aspect of Tenant’s financial statements that Tenant designates to Landlord as confidential except (1) to a Landlord’s Mortgagee or prospective mortgagees or purchasers of, or investors in, the Project, (2) in litigation between Landlord and Tenant, and/or (3) if required by Law or court order. Tenant shall not be required to deliver the financial statements required under this Section 24(q) more than once in any 12-month period unless requested by a Landlord’s Mortgagee or a prospective mortgagee or purchaser of, or investor in, the Project or an Event of Default occurs.

(r) Landlord’s Fees . Whenever Tenant requests Landlord to take any action not required of it hereunder or give any consent required or permitted under this Lease, Tenant will reimburse Landlord for Landlord’s commercially reasonable, out-of-pocket costs payable to third parties and incurred by Landlord in reviewing the proposed action or consent, including reasonable attorneys’, engineers’ or architects’ fees (subject to any limitations on such fees specifically set forth in this Lease), within thirty (30) days after Landlord’s delivery to Tenant of a statement of such costs and commercially reasonable supporting evidence. Tenant will be obligated to make such reimbursement without regard to whether Landlord consents to any such proposed action.

(s) Confidentiality . Tenant acknowledges that the terms and conditions of this Lease are to remain confidential for Landlord’s benefit, and may not be disclosed by Tenant to anyone, by any manner or means, directly or indirectly, without Landlord’s prior consent; however, Tenant may disclose the terms and conditions of this Lease if required by Law, federal or state securities regulations, or court order, and to its attorneys, accountants, employees and existing or prospective financial partners provided same are advised by Tenant of the confidential nature of such terms and conditions and agree to maintain the confidentiality thereof (in each case, prior to disclosure). Tenant shall be liable for any disclosures made in violation of this Section 24(s) by Tenant or by any entity or individual to whom the terms and conditions of this Lease were disclosed or made available by Tenant. The consent by Landlord to any disclosures shall not be deemed to be a waiver on the part of Landlord of any prohibition against any future disclosure.

(t) Authority . Tenant (if a corporation, partnership or other business entity) hereby represents and warrants to Landlord that Tenant is a duly formed and existing entity qualified to do business in the State of Washington, that Tenant has full right and authority to execute and deliver this Lease, and that each person signing on behalf of Tenant is authorized to do so. Landlord hereby represents and warrants to Tenant that Landlord has full right and authority to execute and deliver this Lease, and that each person signing on behalf of Landlord is authorized to do so, and that no additional approvals or consents from third parties (including without limitation any Landlord’s Mortgagee or any Bankruptcy Court having jurisdiction over the Project) are required in order for this Lease to be effective.

(u) Hazardous Materials . The term “ Hazardous Materials ” means any substance, material, or waste that is now or hereafter classified or considered to be hazardous, toxic, or dangerous under any Law relating to pollution or the protection or regulation of human health, natural resources or the environment, or poses or threatens to pose a hazard to the health or safety of persons on the Premises or in the Project. Tenant shall not use, generate, store, or dispose of, or permit the use, generation, storage or disposal of Hazardous Materials on or about the Premises or the Project except in a manner and quantity necessary for the ordinary performance of Tenant’s business, and then in compliance with all Laws. If Tenant breaches its obligations under this Section 24(w), Landlord may upon five (5) days prior notice to Tenant, or such shorter time required by Law or in order to minimize any hazard to person or property, take

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any and all action reasonably appropriate to remedy the same, including taking all appropriate action to clean-up or remediate any contamination resulting from Tenant’s use, generation, storage or disposal of Hazardous Materials, and Tenant shall reimburse to Landlord an amount equal to Landlord’s costs plus three percent (3%) for overhead which shall be payable within thirty (30) days after Tenant’s receipt of an invoice therefor, together with commercially reasonable supporting evidence. Notwithstanding Landlord’s indemnity contained in Section 11(d) above, Tenant shall defend, indemnify, and hold harmless Landlord and its representatives and agents from and against any and all Claims(including reasonable attorneys’ fees, cost of clean-up investigation and remediation and diminution in the value of the Premises or other portion of the Project) arising from Tenant’s failure to comply with the provisions of this Section 24(u). To the extent that Landlord is held strictly liable by a court or governmental agency of competent jurisdiction, Tenant’s obligation to Landlord under the foregoing indemnification shall likewise be without regard to fault on Tenant’s part. This indemnity provision shall survive the end of the Term.

(v) List of Exhibits . All exhibits and attachments attached hereto are incorporated herein by this reference.


Exhibit A	–	Outline of Premises
Exhibit B	–	Description of the Land
Exhibit C	–	Building Rules and Regulations
Exhibit D	–	Tenant Work Letter
Exhibit E	–	Form of Confirmation of Commencement Date Letter
Exhibit F	–	Form of Tenant Estoppel Certificate
Exhibit G	–	Parking
Exhibit H	–	Rent Abatement Provision
Exhibit I	–	Termination Option
Exhibit J	–	Extension Option
Exhibit K	–	Right of First Opportunity
Exhibit L	–	Form of Letter of Credit
Exhibit M	–	Intentionally Omitted
Exhibit N	–	Form of Subordination, Non-Disturbance and Attornment Agreement
Exhibit O	–	Form of Guaranty

(w) OFAC/FCPA Representation . Neither Tenant nor any of its Affiliates is or will be (a) conducting any business or engaging in any transaction or dealing with any person appearing on the U.S. Treasury Department’s OFAC list of prohibited countries, territories, “specifically designated nationals” (“ SDNs ”) or “ blocked person ” (each a “ Prohibited Person ”) (which lists can be accessed at the following web address: http://www.ustreas.gov/offices/enforcement/ofac/), including the making or receiving of any contribution of funds, goods or services to or for the benefit of any such Prohibited Person; (b) engaging in certain dealings with countries and organizations designated under Section 311 of the USA PATRIOT Act as warranting special measures due to money-laundering concerns; (c) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 dated September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”; (d) a foreign shell bank or any person that a financial institution would be prohibited from transacting with under the USA PATRIOT Act; or (e) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempting to violate, any of the prohibitions set forth in (i) any U.S. anti-money-laundering law, (ii) the Foreign Corrupt Practices Act, (iii) the U.S. mail and wire fraud statutes, (iv) the Travel Act, (v) any similar or successor statutes or (vi) any regulations promulgated under the foregoing statutes. If at any time this representation becomes false, then it shall be considered an Event of Default under this Lease as to which there shall be no right to notice or an opportunity to cure, notwithstanding anything contained in this Lease to the contrary, and Landlord shall have the right to exercise all of the remedies set forth in this Lease including, without limitation, immediate termination of this Lease.

(x) Survival of Obligations . Any obligations of the parties accruing prior to the end of the Term shall survive, and the parties shall promptly perform all such obligations whether or not this Lease has expired or earlier terminated.

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(y) Reasonable Efforts . Whenever in this Lease there is imposed upon Landlord the obligation to use its best efforts, reasonable efforts or diligence, Landlord shall be required to do so only to the extent the same is economically feasible and otherwise will not impose upon Landlord excessive financial or other burdens.

(z) Landlord Default . Notwithstanding anything to the contrary set forth in this Lease, Landlord shall be in default in the performance of any obligation required to be performed by Landlord pursuant to this Lease if Landlord fails to perform such obligation within thirty (30) days after the receipt of notice from Tenant specifying in detail Landlord’s failure to perform; provided, that if the nature of Landlord’s obligation is such that more than thirty (30) days are reasonably required for its performance, then Landlord shall not be in default under this Lease if it shall commence such performance within such thirty (30) day period and thereafter diligently pursue the same to completion.

(aa) Business Days . For purposes of this Lease, “ Business Days ” means all calendar days other than Saturdays, Sundays, and Holidays. If the date for performance of any covenant or obligation under this Lease shall fall on a day that is not a Business Day, then the date for performance thereof shall be deemed to be the next following Business Day.

(bb) Terms; Captions . The words “ Landlord ” and “ Tenant ” as used herein shall include the plural as well as the singular. The captions of Sections are for convenience only and shall not affect the interpretation of such Sections. The word “person”, as used in this Lease, means any natural person or persons in individual or representative capacities and any entity or entities of any kind whatsoever, including, corporations, partnerships and associations, or any combination of persons and entities. Any reference herein to “any part” or “any portion” of the Premises, the Building, the Property, the Project or any other property shall be construed to refer to all or any part of such property. Wherever this Lease requires Tenant to comply with any Law, rule, regulation, program, procedure or other requirement or prohibits Tenant from engaging in any particular conduct, this Lease shall be deemed also to require Tenant to cause each of its employees, licensees, invitees and subtenants, and any other person claiming by, through or under Tenant, to comply with such requirement or refrain from engaging in such conduct, as the case may be.

25. Signage .

(a) Interior Signage . Landlord shall (A) install one (1) Building standard identification sign identifying Tenant on the multi-tenant floor directory, (B) display Tenant’s name on the directory board for the Building located in the lobby of the Building, and (C) install identification signage at the entrance to the Premises. Landlord shall pay for the cost of the initial installation of such permitted signage, and Tenant shall pay for the cost of any changes thereto (which changes shall be subject to Landlord’s prior approval, which shall not be unreasonably withheld, conditioned or delayed).

(b) Monument Sign . Subject to the approval of all applicable governmental authorities, and compliance with all Laws, the Underlying Documents, and the terms of this Section 25(b), Landlord hereby grants Tenant the non-exclusive right to have Tenant’s name, “Griptonite, Inc.” and/or the name of Tenant’s parent corporation, “Glu Mobile Inc.,” but no other markings, displayed on one (1) sign panel of the existing monument sign for the Building (the “ Signage Monument ”). The design, size, specifications, graphics, materials, colors, lighting (if applicable) and exact location with respect to Tenant’s name sign on the Signage Monument shall be (A) consistent with the other signs (if any) on or to be placed on the Signage Monument and the quality and appearance of the Project and (B) designated by Landlord, subject to the approval of all applicable governmental authorities. Landlord shall install Tenant’s name sign on the Signage Monument at Tenant’s sole cost and expense. Any changes, additions, deletions or modifications to the Monument Signage shall be subject to Landlord’s prior approval (in its sole and absolute discretion) and shall also be at Tenant’s sole cost and expense. In addition, Tenant shall pay to Landlord from time to time, within thirty (30) days after Tenant’s receipt of an invoice from Landlord, together with reasonable supporting evidence, all other commercially reasonable costs attributable to the fabrication, installation, insurance, lighting (if applicable), maintenance and repair of Tenant’s name on the Signage Monument, plus a pro-rata share (determined by Landlord based upon the number of tenant signs on the Signage Monument) of the costs of maintenance, insurance, and repair of the Signage Monument. Landlord shall have the right to relocate, redesign and/or reconstruct the Signage Monument

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from time to time. The signage rights granted to Tenant under this Section 25(b) are personal to Griptonite, Inc., a Washington corporation, the original Tenant executing this Lease (the “ Original Tenant ”), and any Permitted Transferee to which Tenant’s entire interest in this Lease has been assigned pursuant to Section 10(h) above, and may not be assigned, voluntarily or involuntarily to, or exercised or used by, any person or entity other than the Original Tenant or such Permitted Transferee, and shall only be available to and exercisable by the Original Tenant, or such Permitted Transferee, as the case may be, when the Original Tenant, or such Permitted Transferee, as the case may be, is in actual and physical possession of one hundred percent (100%) of the Premises; provided, however, a change of the Signage Monument to reflect the name of any such Permitted Transferee or to reflect a change in the name of the Original Tenant shall be permitted so long as the name is not an Objectionable Name. The phrase “ Objectionable Name ” shall mean any name which relates to an entity that is of a character or reputation, or is associated with a political orientation or faction that is inconsistent with the quality of the Building as a Class “A” office building, or which would otherwise reasonably offend landlords of the Comparison Buildings (as defined in Exhibit J ). Upon termination or expiration of this Lease, or upon the earlier termination of Tenant’s signage rights under this Section 25(b), Landlord shall have the right to permanently remove Tenant’s (or such Permitted Transferee’s) name sign from the Signage Monument and to restore and repair all damage to the Signage Monument resulting from such removal. Within thirty (30) days of Tenant’s receipt of an invoice from Landlord, together with reasonable supporting evidence, Tenant shall reimburse Landlord for the commercially reasonable costs and expenses incurred by Landlord in performing such work plus a Landlord’s supervision fee equal to three percent (3%) of such costs and expenses. The immediately preceding sentence shall survive the end of the Term.

(c) Building Exterior Signage . Subject to the approval of all applicable governmental authorities, and compliance with all Laws, the Underlying Documents, and the terms of this Section 25(b), Landlord hereby grants Tenant the non-exclusive right to have Tenant’s name, “Griptonite, Inc.” and/or the name of Tenant’s parent corporation, “Glu Mobile Inc.,” but no other markings, displayed on one (1) exterior sign on the Building entry in the location mutually and reasonably agreed upon by Landlord and Tenant (the “ Building Exterior Sign ”). The design, size, specifications, graphics, materials, colors, lighting (if applicable) and exact location on the Building shall be (A) consistent with the other signs (if any) on or to be placed on the Building exterior and the quality and appearance of the Project and (B) designated by Landlord, subject to the approval of all applicable governmental authorities. Landlord shall install the Building Exterior Sign at Tenant’s sole cost and expense. Any changes, additions, deletions or modifications to the Building Exterior Sign shall be subject to Landlord’s prior approval (in its sole and absolute discretion) and shall also be at Tenant’s sole cost and expense. In addition, Tenant shall pay to Landlord from time to time, within thirty (30) days after Tenant’s receipt of an invoice from Landlord, together with reasonable supporting evidence, all other commercially reasonable costs attributable to the fabrication, installation, insurance, lighting (if applicable), maintenance and repair of Tenant’s name on the Building Exterior Sign, plus the costs of maintenance, insurance, and repair of the Building Exterior Sign. The signage rights granted to Tenant under this Section 25(b) are personal to the Original Tenant and any Permitted Transferee to which Tenant’s entire interest in this Lease has been assigned pursuant to Section 10(h) above, and may not be assigned, voluntarily or involuntarily to, or exercised or used by, any person or entity other than the Original Tenant or such Permitted Transferee, and shall only be available to and exercisable by the Original Tenant, or such Permitted Transferee, as the case may be, when the Original Tenant, or such Permitted Transferee, as the case may be, is in actual and physical possession of one hundred percent (100%) of the Premises; provided, however, a change of the Building Exterior Sign to reflect the name of any such Permitted Transferee or to reflect a change in the name of the Original Tenant shall be permitted so long as the name is not an Objectionable Name. Upon termination or expiration of this Lease, or upon the earlier termination of Tenant’s signage rights under this Section 25(b), Landlord shall have the right to permanently remove the Building Exterior Sign and to restore and repair all damage to the Building resulting from such removal. Within thirty (30) days of Tenant’s receipt of an invoice from Landlord, together with reasonable supporting evidence, Tenant shall reimburse Landlord for the commercially reasonable costs and expenses incurred by Landlord in performing such work plus a Landlord’s supervision fee equal to three percent (3%) of such costs and expenses. The immediately preceding sentence shall survive the end of the Term.

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26. Telecommunications and Communications .

(a) Tenant’s Telecommunications Providers . Tenant and its telecommunications companies, including local exchange telecommunications companies and alternative access vendor services companies, shall have no right of access to and within the Building or any other portion of the Project, for the installation and operation of telecommunications systems, including voice, video, data, Internet, and any other services provided over wire, fiber optic, microwave, wireless, and any other transmission systems (“ Telecommunications Services ”), for part or all of Tenant’s telecommunications within the Building and from the Building to any other location without Landlord’s prior consent, which consent shall not be unreasonably withheld, conditioned or delayed, and subject to the prior execution and delivery of an access agreement on Landlord’s standard form. All providers of Telecommunications Services shall be required to comply with the rules and regulations of the Building, applicable Laws and Landlord’s policies and practices for the Building. Tenant acknowledges that Landlord shall not be required to provide or arrange for any Telecommunications Services and that Landlord shall have no liability to any Tenant Party in connection with the installation, operation or maintenance of Telecommunications Services or any equipment or facilities relating thereto. Tenant, at its cost and for its own account, shall be solely responsible for obtaining all Telecommunications Services.

(b) Cable Work . Tenant may install, maintain, replace and remove (collectively, the “Cable Work”) and use any communications or computer wires, cables, fibers, connections and related telecommunications equipment and/or other facilities for telecommunications (collectively, “ Cable(s) ”) within or serving the Premises, provided: (1) Tenant shall obtain Landlord’s prior approval, which approval shall not be unreasonably withheld, delayed or conditioned, shall use an experienced, licensed and qualified contractor approved by Landlord, which approval shall not be unreasonably withheld, delayed or conditioned, and shall comply with provisions of Section 8 above and shall not interfere with the use of any then-existing Cables within or serving the Building, (2) an acceptable number of spare Cables and space for additional Cables shall be maintained for existing and future occupants of the Building, as determined in Landlord’s reasonable opinion, (3) if Tenant at any time uses any equipment that may create an electromagnetic field exceeding the normal insulation ratings of ordinary twisted pair riser cable or cause radiation higher than normal background radiation, the Cables therefor (including riser Cables) shall be appropriately insulated to prevent such excessive electromagnetic fields or radiation, (4) the Cables shall be clearly marked with adhesive plastic labels (or plastic tags attached to such Cables with wire) to show Tenant’s name, suite number, telephone number and the name of the person to contact in the case of an emergency (A) every four feet (4’) outside the Premises (including the electrical room risers and other Common Areas), and (B) at the Cables’ termination point(s), and (5) Tenant shall pay all costs in connection therewith. Landlord shall at all times maintain exclusive control over all risers (including their use) in the Building. Landlord reserves the right to require that Tenant remove any Cables located in or serving the Premises that are installed by or on behalf of Tenant in violation of these provisions, or which are at any time in violation of any applicable Laws or represent a dangerous or potentially dangerous condition, within three (3) days after receipt of notice by Tenant or such longer period of time as is reasonably necessary.

(c) Landlord’s Reserved Rights . Landlord may (but shall not have the obligation to) (i) install new Cables at the Building, (ii) create additional space for Cables at the Building, and (iii) reasonably direct, monitor and/or supervise the installation, maintenance, replacement and removal of the allocation and periodic reallocation of available space (if any) for, and the allocation of excess capacity (if any) on, any Cables now or hereafter installed at the Building by Landlord, Tenant or any other person. Such rights shall not be in limitation of other rights that may be available to Landlord by Law, in equity or otherwise. If Landlord exercises any such rights, Landlord may charge Tenant for such commercially reasonable costs attributable to Tenant, or may include those costs and all other such costs in Operating Costs (including, costs for acquiring and installing Cables and risers to accommodate new Cables and spare Cables, any associated computerized system and software for maintaining records of Cable connections, and the fees of any consulting engineers and other experts); provided, any capital expenditures included in Operating Costs hereunder shall be amortized (including interest on the unamortized cost) over the period of time prescribed by Section 4(b) above.

(d) Removal Obligations . Notwithstanding anything to the contrary contained in this Lease, Landlord reserves the right to require that Tenant remove any or all Cables within or serving the Premises upon expiration or earlier termination of this Lease. Any Cables not required by Landlord to be removed pursuant to this Section 26(d) shall, at

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[Griptonite, Inc.]

Landlord’s option, become the property of Landlord (without payment by Landlord). If Tenant fails to remove any such Cables as required by Landlord, or violates any other provision of this Section 26, Landlord may, after twenty (20)-days’ notice to Tenant, remove such Cables or remedy such other violation, at Tenant’s expense (without limiting Landlord’s other remedies available under this Lease, at Law or in equity), which amount plus three percent (3%) thereof shall be paid by Tenant within thirty (30) days after Tenant’s receipt of an invoice therefor, together with commercially reasonable supporting evidence. Tenant shall not, without the prior consent of Landlord in each instance (which may be withheld in Landlord’s sole discretion), grant to any third party a security interest in, or lien on, any Cables, and any such security interest or lien granted without Landlord’s consent shall be null and void. Notwithstanding anything to the contrary contained in this Lease, and without limiting the provisions of Section 26(a) above, except to the extent arising from the intentional or grossly negligent acts of Landlord or Landlord’s agents or employees, Landlord shall have no liability for damages arising from, and Landlord does not warrant that the Tenant’s use of any Cable will be free from the following (collectively, “Cable Problems”): (1) any eavesdropping or wire tapping by unauthorized parties, (2) any failure of any Cable to satisfy Tenant’s requirements, or (3) any shortages, failures, variations, interruptions, disconnections, loss or damage caused by the installation, maintenance, replacement, use or removal of Cables or by any failure of the environmental conditions or the power supply for the Building to conform to any requirements for the Cables or any associated equipment, or any other problems associated with any Cable by any other cause. Under no circumstances shall any Cable Problems be deemed an actual or constructive eviction of Tenant, render Landlord liable to Tenant for abatement of Rent or otherwise, or relieve Tenant from performance of Tenant’s other obligations under this Lease. Landlord in no event shall be liable for damages by reason of loss of profits, business interruption or other consequential damage arising from any Cable Problems. The provisions of this Section 26 shall survive the expiration or earlier termination of this Lease.

27. Building Upgrades . Landlord, at its sole cost and expense, shall complete certain building improvements as more particularly set forth in Exhibit D attached hereto.

LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT’S INTENDED COMMERCIAL PURPOSE, AND TENANT’S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, TENANT SHALL CONTINUE TO PAY THE RENT, WITHOUT ABATEMENT, DEMAND, SETOFF OR DEDUCTION, NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.

[Remainder of the Page Left Blank; Signature Page Follows]

[Cypress Building]

[Griptonite, Inc.]

[Signature Page to the Lease Agreement between Talon Properties Services, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA, as Landlord, and Griptonite, Inc., a Washington corporation, as Tenant]

This Lease is executed on the respective dates set forth below, but for reference purposes, this Lease shall be dated as of the date first above written. If the execution date is left blank, this Lease shall be deemed executed as of the date first written above.


LANDLORD:	TALON PORTFOLIO SERVICES, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA

	By:	/s/ William Pollard
	Name:	William Pollard
	Title:	Managing Principal

	Execution Date: 06/11/2013

TENANT:	GRIPTONITE, INC., a Washington corporation

	By:	/s/ Eric R. Ludwig
	Name:	Eric R. Ludwig
	Title:	EVP and CFO

	Execution Date: June 7, 2013

	By:	/s/ Scott J. Leichtner
	Name:	Scott J. Leichtner
	Title:	VP, General Counsel & Corporate Secretary

	Execution Date: June 7, 2013

[Cypress Building]

[Griptonite, Inc.]

LANDLORD ACKNOWLEDGMENT


STATE OF WASHINGTON		}
		} ss.
COUNTY OF KING		}

I certify that I know or have satisfactory evidence that the person appearing before me and making this acknowledgment is the person whose true signature appears on this document.

On this June 11 ^th , 2013, before me personally appeared WILLIAM R. POLLARD [Insert name of the individual executing the Lease on behalf of Landlord] , to me known to be the Managing Principal of Talon Portfolio Services, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA, the company that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

WITNESS my hand and seal hereto affixed the day and year first above written.

/s/ Pamela S. Mattingly

Pamela Mattingly

Type or print name

[NOTARY SEAL]



		Notary Public in and for the State of WA Residing at Redmond My commission expires: June 29, 2016

[Cypress Building]

[Griptonite, Inc.]

TENANT ACKNOWLEDGMENT


State of California		)
		)
County of San Francisco		)

On June 7, 2013 before me, Diana Polyakov, a Notary Public in and for said State, personally appeared Eric Robert Ludwig who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature Diana Polyakov (Notary Seal)


State of California		)
		)
County of San Francisco		)

On June 7, 2013 before me, Diana Polyakov, a Notary Public in and for said State, personally appeared Scott Jason Leichtner who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature Diana Polyakov (Notary Seal)

[ Cypress Building ]

[ Griptonite, Inc. ]

EXHIBIT A

OUTLINE OF PREMISES

PREMISES

LOGO

EXHIBIT A

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT A-1

OUTLINE OF TEMPORARY SPACE ¹

LOGO

The purposes of the diagram set forth in this Exhibit A-1 is to show the approximate location of the Temporary Space only, and such Exhibit A-1 is not meant to constitute an agreement, representation or warranty as to the construction of the Temporary Space, the precise area or layout thereof, or the specific location of any Common Areas. In addition, all of the furniture, fixtures and equipment show on this Exhibit A-1 is for illustrative purposes only, and are not part of (and shall not be provided with) the Temporary Space.

EXHIBIT A

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT B

DESCRIPTION OF THE LAND

The following described real property in the City of Bellevue, County of King, State of Washington:

Lots 1-4 & Undivided Interest in Tracts A-J, Bellefield Office Park, BSP, Vol. 138, Pgs. 25-29 and Lot 6, Bellefield Office Park, Vol. 119, P. 81-90.

EXHIBIT B

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT C

BUILDING RULES AND REGULATIONS

The following rules and regulations shall apply to the Premises, the Building, the Garage Area, and the appurtenances thereto:

1. Sidewalks, doorways, vestibules, halls, stairways, and other similar areas shall not be obstructed by tenants or used by any tenant for purposes other than ingress and egress to and from their respective leased premises and for going from one to another part of the Building.

2. Plumbing, fixtures and appliances shall be used only for the purposes for which designed, and no sweepings, rubbish, rags or other unsuitable material shall be thrown or deposited therein. Damage resulting to any such fixtures or appliances from misuse by a tenant or its agents, employees or invitees, shall be paid by such tenant.

3. No signs, advertisements or notices (other than those that are not visible outside any tenant’s leased premises) shall be painted or affixed on or to any windows or doors or other part of the Building without the prior written consent of Landlord. No nails, hooks or screws (other than those that are necessary to hang paintings, prints, pictures, or other similar items on the interior walls of any tenant’s leased premises) shall be driven or inserted in any part of the Building except by Building maintenance personnel. No curtains or other window treatments shall be placed between the glass and the Building standard window treatments.

4. Landlord shall provide and maintain an alphabetical directory for all tenants in the main lobby of the Building.

5. Landlord shall provide all door locks in each tenant’s leased premises, at the cost of such tenant, and no tenant shall place any additional door locks in its leased premises without Landlord’s prior written consent. Landlord shall furnish to each tenant a reasonable number of keys to such tenant’s leased premises, at such tenant’s cost, and no tenant shall make a duplicate thereof.

6. Movement in or out of the Building of furniture or office equipment, or dispatch or receipt by tenants of any bulky material, merchandise or materials that require use of elevators or stairways, or movement through the Building entrances or lobby shall be conducted under Landlord’s supervision at such times and in such a manner as Landlord may reasonably require. Each tenant assumes all risks of, and shall be liable for all damage to, articles moved and injury to persons or public engaged or not engaged in such movement, including equipment, property and personnel of Landlord if damaged or injured as a result of acts in connection with carrying out this service for such tenant.

7. Landlord may prescribe weight limitations and determine the locations for safes and other heavy equipment or items, which shall in all cases be placed in the Building so as to distribute weight in a manner acceptable to Landlord, which may include the use of such supporting devices as Landlord may require. All damages to the Building caused by the installation or removal of any property of a tenant, or done by a tenant’s property while in the Building, shall be repaired at the expense of such tenant.

8. Corridor doors, when not in use, shall be kept closed. Nothing shall be swept or thrown into the corridors, halls, elevator shafts or stairways. No birds or animals (other than service animals) shall be brought into or kept in, on or about any tenant’s leased premises. No portion of any tenant’s leased premises shall at any time be used or occupied as sleeping or lodging quarters.

9. Tenant shall cooperate with Landlord’s employees in keeping its leased premises neat and clean. Tenants shall not employ any person for the purpose of such cleaning other than the Building’s cleaning and maintenance personnel.

10. To ensure orderly operation of the Building, no ice, mineral or other water, towels, newspapers, etc. shall be delivered to any leased area except by persons approved by Landlord.

EXHIBIT C

[Cypress Building]

[Griptonite, Inc.]

11. Tenant shall not make or permit any vibration or improper, objectionable or unpleasant noises or odors in the Building or otherwise interfere in any way with other tenants or persons having business with them.

12. No machinery of any kind (other than normal office equipment) shall be operated by any tenant on its leased area without Landlord’s prior written consent, nor shall any tenant use or keep in the Building any flammable or explosive fluid or substance (other than typical office supplies [e.g., photocopier toner] used in compliance with all Laws).

13. Landlord will not be responsible for lost or stolen personal property, money or jewelry from tenant’s leased premises or public or Common Areas regardless of whether such loss occurs when the area is locked against entry or not.

14. No vending or dispensing machines of any kind may be maintained in any leased premises without the prior written permission of Landlord.

15. Tenant shall not conduct any activity on or about the Premises or Project which will draw pickets, demonstrators, or the like.

16. All vehicles are to be currently licensed, in good operating condition, parked for business purposes having to do with tenant’s business operated in such tenant’s leased premises, parked within designated parking spaces, one vehicle to each space. No vehicle shall be parked as a “billboard” vehicle in the Garage. Any vehicle parked improperly may be towed away. Tenant, tenant’s agents, employees, vendors and customers who do not operate or park their vehicles as required shall subject the vehicle to being towed at the expense of the owner or driver. Landlord may place a “boot” on the vehicle to immobilize it and may levy a charge of Fifty Dollars ($50.00) to remove the “boot.” Tenant shall indemnify, hold and save harmless Landlord of any liability arising from the towing or booting of any vehicles belonging to a Tenant Party.

17. No tenant may enter into phone rooms, electrical rooms, mechanical rooms, or other service areas of the Building unless accompanied by Landlord or the Building manager.

18. Tenant will not permit any Tenant Party to bring onto the Project any handgun, firearm or other weapons of any kind, illegal drugs or, unless expressly permitted by Landlord in writing, alcoholic beverages.

19. Tenant shall not permit its employees, invitees or guests to smoke in such tenant’s leased premises or the lobbies, passages, corridors, elevators, vending rooms, rest rooms, stairways or any other area shared in common with other tenants in the Building, or permit its employees, invitees, or guests to loiter at the Building entrances for the purposes of smoking. Landlord may, but shall not be required to, designate an area for smoking outside the Building.

20. Any requests by Tenant will be attended to only upon application at the office of the property manager located at 1150 114 ^th Avenue, SE, Suite 100, Bellevue, Washington (or such other address as may be designated by Landlord from time to time) (the “ Property Management Office ”). Employees of the Project shall not perform work or do anything outside their regular duties unless under special instructions from the Property Management Office.

EXHIBIT C

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT D

TENANT WORK LETTER

Tenant acknowledges and agrees that the Premises have previously been constructed including interior tenant improvements therein, and is satisfactory and shall be accepted by Tenant in its “AS-IS” condition and configuration as of the date of execution of the Lease and on the Commencement Date; provided, however, that Landlord shall construct certain modifications to the interior of the Premises pursuant to the “Approved Working Drawings” (as defined below) in accordance with the following provisions of this Tenant Work Letter. All references in this Tenant Work Letter to “the Lease” shall mean the relevant portions of the Lease to which this Tenant Work Letter is attached as Exhibit D .

SECTION 1

IMPROVEMENTS

1.1 Construction Drawings for the Premises . Prior to the execution of the Lease, Landlord and Tenant have approved a detailed space plan for the construction of certain improvements in the Premises, which space plan has been prepared by JPC Architects, and is dated May 22, 2013 (the “ Final Space Plan ”). Based upon and in conformity with the Final Space Plan, Landlord shall cause its architect and engineers to prepare and deliver to Tenant, for Tenant’s approval, detailed specifications and engineered working drawings for the tenant improvements shown on the Final Space Plan (the “ Working Drawings ”). The Working Drawings shall incorporate modifications to the Final Space Plan as necessary to comply with the floor load and other structural and system requirements of the Building. To the extent that the finishes and specifications are not completely set forth in the Final Space Plan for any portion of the tenant improvements depicted thereon, the actual specifications and finish work shall be in accordance with the specifications for the Building’s standard components (the “Specifications”) to be used in the construction of tenant improvements (collectively, the “Standard Improvement Package”), which Specifications have been received and reviewed by Tenant. Landlord may make changes to the Specifications for the Standard Improvement Package from time to time. Within three (3) Business Days after Tenant’s receipt of the Working Drawings, Tenant shall approve or disapprove the same, which approval shall not be unreasonably withheld; provided, however, that Tenant may only disapprove the Working Drawings to the extent such Working Drawings are inconsistent with the Final Space Plan and only if Tenant delivers to Landlord, within such three (3)-Business Day period, specific changes proposed by Tenant that are consistent with the Final Space Plan and do not constitute changes that would result in any of the circumstances described in items (i) through (iv) below. If any such revisions are timely and properly proposed by Tenant, Landlord shall cause its architect and engineers to revise the Working Drawings to incorporate such revisions and submit the same for Tenant’s approval in accordance with the foregoing provisions within three (3) Business Days after Landlord’s receipt of such proposed revisions, and the parties shall follow the foregoing procedures for approving the Working Drawings until the same are finally approved by Landlord and Tenant; provided, however, that if the Working Drawings are not finally approved by Landlord and Tenant by May 24, 2013, then either Landlord or Tenant may, in its sole discretion, terminate the Lease upon delivery of written notice therefor to the other on or before May 31, 2013. Upon Landlord’s and Tenant’s approval of the Working Drawings, the same shall be referred to as the “Approved Working Drawings”. Tenant shall make no changes, change orders or modifications to the Approved Working Drawings without the prior written consent of Landlord, which consent may be withheld in Landlord’s sole discretion if such change or modification would: (i) directly or indirectly delay the Substantial Completion of the Premises; (ii) increase the cost of designing or constructing the Tenant Improvements (as defined below) above the cost of the tenant improvements depicted in the Final Space Plan; (iii) be of a quality lower than the quality of the Specifications set forth in the Standard Improvement Package; and/or (iv) require any changes to the base, shell and core work, the Building’s Structure structural improvements or any of the Building’s Systems. The Final Space Plan and Approved Working Drawings shall be collectively referred to herein as the “Construction Drawings”. The tenant improvements shown on the Approved Working Drawings shall be referred to herein as the “Tenant Improvements”. Following Landlord’s and Tenant’s approval of the Working Drawings, and the Contractor’s

EXHIBIT D

[Cypress Building]

[Griptonite, Inc.]

completion of its construction schedule for the Tenant Improvements, Landlord shall deliver a courtesy copy of such construction schedule to Tenant, and thereafter, Tenant may request from time to time that Landlord provide Tenant with a courtesy copy of any revised construction schedule and if Landlord has received such an updated construction schedule from the Contractor, Landlord shall deliver a courtesy copy of the same to Tenant. In addition, following Tenant’s written request following the Substantial Completion of the Tenant Improvements, Landlord shall provide Tenant with a statement of the final costs of the construction of the Tenant Improvements for Tenant’s use solely in connection with the “full value” requirement for Tenant’s property damage insurance under Section 11(a)(B) of this Lease.

1.2 Landlord Work . In addition to the foregoing Tenant Improvements, Landlord shall, at Landlord’s sole cost and expense, construct certain improvements to the Building (including, without limitation, to the Building’s entry lobby) (collectively, the “Landlord Work”), which Landlord Work is set forth more particularly on Schedule 1 attached to this Tenant Work Letter. Unless otherwise expressly set forth on Schedule 1 , all such Landlord Work shall be completed to Landlord’s Building standard condition, using Building standard methods, materials and procedures, in Building standard color or colors (if applicable) to be designated by Landlord. Tenant shall make no changes or modifications to the Landlord Work without the prior written consent of Landlord, which consent may be withheld in Landlord’s sole discretion.

SECTION 2

CONSTRUCTION AND COST OF TENANT IMPROVEMENTS

Landlord and Tenant hereby agree that Landlord shall, at Landlord’s expense (except as provided in this Section 2), cause a contractor designated by Landlord (the “ Contractor ”) to (i) obtain all applicable building permits for construction of the Tenant Improvements and the Landlord Work, and (ii) construct the Tenant Improvements as depicted on the Approved Working Drawings and the Landlord Work as set forth in Section 1.2 of this Tenant Work Letter, all in compliance with such building permits and all applicable Laws and Restrictions in effect at the time of construction, and in good workmanlike manner; provided, however, in the event that (A) the Approved Working Drawings differ with respect to the quality and quantity of those tenant improvements depicted on the Final Space Plan, and such differences were caused by Tenant’s requests, and/or (B) Tenant shall request any changes or substitutions to any of the Construction Drawings, and such differences, changes and/or substitutions increase the cost of construction of the Tenant Improvements above the cost of the tenant improvements depicted on the Final Space Plan, then Tenant shall pay such excess cost (which shall include a Landlord’s supervision fee equal to three percent (3%) of such excess cost) to Landlord in cash within thirty (30) days after Landlord’s request therefor. Notwithstanding the foregoing to the contrary, in no event shall Landlord be obligated to pay for any of Tenant’s furniture, computer systems, telephone systems, equipment or other personal property that may be depicted on the Construction Drawings, all of which items shall be paid for by Tenant.

Notwithstanding the foregoing, Tenant shall be entitled to a one-time allowance (the “ Moving Allowance ”) in an amount up to One Hundred Five Thousand Eight Hundred Sixteen Dollars ($105,816.00) for the costs reasonably and actually incurred by Tenant and paid to third-parties in connection with its moving into the Premises. The Moving Allowance will be disbursed by Landlord in accordance with Landlord’s standard disbursement procedures, including, without limitation, following Landlord’s receipt of (i) evidence (i.e., invoices, contracts, or other documentation reasonably satisfactory to Landlord) of Tenant’s payment of its moving costs, and (ii) written notice from Tenant requesting such disbursement. In no event shall Landlord be obligated to disburse any amount in excess of the Moving Allowance in connection with any moving costs incurred by Tenant (other than the Additional Moving Allowance provided below). No portion of the Moving Allowance, if any, remaining thirty (30) days after Tenant’s move into the Premises shall be available for use by Tenant.

In the event that the Tenant Improvements are not Substantially Completed by September 30, 2013, and such failure was not due in any part to Tenant Delay (as that term is defined in Section 3.2, below), then in connection with Tenant’s leasing of the Temporary Space as set forth in Section 3(b) of this Lease, Tenant shall be entitled to an additional one-time allowance

EXHIBIT D

[Cypress Building]

[Griptonite, Inc.]

(the “ Additional Moving Allowance ”) in an amount up to Fifty-Two Thousand Nine Hundred Eight and No/100 Dollars ($52,908.00) for the additional costs reasonably and actually incurred by Tenant and paid to third-parties in connection with first moving into the Temporary Space and then moving into the Premises. In no event shall any portion of the Additional Moving Allowance be applied towards any cost related to moving into the Temporary Space or Premises that is duplicative of costs related to moving into the Premises or Temporary Space, respectively, unless such costs are separate and distinct costs actually and reasonably incurred by Tenant The Additional Moving Allowance will be disbursed by Landlord in accordance with Landlord’s standard disbursement procedures applicable to the Moving Allowance as set forth above. In no event shall Landlord be obligated to disburse any amount in excess of the Additional Moving Allowance in connection with any costs incurred by Tenant (other than the Additional Moving Allowance provided below). No portion of the Additional Moving Allowance, if any, remaining thirty (30) days after Tenant’s move into the Premises shall be available for use by Tenant.

SECTION 3

SUBSTANTIAL COMPLETION

3.1 Substantial Completion . For purposes of the Lease, including this Work Letter, “ Substantial Completion ” (and any correlative variations thereof) of the Tenant Improvements shall be deemed to be that date upon which (i) Landlord has obtained the approvals and/or permits from the applicable governmental authority that are required for Tenant’s occupancy and use of the Premises for the Permitted Use (e.g., a certificate of occupancy, a temporary certificate of occupancy, or the legal equivalent of either); and (ii) the Tenant Improvements are completed pursuant to the Approved Working Drawings, with the exception of any “Punch List Items” (as defined below), and any finish items and materials that are selected by Tenant, but that are not available within a reasonable time give the Estimated Delivery Date. For the purposes of this Work Letter, the term “ Punch List Items ” shall mean minor details of construction or decoration or mechanical adjustments that can reasonably be corrected or competed after the date Tenant commences its operations within the Premises without causing substantial interference with Tenant’s operations therein.

3.2 Tenant Delays . If there shall be a delay or there are delays in the Substantial Completion of the Tenant Improvements as a direct, indirect, partial, or total result of any of the following (individually, a “ Tenant Delay ”, and collectively, “ Tenant Delays ”):

(i) Tenant’s failure to timely approve the Working Drawings or any other matter requiring Tenant’s approval;

(ii) a breach by Tenant of the terms of this Tenant Work Letter or the Lease;

(iii) Tenant’s request for changes in any of the Construction Drawings, or to any of the Landlord Work;

(iv) Tenant’s requirement for materials, components, finishes or improvements that are not available in a commercially reasonable time given the Estimated Delivery Date, or which are different from, or not included in, the Standard Improvement Package;

(v) any changes in the Construction Drawings, the Tenant Improvements, and/or the Landlord Work required by applicable Laws if such changes are directly attributable to Tenant’s use of the Premises or Tenant’s specialized Tenant Improvements (as reasonably determined by Landlord);

(vi) changes to the base, shell and core work, the Building’s Structure, including the base, shell and core thereof, or the Building’s Systems required by the Approved Working Drawings;

(vii) the installation of the HVAC on/off system described in Section 7(a) of this Lease; or

(vii) any other acts or omissions of Tenant, or its agents or employees;

EXHIBIT D

[Cypress Building]

[Griptonite, Inc.]

then, notwithstanding anything to the contrary set forth in the Lease and regardless of the actual date of Substantial Completion of the Premises, the Commencement Date shall be deemed to be the date the Commencement Date would have occurred if no Tenant Delay or Tenant Delays, as set forth above, had occurred.

SECTION 4

MISCELLANEOUS

4.1 Tenant’s Entry Into the Premises Prior to Substantial Completion . Subject to the terms hereof and provided that Tenant and its agents do not interfere with Contractor’s work at the Project or in the Premises, at Landlord’s reasonable discretion Contractor shall allow Tenant access to the Premises from and after the Lease Date and prior to the Substantial Completion of the Premises for the purpose of Tenant installing overstandard equipment or fixtures (including Tenant’s data and telephone equipment) in the Premises. Prior to Tenant’s entry into the Premises as permitted by the terms of this Section 4.1, (i) Tenant shall submit a schedule to Landlord and Contractor, for their approval, which schedule shall detail the timing and purpose of Tenant’s entry, and (ii) Tenant shall deliver to Landlord the policies or certificates evidencing each contractor’s/subcontractor’s insurance as required under the terms of Section 8(c) of this Lease and Tenant’s insurance as required under the terms of Section 11(a) of this Lease. In connection with any such entry, Tenant acknowledges and agrees that Tenant’s employees, agents, contractors, consultants, workmen, mechanics, suppliers and invitees shall fully cooperate, work in harmony and not, in any manner, interfere with Landlord or Landlord’s contractors (including the Contractor), agents or representatives in performing work at the Project or in the Premises, or interfere with the general operation of the Project or any portion thereof. If at any time any such person representing Tenant shall not be cooperative or shall otherwise cause or threaten to cause any such disharmony or interference, including, without limitation, labor disharmony, and Tenant fails to immediately institute and maintain corrective actions as reasonably directed by Landlord, then Landlord may revoke Tenant’s entry rights upon twenty-four (24) hours’ prior notice to Tenant. Tenant acknowledges and agrees that any such entry into and occupancy of the Premises or any portion thereof by Tenant or any person or entity working for or on behalf of Tenant shall be deemed to be subject to all of the terms, covenants, conditions and provisions of the Lease, excluding only the covenant to pay Rent (until the occurrence of the Commencement Date). Tenant further acknowledges and agrees that Landlord shall not be liable for any injury, loss or damage that may occur to any of Tenant’s work made in or about the Premises in connection with such entry or to any property placed therein prior to the Commencement Date, the same being at Tenant’s sole risk and liability. Tenant shall be liable to Landlord for any damage to any portion of the Premises, including the Tenant Improvements, caused by Tenant or any of Tenant’s employees, agents, contractors, consultants, workmen, mechanics, suppliers and invitees. In the event that the performance of Tenant’s work in connection with such entry causes extra costs to be incurred by Landlord or requires the use of any Building or other Project services, Tenant shall reimburse Landlord for such extra costs and/or shall pay Landlord for such Building or other Project services, as the case may be, at Landlord’s standard rates then in effect within thirty (30) days of Tenant’s receipt of an invoice from Landlord, together with commercially reasonable supporting evidence. In addition, Tenant shall hold Landlord harmless from and indemnify, protect and defend Landlord against any loss or damage to the Project or any portion thereof and against injury to any persons caused by Tenant’s actions pursuant to this Section 4.1.

4.2 Tenant’s Representative . Tenant has designated Mr. Jack Beaudoin as its sole representative with respect to the matters set forth in this Tenant Work Letter, who shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter. Tenant shall have the right to change its designated representative from time to time upon written notice to Landlord.

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

EXHIBIT D

[Cypress Building]

[Griptonite, Inc.]

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

4.5 Tenant’s Lease Default . Notwithstanding any provision to the contrary contained in the Lease, if an Event of Default by Tenant as described in Section 17 of the Lease or any default by Tenant under this Tenant Work Letter has occurred at any time on or before Substantial Completion of the Tenant Improvements, then (i) in addition to all other rights and remedies granted to Landlord pursuant to the Lease, at law and/or in equity, Landlord shall have the right to cause Contractor to cease the construction of the Tenant Improvements (in which case, Tenant shall be responsible for any delay in the Substantial Completion of the Tenant Improvements caused by such work stoppage as set forth in Section 3.2 of this Tenant Work Letter), and (ii) all other obligations of Landlord under the terms of this Tenant Work Letter shall be forgiven until such time as such default is cured pursuant to the terms of the Lease or this Work Letter (in which case, Tenant shall be responsible for any delay in the Substantial Completion of the Tenant Improvements caused by such inaction by Landlord). In addition, if the Lease is terminated prior to the Commencement Date, for any reason due to an Event of Default by Tenant as described in Section 17 of the Lease or any default by Tenant under this Tenant Work Letter, in addition to any other remedies available to Landlord under the Lease, at law and/or in equity, Tenant shall pay to Landlord, as additional Rent under the Lease, within five (5) days of receipt of a statement therefor, any and all costs incurred by Landlord (including any portion of the Tenant Improvement Allowance disbursed by Landlord) and not reimbursed or otherwise paid by Tenant through the date of such termination in connection with the Tenant Improvements to the extent planned, installed and/or constructed as of such date of termination, including, but not limited to, any costs related to the removal of all or any portion of the Tenant Improvements and restoration costs related thereto.

4.6 Deliveries Upon Completion . Upon completion of the Tenant Improvements, Landlord shall submit to Tenant (i) two (2) complete sets of as-built plans [one (1) of which shall be reproducible] and specifications describing all portions of the Tenant Improvements and indicating any material changes from the Approved Working Drawings, if any, made during the course of the performance of the Tenant Improvements; and (ii) warranties from the Contractor for not less than one (1) year against defects in workmanship, materials and equipment.

EXHIBIT D

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT E

CONFIRMATION OF COMMENCEMENT DATE

, 20

[Insert name and address of Tenant]

Re:

Lease Agreement (the “Lease”) dated , 20 , between Talon Portfolio Services, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA (“ Landlord ”), and Griptonite, Inc., a Washington corporation (“ Tenant ”). Capitalized terms used herein but not defined shall be given the meanings assigned to them in the Lease.

Ladies and Gentlemen:

Landlord and Tenant agree as follows:

1. Condition of Premises . Tenant has accepted possession of the Premises pursuant to the Lease. Any improvements required by the terms of the Lease to be made by Landlord have been completed to the full and complete satisfaction of Tenant in all respects except for the punch-list items described on Exhibit A hereto (the “ Punch-list Items ”), and except for such Punch-list Items, Landlord has fulfilled all of its duties under the Lease with respect to such initial tenant improvements. Furthermore, Tenant acknowledges that the Premises are suitable for the Permitted Use.

2. Commencement Date . The Commencement Date of the Lease is , 20 .

3. Expiration Date . The Term is scheduled to expire on the last day of the th full calendar month of the Term, which date is , 20 .

4. Contact Person . Tenant’s contact person in the Premises is:

________________________

Attention:

Telephone: - -

5. Ratification . Tenant hereby ratifies and confirms its obligations under the Lease, and represents and warrants to Landlord that as of the date hereof, it has no defenses thereto. Additionally, Tenant further confirms and ratifies that, as of the date hereof, (a) the Lease is and remains in good standing and in full force and effect, and (b) Tenant has no claims, counterclaims, setoffs or defenses against Landlord arising out of the Lease or in any way relating thereto or arising out of any other transaction between Landlord and Tenant.

6. Binding Effect; Governing Law . Except as modified hereby, the Lease shall remain in full effect and this letter shall be binding upon Landlord and Tenant and their respective successors and assigns. If any inconsistency exists or arises between the terms of this letter and the terms of the Lease, the terms of this letter shall prevail. This letter shall be governed by the laws of the State of Washington.

EXHIBIT E

[Cypress Building]

[Griptonite, Inc.]

Please indicate your agreement to the above matters by signing this letter in the space indicated below and returning an executed original to us.


Sincerely,

[PROPERTY MANAGEMENT COMPANY SIGNATURE BLOCK] , on behalf of Landlord

, a _____________________________ [Insert jurisdiction in which the Property Management Company is organized and type of entity]

By:
Name:
Title:



Agreed and accepted:

GRIPTONITE, INC., a Washington corporation

By:

Name:

Title:

EXHIBIT E

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT A TO EXHIBIT E

PUNCH-LIST ITEMS

Please insert any punch-list items that remain to be performed by Landlord. If no items are listed below by Tenant, none shall be deemed to exist.

EXHIBIT E

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT F

FORM OF TENANT ESTOPPEL CERTIFICATE

The undersigned is the Tenant under the Lease (as defined below) between Talon Portfolio Services, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA, as Landlord, and the undersigned as Tenant, for the Premises commonly known as Suite 100 of the office building located at 1500 114 ^th Avenue SE, Bellevue, Washington, and commonly known as the Cypress Building, and hereby certifies as follows:

1. The Lease consists of the original Lease Agreement dated as of , 20 between Tenant and Landlord and the following amendments or modifications thereto (if none, please state “none”):

The documents listed above are herein collectively referred to as the “ Lease ” and represent the entire agreement between the parties with respect to the Premises. All capitalized terms used herein but not defined shall be given the meaning assigned to them in the Lease.

2. The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided in Section 1 above.

3. The Term commenced on , 20 and the Term expires, excluding any renewal options, on , 20 , and Tenant has no option, right of first refusal or other right to purchase all or any part of the Premises or the Project or interest therein, or any option to terminate or cancel the Lease, except as expressly set forth in the Lease.

4. Tenant currently occupies the Premises described in the Lease and Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect thereto except as follows (if none, please state “none”):

5. All monthly installments of Basic Rent, all Additional Rent and all monthly installments of estimated Additional Rent have been paid when due through . The current monthly installment of Basic Rent is $ .

6. All conditions of the Lease to be performed by Landlord necessary to the enforceability of the Lease have been satisfied and Landlord is not in default thereunder. In addition, Tenant has not delivered any notice to Landlord regarding a default by Landlord thereunder.

7. As of the date hereof, there are no existing defenses or offsets, or, to the undersigned’s knowledge, claims or any basis for a claim, that Tenant has against Landlord and no event has occurred and no condition exists, which, with the giving of notice or the passage of time, or both, will constitute a default under the Lease.

8. No rental has been paid more than thirty (30) days in advance and no security deposit has been delivered to Landlord except as provided in the Lease.

9. If Tenant is a corporation, partnership or other business entity, each individual executing this Estoppel Certificate on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in the state in which the Premises are located if required by law and that Tenant has full right and authority to execute and deliver this Tenant Estoppel Certificate and that each person signing on behalf of Tenant is authorized to do so.

EXHIBIT F

[Cypress Building]

[Griptonite, Inc.]

10. There are no actions pending against Tenant under any bankruptcy or similar laws of the United States or any state.

11. Other than in compliance with all applicable laws and incidental to the ordinary course of the use of the Premises, Tenant has not used, stored, or released any hazardous substances in the Premises.

12. All tenant improvement work and other improvement work to be performed by Landlord under the Lease has been completed in accordance with the Lease and has been accepted by the undersigned and all reimbursements and allowances due to the undersigned under the Lease in connection with any tenant improvement work have been paid in full.

13. Tenant’s current address for receipt of notices, elections, demands or other communications is .

Tenant acknowledges that this Tenant Estoppel Certificate may be delivered to Landlord’s current and prospective mortgagees, trust deed holders, ground lessors and/or investors, or prospective purchasers, or investors or any of their respective lenders, and acknowledges that it recognizes that if so delivered, in addition to Landlord, said mortgagees, trust deed holders, ground lessors, investors or purchasers, and their respective lenders, successors and assigns will be relying upon the statements contained herein in disbursing loan advances or making a new loan or investing in or acquiring the property of which the Premises are a part, and/or in accepting an assignment, of the Lease documents as collateral security, and that receipt by it of this Tenant Estoppel Certificate is a condition of making of the loan, disbursing loan proceeds, or investing in, or acquiring, such property. Tenant hereby agrees to execute such other and further estoppel certificates as any of Landlord’s current or prospective mortgagees, trust deed holders, ground lessors, investors, purchasers or any of their respective lenders, successors or assigns may reasonably require.


TENANT:

_______________________________________,
[Insert name of Tenant]
a _______________________________________
[Insert jurisdiction in which Tenant is organized and type of entity]

By:
Name:
Title:


GUARANTOR:

,
[Insert name of Guarantor]
a _______________________________________
[Insert jurisdiction in which Guarantor is organized and type of entity]

By:
Name:
Title:

Executed as of , 20 .

EXHIBIT F

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT G

PARKING

(1) Tenant’s Parking Spaces . Landlord hereby agrees to license to Tenant, and Tenant shall have the right, but not the obligation, to use without any charge, throughout the Term of the Lease, non-exclusive, unreserved, first-come first-served parking spaces in a total amount equal to four and one-half (4 ¹ / ₂ ) parking spaces per each 1,000 rentable square feet of the Premises (collectively, “ Tenant’s Parking Spaces ”) in the Project’s parking facilities (collectively, the “ Garage ”), subject to such terms, conditions and regulations as are from time to time applicable to patrons of the Garage. Such Tenant’s Parking Spaces shall be allocated as follows: Tenant shall have the right to license up to a maximum of one (1) parking space per each 1,000 rentable square feet of the Premises in the covered parking portion of the Garage, and Tenant’s remaining allocation of parking spaces as set forth herein shall be in the surface portions (uncovered) of the Garage. Tenant’s license of such parking spaces shall be without charge (excepting only any parking taxes or other charges imposed by governmental authorities in connection with the use of such parking as more particularly contemplated below).

(2) Conditions on Use . The use by Tenant, its employees, suppliers, shippers or customers and invitees, of the Garage shall be on the terms and conditions established by Landlord (or Landlord’s agent), and shall be subject to such other agreement between Landlord and Tenant as may hereinafter be established. Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be loaded, unloaded or parked in areas other than those designated for such activities by Landlord. Tenant shall not store or permit its employees to store any automobiles in the Garage, without the prior written consent of Landlord. Except for emergency repairs, Tenant and its employees shall not perform any work on any automobiles while located in the Garage or on the Property. If it is necessary for Tenant or its employees to leave an automobile in the Garage, overnight, Tenant shall provide Landlord with prior notice thereof designating the license plate number and model of such automobile. If Tenant permits or allows any of the prohibited activities, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Tenant, which cost shall be payable within thirty (30) days of Tenant’s receipt of an invoice from Landlord, together with reasonable supporting evidence. Tenant shall have no right to assign or sublicense any of its rights in Tenant’s Parking Spaces, except as part of a permitted assignment of this Lease or a sublease of the Premises. Landlord shall have the right to terminate Tenant’s rights hereunder (including termination of any parking agreement related thereto) with respect to any of Tenant’s Parking Spaces that Tenant desires to sublicense or assign except as part of a permitted assignment of this Lease or a sublease of the Premises. Landlord may, in its discretion, allocate and assign parking spaces in the Garage among Tenant and other tenants and occupants in the Project so long as Tenant has access to Tenant’s Required Parking Spaces. Landlord shall also have the right from time to time to promulgate reasonable rules and regulations regarding the Garage, Tenant’s Parking Spaces and the use thereof, including rules and regulations controlling the flow of traffic to and from various areas of the Garage, the angle and direction of parking and the like. Tenant shall comply with and cause its employees to comply with all such rules and regulations, all reasonable additions and amendments thereto, and the terms and provisions hereof. Landlord may elect to provide parking cards or keys to control access to the Garage. In such event, Landlord shall provide Tenant with one (1) card or key for each of Tenant’s Parking Spaces, provided that Landlord shall have the right to require Tenant or its employees to place a deposit on such access cards or keys and to pay a fee for any lost or damaged cards or keys. Tenant’s use of the Garage shall be at Tenant’s sole risk, and Landlord shall have no liability for any personal injury or damage or theft of any vehicles or other property occurring in the Garage, regardless of whether such loss or theft occurs when the Garage or other areas therein are locked or otherwise secured. Except as caused by the negligence or willful misconduct of Landlord and without limiting the terms of the preceding sentence, Landlord shall not be liable for any loss, injury or damage to persons using the Garage, or automobiles or other property therein, it being agreed that, to the fullest extent permitted by law, the use of the Unreserved Spaces shall be at the sole risk of Tenant and its employees. Landlord specifically reserves the right to change the size, configuration, design, layout, location and all other aspects of the Garage and Tenant acknowledges and agrees that Landlord may, without incurring any liability to Tenant and without any abatement of Rent

EXHIBIT G

[Cypress Building]

[Griptonite, Inc.]

under this Lease, from time to time, close off or restrict access to the Garage or relocate Tenant’s parking to other parking structures and/or surface parking areas within a reasonable distance of the Project, for purposes of permitting or facilitating construction, repair, maintenance, alteration or improvements with respect to the Garage, or to accommodate or facilitate renovation, alteration, construction or other modification of other improvements or structures located at the Project or at the location of the Garage, as the case may be, or if required as a result of any Force Majeure events. No deductions or allowances shall be made for any days when Tenant and/or any of its employees does not utilize the Garage or any of Tenant’s Parking Spaces. Landlord may delegate its responsibilities hereunder to a parking operator, in which case such parking operator shall have all the rights of control attributed hereby to Landlord. If requested by Landlord, Tenant shall execute and deliver to Landlord or the parking operator, as applicable, the standard parking agreement used by Landlord or the parking operator for the Parking Spaces. Landlord shall have no liability for claims arising through acts or omissions of any such parking operator, except as otherwise provided in this Lease.

EXHIBIT G

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT H

RENT ABATEMENT PROVISION

Basic Rent shall be conditionally abated during the first (1 ^st ) through fourth (4 ^th ) full calendar months of the initial Term as well as during the forty-ninth (49 ^th ) through fifty-first (51 ^st ) full calendar months of the initial Term (collectively, the “ Abatement Period ”). As provided in this Lease, Tenant shall, contemporaneously with its execution of this Lease, pay to Landlord Basic Rent for the fifth (5 ^th ) month of the Term; thereafter, Tenant shall make Basic Rent payments as otherwise provided in this Lease. Notwithstanding such abatement of Basic Rent (a) all other sums due under this Lease, including Additional Rent, shall be payable as provided in this Lease, and (b) any increases in Basic Rent set forth in this Lease shall occur on the dates scheduled therefor. The amount of Basic Rent conditionally abated for the Abatement Period pursuant to this Exhibit H shall be referred to herein as the “ Abated Rent ”. Landlord and Tenant acknowledge that the aggregate amount of the Abated Rent equals $287,687.26 ( i.e. , four (4) months at $38,578.75 per month and three (3) months at $44,457.42 per month).

The Abated Rent provided for in this Exhibit H is conditioned upon Tenant’s full and timely performance of all of its obligations under this Lease. If at any time during the Term an Event of Default by Tenant occurs and this Lease is terminated as a result thereof, then the Abatement Period provided for in this Exhibit H shall immediately become void, and Tenant shall promptly pay to Landlord, in addition to all other amounts due to Landlord under this Lease, the full amount of the Abated Rent; provided, however, that if such Event of Default occurs prior to the Termination Date, then the Abated Rent shall only equal $154,315.00.

EXHIBIT H

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT I

TERMINATION OPTION

(a) Generally . Subject to the terms and conditions set forth in this Exhibit I , Tenant shall have the one-time right (the “Termination Option”) to terminate this Lease and surrender to Landlord, as of the Termination Date, the Premises in accordance with the provisions of this Exhibit I . The “Termination Date” shall mean the last day of the forty-eighth (48 ^th ) full calendar month of the initial Term. Tenant shall only have the right to exercise such Termination Option in the event that: (i) no Event of Default exists as of the date Tenant exercises the Termination Option and as of the Termination Date, and (ii) Tenant has not exercised any of its rights under Exhibit K of this Lease to lease any First Opportunity Space at any time following the last day of the twenty-fourth (24 ^th ) full calendar month of the initial Term. In the event that Tenant does exercise its rights under Exhibit K of this Lease to lease any First Opportunity Space at any time following the last day of the twenty-fourth (24 ^th ) full calendar month of the initial Term, then this Exhibit I shall automatically terminate and be of no further force or effect.

(b) Exercise of Termination Option . Tenant may exercise the Termination Option only by (i) delivering to Landlord irrevocable notice of such exercise (the “Termination Notice”) on or before the last day of the thirty-sixth (36 ^th ) full calendar month of the initial Term (and no earlier than the first day of the twenty-fifth (25 ^th ) full calendar month of the initial Term) and (ii) together with the Termination Notice, paying to Landlord an amount equal to Three Hundred Sixty-Four Thousand Three Hundred Thirty-Three and No/100 dollars ($364,333.00) (the “Termination Payment”). If Tenant shall fail timely to deliver the Termination Notice, or timely to pay the Termination Payment, then the Termination Right shall be null and void and Tenant shall have no further rights under this Exhibit H.

(c) Effectiveness of Termination . If Tenant timely exercises the Termination Option and timely pays the Termination Payment, then effective as of the Termination Date, the Term shall end and expire and Tenant’s estate in and possession of the Premises shall terminate and be wholly extinguished with the same force and effect as if such date were initially set forth in the Lease as the Expiration Date. On the Termination Date, Tenant shall surrender and deliver vacant possession of the Premises to Landlord in the condition required by the Lease as if such date were the Expiration Date. If Tenant fails to surrender, vacate and deliver to Landlord possession of the Premises in such condition on the Termination Date, then Tenant shall be deemed to be a holdover in the Premises and Landlord shall have the right to exercise any of its rights and remedies at law and in equity (including, without limitation, its rights and remedies under Section 22 of this Lease). In the event that Tenant exercises such Termination Option, then effective as of the date of Tenant’s notice of such exercise, (i) Tenant’s right to exercise the Extension Option set forth in Exhibit J of this Lease shall automatically terminate (and Exhibit J of this Lease shall automatically terminate and be of no further force or effect), and (ii) Tenant’s right to exercise the Right of First Opportunity set forth in Exhibit K of this Lease shall automatically terminate (and Exhibit K of this Lease shall automatically terminate and be of no further force or effect).

EXHIBIT I

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT J

EXTENSION OPTION

(1) Option Terms . Subject to the terms and conditions set forth below, Tenant shall have one (1) option (an “ Extension Option ”) to extend the Term for a period of five (5) years (the “ Option Term ”). If Tenant properly exercises the Extension Option, all of the terms, covenants and conditions of this Lease shall continue in full force and effect during the Option Term, including provisions regarding payment of Rent, which shall remain payable on the terms herein set forth, except that (a) the Basic Rent payable by Tenant during the Option Term shall be as calculated in accordance with Section 3 and Section 4 below, (b) Tenant shall continue to possess and occupy the Premises in their existing condition, “as is” as of the commencement of such Option Term, and Landlord shall have no obligation to repair, remodel, improve or alter the Premises, to perform any other construction or other work of improvement upon the Premises or the Project, and (c) Tenant shall have no further rights to extend the Term of this Lease after the expiration of the Option Term.

(2) Exercise . To exercise the Extension Option, Tenant must deliver an irrevocable, unconditional binding notice to Landlord (“ Exercise Notice ”) not sooner than twelve (12) months, nor later than nine (9) months, prior to the Expiration Date, the time of such exercise being of the essence. If Tenant fails to timely give its notice of exercise with respect to the Extension Option, Tenant will be deemed to have waived the Extension Option.

(3) Market Rate Calculation . The Basic Rent payable by Tenant for the Premises during the Option Term shall be equal to ninety-five percent (95%) of the Market Rate (as defined below) for the Premises, valued as of the commencement of the Option Term (and the Basic Rent payable by Tenant for the First Opportunity Space leased by Tenant after the Initial 6-month Period (as such term is defined in, and pursuant to, Exhibit K) for the initial lease term therefor, shall be equal to the Market Rate), determined in the manner hereinafter provided. As used herein, the term “Market Rate” shall mean the annual amount of Basic Rent at which tenants, as of the commencement of the Option Term (or, in the case of determining the Market Rate for the First Opportunity Space, if applicable, upon the date Landlord delivers to Tenant the First Opportunity Notice for the First Opportunity Space, if applicable, as the case may be), are leasing non-sublease, non-encumbered, non-equity space under then-prevailing ordinary rental market practices (e.g., not pursuant to extraordinary rental, promotional deals or other concessions to tenants that deviate from what is the then-prevailing ordinary practice), at arm’s length, that is comparable to the Premises (or the First Opportunity Space, if applicable, as the case may be) within the Building or other comparable first-class office buildings in the South Bellevue submarket of Washington, defined as the geographical area with borders of Main Street to the north, I-90 to the south, I-405 to the east and Lake Washington to the west (the “ Comparison Buildings ”), based upon binding lease transactions for tenants in the Comparison Buildings that, where possible, commence or are to commence within six (6) months prior to or within six (6) months after the commencement of the Option Term (or the First Opportunity Term, if applicable, as the case may be) (the “ Comparison Leases ”); provided, however, that Comparison Leases with respect to the Option Term shall exclude subleases and leases of space subject to another tenant’s expansion rights. Rental rates payable under Comparison Leases shall be adjusted to account for variations between this Lease and the Comparison Leases with respect to: (a) the length of the Option Term (or the First Opportunity Term, if applicable, as the case may be) compared to the lease term of the Comparison Leases; (b) rental structure, including, rental rates per rentable square foot (including type, gross or net, and if gross, adjusting for base year or expense stop), additional rental, annual rent adjustments, escalation provisions, all other payments and escalations; (c) the size of the Premises (or the First Opportunity Space, if applicable, as the case may be) compared to the size of the premises of the Comparison Leases; (d) free rent, moving expenses and other cash payments, allowances or other monetary concessions affecting the rental rate; (e) the age and quality of construction of the buildings; and (f) leasehold improvements and/or allowances, taking into account the value of existing leasehold improvements to the existing tenant. In addition, the determination of the Market Rent with respect to any First Opportunity Space, if required, shall include a determination as to whether, and if so to what extent, Tenant must provide Landlord with financial security, such as a letter of credit or guaranty, for Tenant’s rent obligations for the First Opportunity Space during

EXHIBIT J

[Cypress Building]

[Griptonite, Inc.]

the corresponding First Opportunity Term. Such determination shall be made by reviewing the extent of financial security then generally being imposed in Comparable Lease upon tenants of comparable financial condition and credit history to the then existing financial condition and credit history of Tenant (with appropriate adjustments to account for differences in the then-existing financial condition of Tenant and such other tenants).

(4) Basic Rent Determination . The Basic Rent payable by Tenant for the Premises during the Option Term (or the First Opportunity Space during the First Opportunity Term, if and as applicable) shall be determined as follows:

(a) If Tenant provides Landlord with its Exercise Notice, then, prior to the commencement of the Option Term, Landlord shall deliver to Tenant a good faith written proposal of the Market Rate. Within twenty-one (21) days after receipt of Landlord’s proposal, Tenant shall notify Landlord in writing (1) that Tenant accepts Landlord’s proposal or (2) that Tenant elects to submit the determination of Market Rate to arbitration in accordance with Section 4(b) through 4(d) below. If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s proposal of Market Rate shall be binding upon Tenant.

(b) If Tenant timely elects to submit the determination of Market Rate to arbitration (or, with respect to the First Opportunity Space, if required, Tenant timely and appropriately objects in Tenant’s Election Notice to the Market Rate for the First Opportunity Space for the initial lease term therefor as set forth in the First Opportunity Notice pursuant to clause (c) of Exhibit J ), Landlord and Tenant shall first negotiate in good faith in an attempt to determine the Market Rate. If Landlord and Tenant are able to agree within thirty (30) days following the delivery of Tenant’s notice to Landlord electing arbitration (or if Tenant accepts Landlord’s initial proposal), then such agreement shall constitute a determination of Market Rate for purposes of this Section, and the parties shall immediately execute an amendment to this Lease stating the Basic Rent for the Option Term (or the First Opportunity Term, if applicable, as the case may be); provided, however, that an otherwise valid exercise of an Extension Option (or the Right of First Opportunity shall be fully effective whether or not such amendment is executed and delivered. If Landlord and Tenant are unable to agree on the Market Rate within such thirty (30)-day negotiating period, then within fifteen (15) days after the expiration of such negotiating period, the parties shall meet and concurrently deliver to each other in envelopes their respective good faith estimates of the Market Rate (set forth on a net effective rentable square foot per annum basis). If the higher of such estimates is not more than one hundred five percent (105%) of the lower, then the Market Rate shall be the average of the two. Otherwise, the dispute shall be resolved by arbitration in accordance with Sections 4(c) and 4(d) below.

(c) Within fifteen (15) days after the exchange of estimates, the parties shall select as an arbitrator an independent member of the Appraisal Institute who has been active during the fifteen (15) year period ending on the date of such appointment in appraising leases of office space in Comparison Buildings, and who has not previously been employed in any capacity by either Landlord or Tenant (a “ Qualified Appraiser ”). If the parties cannot agree on a Qualified Appraiser, then within ten (10) days after the expiration of such fifteen (15)-day period, each shall select a Qualified Appraiser and within ten (10) days thereafter the two (2) appointed Qualified Appraisers shall select an independent Qualified Appraiser and the independent Qualified Appraiser shall be the sole arbitrator. If one party shall fail to select a Qualified Appraiser within the first ten (10)-day period, then the Qualified Appraiser chosen by the other party shall be the sole arbitrator.

(d) Within twenty-one (21) days after submission of the matter to the arbitrator, the arbitrator shall determine the Market Rate by choosing whichever of the estimates submitted by Landlord and Tenant the arbitrator judges to be more accurate. The arbitrator shall notify Landlord and Tenant of its decision, which shall be final and binding. If the arbitrator believes that expert advice would materially assist him, the arbitrator may retain one or more qualified persons to provide expert advice. The fees of the arbitrator and the expenses of the arbitration proceeding, including the fees of any expert witnesses retained by the arbitrator, shall be paid by the party whose estimate is not selected. Each party shall pay the fees of its respective counsel and the fees of any witness called by that party.

EXHIBIT J

[Cypress Building]

[Griptonite, Inc.]

(e) Until the matter is resolved by agreement between the parties or a decision is rendered in any arbitration commenced pursuant to this Exhibit J , Tenant’s monthly payments of Basic Rent shall be in an amount equal to the lesser of (i) Landlord’s determination of the Market Rent (as set forth in Landlord’s proposal set forth in Section 4(a), above), and (ii) an amount equal to the product of the Basic Rent in effect prior to the Expiration Date and one hundred three percent (103%). Landlord’s determination of the Market Rate. Within ten (10) Business Days following the resolution of such dispute by the parties or the decision of the arbitrator, as applicable, Tenant shall pay to Landlord, or Landlord shall pay to Tenant, the amount of any deficiency or excess, as the case may be, in the Basic Rent theretofore paid.

(5) Rights Personal to Tenant . The Extension Option is personal to, may be exercised only by, the Tenant originally named in this Lease (the “ Original Tenant ”) or by a Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer under the terms of Section 10(h) of this Lease, shall not be assigned or otherwise transferred, voluntarily or involuntarily to, or exercised by, any person other than the Original Tenant or such Permitted Transferee, and shall only be exercisable if the Original Tenant or such Permitted Transferee occupies at least eighty percent (80%) of the Premises at the time Landlord receives the Exercise Notice and at the commencement date of the Option Term. If the Original Tenant shall transfer this Lease (or any interest therein), or an aggregate of more than twenty percent (20%) of the Premises (other than a transfer of its entire interest in this Lease or the Premises to a Permitted Transferee pursuant to a Permitted Transfer), then simultaneously with such transfer Tenant’s Extension Option shall terminate and be of no further force or effect. No transferee of Tenant’s interest in this Lease (or any interest therein) or any portion of the Premises (other than a Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer) shall have any right to exercise the option right set forth in this Exhibit J .

(6) Conditions of Exercise . Notwithstanding anything in this Exhibit J to the contrary, if an Event of Default has occurred at the time the Tenant’s Exercise Notice is received by Landlord, or at any time thereafter until the commencement of the Option Term, or if an Event of Default has occurred at any time prior to Landlord’s receipt of Tenant’s Exercise Notice, Landlord shall have the right, in addition to all of its other rights and remedies under this Lease (but not the obligation), to unilaterally revoke Tenant’s exercise of the Extension Option by giving written notice of such revocation to Tenant within ten (10) business days after the later of the occurrence of such Event of Default or Landlord’s receipt of Tenant’s Exercise Notice, in which case this Lease shall expire on the Expiration Date, unless earlier terminated pursuant to the terms hereof, and Tenant shall have no further rights under this Lease to renew or extend the Term.

EXHIBIT J

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT K

RIGHT OF FIRST OPPORTUNITY

(1) Right of First Opportunity . During the period from and after the date of execution of this Lease through the initial Term of this Lease (the “ First Opportunity Period ”), Tenant shall have a right of first opportunity (“ Right of First Opportunity ”) to lease any available rentable space located in the Building, and to the extent that no further rentable space remains in the Building, then in the adjacent building located at 1450 114th Avenue SE and commonly known as the “Conifer Building” (each such space a “ First Opportunity Space ”), in accordance with, and subject to, the terms and conditions set forth in this Exhibit K in the event that the First Opportunity Space becomes “available for lease to third parties” (as defined below) and Landlord receives a request for proposal, a letter of intent, or a similar offer for the leasing of such space from a qualified third party (a “ Third Party Offer ”). For purposes hereof, a First Opportunity Space shall become “available for lease to third parties” if (a) Landlord is free to lease the space to the general public unencumbered by any renewal rights, extension rights, expansion rights, rights of First Opportunity, rights of first refusal or other similar rights in favor of other tenants in the Project; and (b) Landlord intends to market the space to the general public (i.e., the space will not be occupied by Landlord, any of its Affiliates or successors, or by an existing tenant of the space, whether or not the renewal or extension of the existing tenant’s lease is pursuant to an express written provision in such tenant’s lease, and without regard to whether such renewal or extension is characterized by the parties thereto as a “renewal”, “extension” or “new lease”) (all of the foregoing described in clauses (a) and (b) being herein collectively referred to as “ Superior Rights ”). In the event that Tenant exercises its Termination Option as provided in Exhibit I of this Lease, this Exhibit K shall automatically terminate and be of no further force or effect.

(2) First Opportunity Notice . Landlord shall give Tenant written notice (a “ First Opportunity Notice ”) at such time as (i) a First Opportunity Space will or has become available to third parties (as such availability is determined by Landlord) pursuant to the terms of Tenant’s Right of First Opportunity, as set forth in this Exhibit K , and (ii) Landlord has received a Third Party Offer with respect to such First Opportunity Space. In no event shall Landlord be obligated to provide Tenant with a First Opportunity Notice with respect to any commercially marketable space in the Conifer Building to the extent there remains any space in the Building that is available for lease to third parties. A First Opportunity Notice may be conditioned on the failure of a holder of Superior Rights to lease all or any portion of the First Opportunity Space identified in such First Opportunity Notice. The First Opportunity Notice shall set forth the material economic terms upon which Landlord would be prepared to lease such First Opportunity Space to Tenant for the remainder of the Term (the “ Economic Terms ”), including, without limitation (a) the anticipated date upon which possession of such First Opportunity Space will be available (the “ Anticipated Delivery Date ”), (b) the tenant improvements, if any, Landlord proposes to install, and/or tenant improvements allowance Landlord proposes to pay, if any, for such First Opportunity Space, if any, (c) a good faith proposal of the Basic Rent for such First Opportunity Space, which shall be equal to the Market Rate for the First Opportunity Space (except to the extent provided otherwise in Section (5) of this Exhibit K), and (d) any other material economic conditions or provisions relating to the leasing of such First Opportunity Space that vary from the provisions of this Lease. The term of the lease for the First Opportunity Space (the “ First Opportunity Term ”) shall terminate concurrently with the Term of this Lease; provided, however, that if as of the Anticipated Delivery Date, there will be less than three (3) years remaining on the Term, then at Landlord’s option Tenant’s leasing of the First Opportunity Space shall be for a term of three (3) years unless Tenant has exercised or later exercises the Extension Option hereunder, in which event Tenant’s lease of the First Opportunity Space after the expiration of such three (3) year term shall automatically be extended to be coterminous and the annual Basic Rent payable for the First Opportunity Space shall be calculated in accordance with Exhibit J attached hereto as part of the “Premises”.

(3) Procedure for Acceptance . On or before the date that is ten (10) business days after Tenant’s receipt of a First Opportunity Notice (the “ Election Date ”), Tenant may, at its option, deliver an irrevocable, unqualified, unconditional notice to Landlord electing to lease the First Opportunity Space identified in such First Opportunity Notice upon the terms set forth in the First Opportunity Notice (“ Tenant’s Election Notice ”); provided, however, Tenant may

EXHIBIT K

[Cypress Building]

[Griptonite, Inc.]

object in Tenant’s Election Notice to the Market Rate for such First Opportunity Space as set forth by Landlord in such First Opportunity Notice, in which case the arbitration provisions of Exhibit J shall apply to determine the Market Rate (if Tenant fails to timely object to Landlord’s determination of the Market Rate in Tenant’s Election Notice, Tenant shall be deemed to have accepted same, and the arbitration provisions of Exhibit I shall not apply with respect thereto). Tenant may exercise its Right of First Opportunity only with respect to all of the First Opportunity Space identified in such First Opportunity Notice and only upon the terms set forth in the First Opportunity Notice. If Tenant does not deliver Tenant’s Election Notice to Landlord on or before the Election Date, then Tenant shall have no further rights hereunder to lease the particular First Opportunity Space identified in a First Opportunity Notice. Time is of the essence of this provision and Tenant acknowledges and agrees that Landlord will have no obligation to lease to Tenant any First Opportunity Space identified in a First Opportunity Notice if Tenant does not deliver Tenant’s Election Notice to Landlord on or before the Election Date. Any qualified or conditional acceptance by Tenant of a First Opportunity Notice shall be deemed to be a counter-offer to, and a rejection of, such First Opportunity Notice. If Tenant’s Election Notice is not a written, unqualified, unconditional, irrevocable acceptance of the First Opportunity Notice, or is not delivered on or before 5:00 p.m. on the Election Date, then Tenant shall be deemed to have rejected the First Opportunity Notice. If Tenant rejects or is deemed to have rejected a First Opportunity Notice for any reason, the Right of First Opportunity shall automatically terminate and be of no further force or effect with respect to the particular First Opportunity Space identified therein and Landlord shall thereafter have the right to lease all or any portion of such First Opportunity Space for a period of twelve (12) months immediately following such rejection or deemed rejection, to any person on any terms and conditions Landlord desires (including terms and conditions more favorable than the terms and conditions set forth in such First Opportunity Notice) free of any rights of Tenant under this Exhibit K , and in the event that following the expiration of such twelve (12) month period, all or any portion of the First Opportunity Space shall remain un-leased to third-parties, then Tenant’s rights under this Exhibit K with respect to such First Opportunity Space shall renew.

(4) Basic Rent for First Opportunity Space That is Leased by Tenant During the First Six Months of the Initial Term . Notwithstanding any contrary terms set forth in Section (4) above, or in Exhibit J, the Basic Rent payable by Tenant with respect to any First Opportunity Space (on a per rentable square foot basis) that Tenant elects to Lease as provided in this Exhibit K during the first six (6) months of the initial Term of this Lease shall be at the same rate (calculated on a per rentable square foot basis) as is then applicable to the initial Premises leased under this Lease, and thereafter throughout the initial Term, such Basic Rent shall increase concurrently (and at the same rate calculated on a per rentable square foot basis) with the Basic Rent increases applicable to the initial Premises leased under this Lease as set forth in the Basic Lease Information of this Lease.

(5) Amendment to Lease . If Tenant delivers a Tenant’s Election Notice prior to the Election Date, Landlord shall prepare and Tenant shall promptly execute an amendment to this Lease to add the First Opportunity Space upon the terms set forth in the First Opportunity Notice, and to modify the applicable provisions of this Lease to reflect the changes in the Rent, area of the Premises, Tenant’s Proportionate Share and other appropriate terms.

(6) Additional Conditions of Exercise . Notwithstanding any provision of this Exhibit K to the contrary, if an Event of Default has occurred either at the time a First Opportunity Notice would otherwise be required to be sent under this Exhibit K , or any other time following Tenant’s exercise of its right to lease First Opportunity Space and prior to the date upon which possession of such First Opportunity Space is to be delivered to Tenant, Landlord shall have, in addition to all of Landlord’s other rights and remedies provided in this Lease, the right to terminate Tenant’s rights under this Exhibit K by giving written notice of such termination to Tenant within ten (10) business days after the occurrence of such Event of Default, and in such event Landlord shall not be required to deliver the First Opportunity Notice or to deliver possession of such First Opportunity Space to Tenant. If not earlier terminated, the rights of Tenant pursuant to this Exhibit K shall automatically terminate on the Expiration Date. Nothing contained in this Exhibit K shall be deemed to impose any obligation on Landlord to refrain from negotiating with the existing tenant of the First Opportunity Space, to withhold the First Opportunity Space from the market, or to take any other action or omit to take any other action in order to make the First Opportunity Space available to Tenant.

EXHIBIT K

[Cypress Building]

[Griptonite, Inc.]

(7) Rights Personal to Tenant . The Right of First Opportunity is personal to, may be exercised only by, the Original Tenant or by a Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer under the terms of Section 10(h) of this Lease, shall not be assigned or otherwise transferred, voluntarily or involuntarily to, or exercised by, any person other than the Original Tenant or such Permitted Transferee, and shall only be exercisable if the Original Tenant or such Permitted Transferee occupies at least eighty percent (80%) of the Premises at the time of such exercise and at the time the First Opportunity Space identified therein is to be added to the Premises as provided in this Exhibit K . If the Original Tenant shall transfer this Lease (or any interest therein), or an aggregate of more than twenty percent (20%) an aggregate of more than twenty percent (20%) of the Premises (other than a transfer of its entire interest in this Lease or the Premises to a Permitted Transferee pursuant to a Permitted Transfer), then simultaneously with such transfer Tenant’s Right of First Opportunity shall terminate and be of no further force or effect. No transferee of Tenant’s interest in this Lease (or any interest therein) or any portion of the Premises (other than a Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer) shall have any right to lease First Opportunity Space pursuant to this Exhibit K .

EXHIBIT K

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT L

FORM OF LETTER OF CREDIT

THIS DRAFT IS FOR DISCUSSION PURPOSES ONLY.

IT WILL BECOME AN INTEGRAL PART OF AND MUST BE ATTACHED TO

SILICON VALLEY BANK APPLICATION FOR STANDBY LETTER OF CREDIT WHEN APPROVED FOR ISSUANCE BY

APPLICANT: GRIPTONITE, INC.

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF

(THE ABOVE LC NUMBER AND THE DATE BELOW WILL BE INSERTED BY SVB AT TIME OF ACTUAL LC ISSUANCE)

DATED: , 20

BENEFICIARY:

TALON PORTFOLIO SERVICES, LLC,

A WASHINGTON LIMITED LIABILITY COMPANY,

AS GENERAL RECEIVER FOR

W2007 SEATTLE OFFICE BELLEFIELD OFFICE PARK REALTY, LLC,

A DELAWARE LIMITED LIABILITY COMPANY

1800 NINTH AVENUE, SUITE 1600

SEATTLE, WASHINGTON 98101

ATTENTION: LEASE ADMINISTRATION

AS “LANDLORD”

APPLICANT:

GRIPTONITE, INC.

45 FREMONT STREET, SUITE 2800

SAN FRANCISCO, CA 94103

AS “TENANT”

AMOUNT: US$500,000.00 ([INSERT AMOUNT IN WORDS AND XX/100 U.S. DOLLARS)

EXPIRATION DATE: , 20

LOCATION: SANTA CLARA, CALIFORNIA

LADIES AND GENTLEMEN:

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF IN YOUR FAVOR. THIS LETTER OF CREDIT IS AVAILABLE BY SIGHT PAYMENT WITH OURSELVES ONLY AGAINST PRESENTATION AT THIS OFFICE OF THE FOLLOWING DOCUMENTS:

THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT (S), IF ANY.

YOUR SIGHT DRAFT DRAWN ON US IN THE FORM ATTACHED HERETO AS EXHIBIT “A”.

A DATED CERTIFICATION PURPORTEDLY SIGNED BY AN AUTHORIZED OFFICER OR REPRESENTATIVE OF THE BENEFICIARY, FOLLOWED BY HIS/HER PRINTED NAME AND DESIGNATED TITLE, STATING EITHER OF THE FOLLOWING:

(A.)

“AN EVENT OF DEFAULT (AS DEFINED IN THE LEASE) HAS OCCURRED BY GRIPTONITE, INC. AS TENANT UNDER THAT CERTAIN LEASE AGREEMENT BY AND BETWEEN TENANT, AND BENEFICIARY, AS LANDLORD, AND THE TERMS AND CONDITIONS OF THE LEASE AUTHORIZE LANDLORD TO NOW DRAW DOWN ON THE LETTER OF CREDIT.”

EXHIBIT L

[Cypress Building]

[Griptonite, Inc.]

(B.)

“WITHIN THIRTY (30) DAYS PRIOR TO THE EXPIRATION DATE OF THIS LETTER OF CREDIT BENEFICIARY HAS NOT RECEIVED AN EXTENSION AT LEAST FOR ONE YEAR TO THE EXISTING LETTER OF CREDIT OR A REPLACEMENT LETTER OF CREDIT SATISFACTORY TO THE BENEFICIARY.”

(C)

“THE UNDERSIGNED HEREBY CERTIFIES THAT WE HAVE RECEIVED A WRITTEN NOTICE OF SILICON VALLEY BANK’S ELECTION TO TERMINATE STANDBY LETTER OF CREDIT NO. SVBSF AND HAVE NOT RECEIVED A REPLACEMENT LETTER OF CREDIT WITHIN AT LEAST TEN (10) DAYS FOLLOWING DEMAND THEREFOR FROM APPLICANT.”

(D)

“THE UNDERSIGNED HEREBY CERTIFIES THAT WE HAVE RECEIVED INFORMATION THAT SILICON VALLEY BANK IS NO LONGER AN ELIGIBLE INSTITUTION (AS THAT TERM IS DEFINED IN THE LEASE AGREEMENT.”

THE LEASE AGREEMENT MENTIONED ABOVE IS FOR IDENTIFICATION PURPOSES ONLY AND IT IS NOT INTENDED THAT SAID LEASE AGREEMENT BE INCORPORATED HEREIN OR FORM PART OF THIS LETTER OF CREDIT.

PARTIAL AND MULTIPLE DRAWINGS ARE ALLOWED. THE ORIGINAL OF THIS LETTER OF CREDIT MUST ACCOMPANY ANY DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE RETURNED TO THE BENEFICIARY UNLESS IT IS FULLY UTILIZED.

WE AGREE THAT WE SHALL HAVE NO DUTY OR RIGHT TO INQUIRE AS TO THE BASIS UPON WHICH BENEFICIARY HAS DETERMINED THAT THE AMOUNT IS DUE AND OWING OR HAS DETERMINED TO PRESENT TO US ANY DRAFT UNDER THIS LETTER OF CREDIT, AND THE PRESENTATION OF SUCH DRAFT IN STRICT COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, SHALL AUTOMATICALLY RESULT IN PAYMENT TO THE BENEFICIARY.

THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED FOR AN ADDITIONAL PERIOD OF ONE YEAR, WITHOUT AMENDMENT, FROM THE PRESENT OR EACH FUTURE EXPIRATION DATE UNLESS AT LEAST NINETY (90) DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE SEND YOU A NOTICE BY REGISTERED MAIL/OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESS THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE CURRENT EXPIRATION DATE. IN NO EVENT SHALL THIS LETTER OF CREDIT BE AUTOMATICALLY EXTENDED BEYOND , 20 , WHICH SHALL BE THE FINAL EXPIRATION DATE OF THIS LETTER OF CREDIT.

THIS LETTER OF CREDIT MAY ALSO BE CANCELED PRIOR TO ANY PRESENT OR FUTURE EXPIRATION DATE, UPON RECEIPT BY SILICON VALLEY BANK BY OVERNIGHT COURIER OR REGISTERED MAIL (RETURN RECEIPT REQUESTED) OF THE ORIGINAL LETTER OF CREDIT AND ALL AMENDMENTS (IF ANY) FROM THE BENEFICIARY TOGETHER WITH A STATEMENT SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY ON COMPANY LETTERHEAD STATING THAT THE LETTER OF CREDIT IS NO LONGER REQUIRED AND IS BEING RETURNED FOR CANCELLATION.

EXHIBIT L

[Cypress Building]

[Griptonite, Inc.]

THIS LETTER OF CREDIT IS TRANSFERABLE ONE OR MORE TIMES, BUT IN EACH INSTANCE ONLY TO A SINGLE BENEFICIARY AS TRANSFEREE AND ONLY UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF ANY NOMINATED TRANSFEREE THAT IS THE SUCCESSOR IN INTEREST TO BENEFICIARY (“TRANSFEREE”), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE IN COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATION, INCLUDING BUT NOT LIMITED TO THE REGULATIONS OF THE U. S. DEPARTMENT OF TREASURY AND U. S. DEPARTMENT OF COMMERCE. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S), IF ANY, MUST BE SURRENDERED TO US AT OUR ADDRESS INDICATED IN THIS LETTER OF CREDIT TOGETHER WITH OUR LETTER OF TRANSFER DOCUMENTATION AS PER ATTACHED EXHIBIT “B” DULY EXECUTED. THE CORRECTNESS OF THE SIGNATURE AND TITLE OF THE PERSON SIGNING THE TRANSFER FORM MUST BE VERIFIED BY BENEFICIARY’S BANK. APPLICANT SHALL PAY OUR TRANSFER FEE OF ¹ / ₄ OF 1% OF THE TRANSFER AMOUNT (MINIMUM US$250.00) UNDER THIS LETTER OF CREDIT. ANY REQUEST FOR TRANSFER WILL BE EFFECTED BY US SUBJECT TO THE ABOVE CONDITIONS. HOWEVER, ANY REQUEST FOR TRANSFER IS NOT CONTINGENT UPON APPLICANT’S ABILITY TO PAY OUR TRANSFER FEE. ANY TRANSFER OF THIS LETTER OF CREDIT MAY NOT CHANGE THE PLACE OR DATE OF EXPIRATION OF THE LETTER OF CREDIT FROM OUR ABOVE SPECIFIED OFFICE. EACH TRANSFER SHALL BE EVIDENCED BY OUR ENDORSEMENT ON THE REVERSE OF THE LETTER OF CREDIT AND WE SHALL FORWARD THE ORIGINAL OF THE LETTER OF CREDIT SO ENDORSED TO THE TRANSFEREE.

DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER AND DATE OF THIS LETTER OF CREDIT.

WE HEREBY AGREE THAT DRAFTS DRAWN UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO: SILICON VALLEY BANK, 3003 TASMAN DRIVE, 2 ^ND FLOOR, MAIL SORT HF210, SANTA CLARA, CALIFORNIA 95054, ATTENTION: GLOBAL FINANCIAL SERVICES – STANDBY LETTER OF CREDIT DEPARTMENT (THE “BANK’S OFFICE”). PRESENTATIONS MAY BE MADE IN PERSON OR BY OVERNIGHT COURIER DELIVERY SERVICE OR BY FACSIMILE ON OR BEFORE OUR CLOSE OF BUSINESS ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT.

SHOULD BENEFICIARY WISH TO MAKE PRESENTATIONS UNDER THIS LETTER OF CREDIT ENTIRELY BY FACSIMILE TRANSMISSION (IT NEED NOT TRANSMIT THE LETTER OF CREDIT). IT MAY DO SO IN LIEU OF PRESENTING THE PHYSICAL DOCUMENTS OTHERWISE REQUIRED FOR PRESENTATION UNDER THE TERMS OF THIS LETTER OF CREDIT. PROVIDED HOWEVER, SHOULD IT ELECT TO DO SO, EACH SUCH FACSIMILE TRANSMISSION SHALL BE MADE ON A BUSINESS DAY AT FAX NO. (408) 496-2418 OR (408) 969-6510; AND SIMULTANEOUSLY UNDER TELEPHONE ADVICE TO: (408) 654-6274 OR (408) 654-7127 OR (408) 654-7716 OR (408) 654-3035 AND, ON THE DAY OF SUCH TRANSMISSION, BE IMMEDIATELY FOLLOWED BY BENEFICIARY’S SENDING TO US ALL OF THE ORIGINALS OF SUCH FAXED DOCUMENTS TOGETHER WITH THE ORIGINAL OF THIS LETTER OF CREDIT BY OVERNIGHT MAIL OR COURIER SERVICE TO THE BANK’S OFFICE AS DESCRIBED ABOVE. PROVIDED FURTHER, HOWEVER, WE WILL DETERMINE TO HONOR OR DISHONOR ANY SUCH FACSIMILE PRESENTATION PURELY ON THE BASIS OF OUR EXAMINATION OF SUCH FACSIMILE PRESENTATION, AND WILL NOT EXAMINE THE ORIGINALS.

AS USED HEREIN, THE TERM “BUSINESS DAY” MEANS A DAY ON WHICH WE ARE OPEN AT OUR ABOVE ADDRESS IN SANTA CLARA, CALIFORNIA TO CONDUCT OUR LETTER OF CREDIT BUSINESS. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THE ISP98 (AS HEREINAFTER DEFINED), IF THE EXPIRATION DATE OR THE FINAL EXPIRATION DATE IS NOT A BUSINESS DAY THEN SUCH DATE SHALL BE AUTOMATICALLY EXTENDED TO THE NEXT SUCCEEDING DATE WHICH IS A BUSINESS DAY.

EXHIBIT L

[Cypress Building]

[Griptonite, Inc.]

WE HEREBY ENGAGE WITH YOU THAT DRAFT(S) DRAWN AND/OR DOCUMENTS PRESENTED UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO SILICON VALLEY BANK, IF PRESENTED ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT.

IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS LETTER OF CREDIT REQUEST THAT PAYMENT IS TO BE MADE BY TRANSFER TO YOUR ACCOUNT WITH ANOTHER BANK, WE WILL ONLY EFFECT SUCH PAYMENT BY FED WIRE TO A U.S. REGULATED BANK, AND WE AND/OR SUCH OTHER BANK MAY RELY ON AN ACCOUNT NUMBER SPECIFIED IN SUCH INSTRUCTIONS EVEN IF THE NUMBER IDENTIFIES A PERSON OR ENTITY DIFFERENT FROM THE INTENDED PAYEE.

THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES 1998 (“ISP98”), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.


SILICON VALLEY BANK,

(FOR S V BANK USE ONLY)				(FOR S V BANK USE ONLY)


AUTHORIZED SIGNATURE				AUTHORIZED SIGNATURE

EXHIBIT L

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT “A”


SIGHT DRAFT/BILL OF EXCHANGE
DATE:		REF. NO.

A T SIGHT OF THIS BILL OF EXCHANGE P AY TO THE ORDER OF US$ U.S. DOLLARS
“DRAWN UNDER SILICON VALLEY BANK , SANTA CLARA, CALIFORNIA, IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER NO. SVBSF DATED , 20 ”

T O: SILICON VALLEY BANK
3003 TASMAN DRIVE SANTA CLARA, CA 95054	(INSERT NAME OF BENEFICIARY)
	Authorized Signature

GUIDELINES TO PREPARE THE SIGHT DRAFT OR BILL OF EXCHANGE:

1.	DATE INSERT ISSUANCE DATE OF DRAFT OR BILL OF EXCHANGE.

2.	REF. NO. INSERT YOUR REFERENCE NUMBER IF ANY.

3.	PAY TO THE ORDER OF: INSERT NAME OF BENEFICIARY

4.	US$ INSERT AMOUNT OF DRAWING IN NUMERALS/FIGURES.

5.	U.S. DOLLARS INSERT AMOUNT OF DRAWING IN WORDS.

6.	LETTER OF CREDIT NUMBER INSERT THE LAST DIGITS OF OUR STANDBY L/C NUMBER THAT PERTAINS TO THE DRAWING.

7.	DATED INSERT THE ISSUANCE DATE OF OUR STANDBY L/C.

NOTE: BENEFICIARY SHOULD ENDORSE THE BACK OF THE SIGHT DRAFT OR BILL OF EXCHANGE

AS YOU WOULD A CHECK.

IF YOU NEED FURTHER ASSISTANCE IN COMPLETING THIS SIGHT DRAFT OR BILL OF EXCHANGE, PLEASE CALL OUR L/C PAYMENT SECTION AT (408) 654-6274 OR (408) 654-7127 OR (408) 654-3035 OR (408) 654-7716 OR (408) 654-7128.

EXHIBIT L

[ Cypress Building ]

[ Griptonite, Inc. ]

EXHIBIT “B”

DATE:

TO:	SILICON VALLEY BANK

3003 TASMAN DRIVE

SANTA CLARA, CA 95054

ATTN: GLOBAL FINANCIAL SERVICES

STANDBY LETTERS OF CREDIT

RE:

SILICON VALLEY BANK IRREVOCABLE STANDBY LETTER OF CREDIT NO.

GENTLEMEN:

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:

(NAME OF TRANSFEREE)

(ADDRESS)

ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS TRANSFER.

BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE. TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.

THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.

SINCERELY,

(BENEFICIARY’S NAME)

(SIGNATURE OF BENEFICIARY)

(PRINTED NAME AND TITLE)

SIGNATURE AUTHENTICATED

THE NAME(S) TITLE(S), AND SIGNATURE(S) CONFORM TO THAT/THOSE ON FILE WITH US FOR THE COMPANY AND THE SIGNATURE(S) IS/ARE AUTHORIZED TO EXECUTE THIS INSTRUMENT.

WE FURTHER CONFIRM THAT THE COMPANY HAS BEEN IDENTIFIED APPLYING THE APPROPRIATE DUE DILIGENCE AND ENHANCED DUE DILIGENCE AS REQUIRED BY THE BANK SECRECY ACT AND ALL ITS SUBSEQUENT AMENDMENTS.

(NAME OF BANK)

(ADDRESS OF BANK)

(CITY, STATE, ZIP CODE)

(AUTHORIZED SIGNATURE)

(PRINTED NAME AND TITLE)

(TELEPHONE NUMBER)

EXHIBIT L

[Cypress Building]

[Griptonite, Inc.]

EXHIBIT M

INTENTIONALLY OMITTED

EXHIBIT M

[ Cypress Building ]

[ Griptonite, Inc. ]

EXHIBIT N

FORM OF SNDA

[attached]

EXHIBIT N

[ Cypress Building ]

[ Griptonite, Inc. ]

SUBORDINATION, NON-DISTURBANCE AND

ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT AGREEMENT (the “ Agreement ”) is made as of June 14, 2013, between GRIPTONITE, INC, a Washington corporation (“ Tenant ”), TALON PORTFOLIO SERVICES, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA (“ Landlord ” or “ Borrower ”), and WELLS FARGO BANK, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-TFL2, its successors and/or assigns (hereinafter “ Lender ”).

Recitals of Fact

A. Tenant is the tenant under a lease dated June 6, 2013 (the “ Lease ”) by and between Tenant, as lessee, and Landlord, as lessor, for certain premises more particularly described in the Lease (the “ Premises ”) located on the property legally described on Exhibit “A” (the “ Property ”).

B. Lender is the owner and holder of a mortgage loan to Borrower and certain other borrowers in the original principal amount of $779,125,927.32 (the “ Loan ”), which is evidenced by that certain Replacement Promissory Note, dated as of July 2, 2007, from Borrower and certain other borrowers in favor of Lender, in the original principal amount of $779,125,927.32 (as the same may be further amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time, the “ Note ”) and secured in part by a first deed of trust, mortgage, or deed to secure debt encumbering the Property (which is herein called the “ Security Instrument ”). The Security Instrument, the Note and all other documents and instruments evidencing and/or securing the Note or now or hereafter executed by Borrower or others in connection with or related to the Loan including any assignments of leases and rents, other assignments, security agreements, financing statements, guaranties, indemnity agreements (including environmental indemnity agreements), letters of credit, or escrow/holdback arrangements, together with all amendments, modifications, substitutions or replacements thereof, are sometimes herein collectively referred to as the “ Loan Documents ”.

C. Lender, Landlord and Tenant desire to enter into this Agreement to establish certain rights, safeguards and obligations with respect to their interests and provide further for various contingencies as hereinafter set forth.

Agreement

In consideration of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound hereby, agree and covenant as follows:

1. Warranties and Representations . Tenant represents and warrants to Lender that (a) the Lease is in full force and effect, (b) to Tenant’s actual knowledge without investigation, Tenant is not in default thereunder, past any permitted grace or cure period in the Lease, (c) to Tenant’s actual knowledge without investigation, Landlord is not in default thereunder, past any permitted grace or cure period in the Lease, and (d) Tenant has not previously subordinated the Lease to any other security instrument or lien on the Property.

2. Subordination . Tenant hereby subordinates its interest in the Lease and all of its right, title and interest in and to the leasehold estate created thereby, to the liens, terms, covenants, provisions and conditions of the Security Instrument and the other Loan Documents and to all present or future advances under the obligations secured thereby. The interests subordinated hereby include without limitation any and all provisions of the Lease, including any extension or renewal rights, options to purchase, rights of first refusal, and other such rights.

3. Non-Disturbance . Notwithstanding the subordination agreement contained above, Lender agrees that, so long as (i) the Lease remains in full force and effect including the duration of any properly exercised extension or renewal provisions therein), (ii) Tenant remains in full compliance with the terms of the Lease, beyond any cure period provided therein, and (iii) Tenant is not in default under this Agreement, then:

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(a) Lender shall not diminish or interfere with Tenant’s possession of the Premises, and Tenant’s rights and privileges under the Lease shall not be diminished or be the subject of any interference by Lender; and

(b) Lender will not join Tenant as a party defendant in any action or proceeding to foreclose the Security Instrument or to enforce any rights or remedies of Lender under the Security Instrument which would terminate or extinguish the Lease or Tenant’s leasehold interest in and estate under the Lease.

Notwithstanding the foregoing provisions, Lender may name or join Tenant as a party in a foreclosure proceeding with respect to the Security Instrument if under the laws of the State where the Property is located it is procedurally necessary or desirable to do so, but in such event Lender shall in no way diminish or otherwise affect the rights and privileges granted to, or inuring to the benefit of, Tenant under this Agreement.

4. Attornment; Payment of Rent to Lender in Event of Default . Tenant agrees that in the event Borrower is in default under the Security Instrument or any other Loan Documents, and after Lender gives notice to Tenant (in the manner hereinafter provided) respecting such default, then Tenant shall be deemed to have attorned to Lender as its new landlord under the Lease, and Tenant shall thereafter pay directly to Lender all rentals and all other payments to be made by Tenant under the Lease. Such payments will be made regardless of any right or setoff, counterclaim or other defense which Tenant may have against Landlord, whether as tenant under the Lease or otherwise. No proof of default shall be required. Tenant is hereby irrevocably authorized by Borrower to rely upon and comply with any notice or demand by the Lender for the payment to the Lender of any rental or other amounts which may be or become due under the Lease, or for the performance of any obligations under the Lease. Borrower irrevocably agrees that Tenant shall not be liable to Borrower or any person claiming under Borrower, for making any payment or rendering any performance to Lender. Tenant shall have no obligation or right to inquire whether any default has actually occurred or is then existing. By its execution of this Agreement, Borrower irrevocably makes and delivers the above instructions.

5. Attornment to Subsequent Owners .

(a) If Lender or its nominee or designee succeeds to the rights of Landlord under the Lease through possession or foreclosure action, delivery of a deed in lieu of foreclosure or otherwise, or if another person or entity purchases the Property upon or following designee, or such purchaser (hereinafter collectively the “ New Landlord ”), Tenant shall attorn to and recognize the New Landlord as Tenant’s landlord under the Lease and shall promptly execute and deliver any instrument that the New Landlord may reasonably request to evidence such attornment. Upon such attornment, the Lease shall continue in full force and effect as a direct lease between the New Landlord and Tenant upon all terms, conditions, and covenants as are set forth in the Lease.

(b) Notwithstanding the foregoing subsection, in such event the New Landlord shall not in any event be liable for any of the following:

(i) any previous act or omission of Landlord or any prior landlord under the Lease occurring prior to New Landlord obtaining possession or title to the Property;

(ii) any setoff, defense or counterclaim which has previously accrued to Tenant against Landlord, which arises prior to the date New Landlord obtains possession or title to the property;

(iii) the performance or observance of any amendment or modification to the Lease made without the written consent of Lender;

(iv) any prepayment of rent or additional rent for more than one (1) month which Tenant might have paid to Landlord, unless previously approved in writing by Lender; or

(v) the return of any security deposit made under the Lease, unless the security deposit has been paid to New Landlord.

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6. Lease Modifications . Tenant agrees that, without the prior written consent of Lender, Tenant shall not: (a) materially amend or modify, terminate or cancel the Lease or any extensions or renewals thereof; (b) make any prepayments of any rent or additional rent in excess of one (1) month; or (c) subordinate or permit the subordination of the Lease to any lien subordinate to the Security Instrument.

7. Notice of Default; Opportunity to Cure . Tenant agrees that prior to exercising any of its rights and remedies under the Lease in the event of any default by Landlord thereunder, including any rights of termination, offset, defense or self-help provisions contained in the Lease, Tenant shall give written notice to Lender of the occurrence of default by Landlord and Landlord’s failure to cure such default pursuant to the terms of the Lease, specifying, with reasonable clarity, the events constituting such default. In the event of a monetary default, Tenant shall give Lender ten (10) calendar days after the date of receipt of such notice to cure such monetary default. In the event of a non-monetary default, Tenant shall give Lender a cure period equal to the longer of (i) 30 days after the cure period provided to Landlord under the Lease; (ii) 30 days after Lender’s receipt of Tenant’s notice to Lender of a Landlord default, or (iii) if the cure of such default requires possession of the Property, 30 days after Lender has obtained possession of the Property; provided that in each case, if such default cannot reasonably be cured within such cure period and Lender has diligently commenced to cure such default within the time contemplated by this Section 7, such cure period shall be extended for so long as necessary for Lender, in the exercise of due diligence, to cure such default. Tenant acknowledges that Lender is not obligated to cure any Landlord default, but if Lender elects to do so, Tenant agrees to accept cure by Lender as that of Landlord under the Lease and will not exercise any right or remedy under the Lease for a Landlord default. Performance rendered by Lender on Landlord’s behalf is without prejudice to Lender’s rights against Landlord under the Security Instrument or any other documents executed by Landlord in favor of Lender in connection with the Loan.

8. Notices . Any notice required or permitted to be given hereunder must be in writing and given (a) by depositing same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested; (b) by delivering the same in person to such party; (c) by transmitting a facsimile copy to the correct facsimile phone number of the intended recipient; or (d) by depositing the same into the custody of a nationally recognized overnight delivery service addressed to the party to be notified. In the event of mailing, notices shall be deemed effective three (3) days after posting; in the event of overnight delivery, notices shall be deemed effective on the next business day following deposit with the delivery service; in the event of personal service or facsimile transmissions, notices shall be deemed effective when delivered. For purposes of notice, the addresses of the parties shall be as follows:


If to Lender, to:		c/o CT Investment Management Co., LLC
		345 Park Avenue
		New York, New York 10154
		Attention: Asset Management
		Facsimile: (212) 655-0044

With a copy to:		Sidley Austin LLP
		787 Seventh Avenue
		New York, New York 10019
		Attention: Alan S. Weil, Esq.
		Telephone: (212) 839-5315
		Facsimile: (212) 839-5599
		Email: aweil@sidley.com

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If to Borrower, to:		c/o Talon Portfolio Services
		1800 Ninth Avenue, Suite 1600
		Seattle, Washington 98101
		Attention: Mr. Gabe Levin
		Telephone: (206) 607-2560
		Facsimile: (206) 607-2551
		E-mail: levin@talonprivate.com

And to:		c/o Talon Portfolio Services
		1800 Ninth Avenue, Suite 1600
		Seattle, Washington 98101
		Attention: Mr. Jim Neal
		Telephone: (206) 607-2555
		Facsimile: (206) 607-2551
		E-mail: neal@talonprivate.com

And to:		c/o Talon Portfolio Services
		1800 Ninth Avenue, Suite 1600
		Seattle, Washington 98101
		Attention: Mr. Bill Leedom
		Telephone: (206) 607-2561
		Facsimile: (206) 607-2551
		E-mail: leedom@talonprivate.com

With a copy to:		Pircher, Nichols & Meeks
		1925 Century Park East
		Suite 1700
		Los Angeles, California 90067-2512
		Attention: Real Estate Notices (SCS/RJC)
		Telephone: (310) 201-8900
		Facsimile: (310) 201-8922
		E-mail: ssilvers@pircher.com; rcooper@pircher.com

And with a copy to:		Alston, Courtnage & Bassetti LLP
		1420 Fifth Avenue, Suite 3650
		Seattle, Washington 98101-4011
		Attention: Charles E. Shigley, Esq.
		Telephone: (206) 623-7600
		Facsimile: (206) 623-1752
		E-mail: cshigley@alcourt.com
If to Tenant, to:


		Attention: [ ]

From time to time either party may designate another or additional addresses for all purposes of this Agreement by giving the other party no less than ten (10) days’ advance notice of such change of address in accordance with the notice provisions hereof.

9. Notice Under Lease . If the Lease entitles Tenant to notice of the existence of any Security Instrument and the identity of any lender, this Agreement shall constitute such notice to Tenant with respect to the Security Instrument and this Lender.

10. Limitation of Liability . Lender shall not, by virtue of this Agreement, the Security Instrument or any other instrument to which Lender may be a party, be or become subject to any liability or obligation to Tenant under the Lease or otherwise, unless specifically set forth herein.

11. Miscellaneous . This Agreement may not be modified or terminated orally. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, representatives, successors and assigns. The term “ Lender ” shall mean the holder of any interest in the Security Instrument, from time to time. The term “ Landlord ” shall mean the holder of the

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lessor’s interest in the Lease, from time to time. The term “ person ” shall mean any individual, joint venture, corporation, partnership, trust, unincorporated association or other entity. Any inconsistency between the Lease and the provisions of this Agreement shall be resolved in favor of this Agreement.

12. Waivers . BORROWER, TENANT AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, TENANT AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH RIGHT TO TRIAL BY JURY WOULD OTHERWISE ACCRUE. BORROWER, TENANT AND LENDER EACH ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH OTHER.

13. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located.

[Remainder of page is blank; signatures appear on next page.]

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IN WITNESS WHEREOF , the parties hereto have executed this Agreement to be effective as the day and year first stated above.


Tenant:

GRIPTONITE, INC., a Washington corporation

By:		/s/ Scott J. Leichtner
Name:		Scott J. Leichtner
Title:		VP & Secretary

Borrower:

TALON PORTFOLIO SERVICES, LLC , a Washington limited liability company, as General Receiver for W2007 SEATTLE OFFICE BELLEFIELD OFFICE PARK REALTY, LCC.,
A DELAWARE LIMITED LIABILITY COMPANY, King County Case No. 12-2-21253-8-SEA

By:		/s/ William Pollard
Name:		William Pollard
Title:		Managing Principal

Lender:

WELLS FARGO BANK, N.A. , as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-TFL2

By:		CT Investment Management Co., LLC, as Special Servicer

By:		Peter H. Smith
Name:		Peter H. Smith
Title:		Director

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STATE OF CALIFORNIA		)
		) ss
COUNTY OF SAN FRANCISCO		)

On June 11, 2013, before me, Constantin Munteanu, a Notary Public in and for said State, personal appeared Scott Jason Leichtner, who proved to me on the basis of satisfactory evidence to be the person whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURYunder the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/ Constantin Munteanu (Notary Seal)

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STATE OF WASHINGTON		)
		) ss
COUNTY OF KING		)

On this 12 ^TH day of June , 20 13 , before me, appeared WILLIAM R. POLLARD to me personally known, who being by me duly sworn, did say that s/he is the MANAGING PRINCIPAL ~~[president] [vice president] [manager] [managing member]~~ of TALON PORTFOLIO SERVICES, LLC, a Washington limited liability company, as General Receiver for W2007 SEATTLE OFFICE BELLEFIELD OFFICE PARK REALTY LLC, A DELAWARE LLC, King County Case No. 12-2-21253-8-SEA, and that the said instrument was signed on behalf of said limited liability company by authority of its [members], and said WILLIAM R. POLLARD , [acting as ~~the [president] [vice president] [manager] [managing member]]~~ MANAGING PRINCIPAL of said limited liability company acknowledged said instrument to be the free act and deed of limited liability company.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal on the day and year last above written.

/s/ Pamela S. Mattingly

Notary Public in and for

said County and State

Print Notary’s Name: PAMELA S. MATTINGTLY

My Commission Expires:

JUNE 29, 2016

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STATE OF NEW YORK		)
		) ss.
COUNTY OF NEW YORK		)

Sworn to before me and subscribed in my presence by Peter H. Smith, a Director of CT INVESTMENT MANAGEMENT CO., LLC, a Delaware limited liability company, as Special Servicer for WELLS FARGO BANK, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-TFL2, this 11 ^th day of June , 2013, on behalf of WELLS FARGO BANK, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-TFL2.

/s/ Veronica Colon

Notary Public in and for

said County and State

Print Notary’s Name: Veronica Colon

My Commission Expires: [Notary Seal]

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GUARANTY

[attached]

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GUARANTY OF LEASE

As an inducement to Talon Portfolio Services, LLC, a Washington limited liability company, as General Receiver for W2007 Seattle Office Bellefield Office Park Realty, LLC, a Delaware limited liability company, King County Case No. 12-2-21253-8-SEA (“ Landlord ”) to enter into that Lease dated June 6, 2013, which covers certain premises located at 1500 114 ^th Avenue SE, Bellevue, Washington (the “ Lease ”) with Griptonite, Inc., a Washington corporation (“ Tenant ”), the undersigned (hereinafter “ Guarantor ”), being financially interested in Tenant and benefiting from the Lease, hereby guarantees to Landlord the full and prompt payment of all sums, including, but not limited to, the rent, taxes, insurance, utility charges and any and all other sums and charges payable by the Tenant under the Lease, including all renewals and extensions thereof, and the full and prompt performance and observance of all of the other covenants, terms and agreements therein provided to be performed and observed by Tenant. Guarantor hereby covenants and agrees to and with Landlord that if Tenant or its successors or assigns at any time defaults in the payment of any such sum or in the performance of any of the other covenants, terms or agreements contained in the Lease and such default is not cured within the applicable cure period, Guarantor will immediately pay such sum or will forthwith perform and fulfill such covenants, terms and agreements, and will immediately pay to Landlord, its successors and assigns, all damages that may arise as a consequence of any default by Tenant under the Lease, including without limitation, all reasonable attorneys’ fees incurred by Landlord. This is an absolute and unconditional guaranty of payment and performance.

The obligations hereunder are independent of the obligations of Tenant, and a separate action or actions may be brought and prosecuted against Guarantor, regardless of whether an action is brought against Tenant and regardless of whether Tenant is joined in such action or actions. The liability of Guarantor hereunder is primary and shall not be affected or diminished by any transfer, of Tenant’s interest in the Lease.

Guarantor acknowledges that Landlord may, without notice or demand to Guarantor (but otherwise in accordance with the terms and conditions set forth in the Lease) and without affecting Guarantor’s liability hereunder, from time to time to (a) renew, extend, accelerate or otherwise change the time for payments under or otherwise change the terms of, the Lease or any part thereof; (b) apply any security for the Lease or direct the order or manner of sale thereof as Landlord in its sole discretion may determine; (c) modify or alter the liability of Tenant under the Lease; or (d) settle or compromise any claim of Landlord against Tenant. Landlord may assign the Lease and/or this Guaranty in whole or in part, without notice and without in any manner affecting Guarantor’s obligations hereunder.

Guarantor waives any right to require Landlord to (a) proceed against Tenant; (b) proceed against or exhaust any security held from Tenant; or (c) pursue any other remedy in Landlord’s power whatsoever. Guarantor waives any defense arising by reason of any right or defense that may arise by reason of the incapability, lack of authority, death or disability of Tenant or any other person. Until all obligations of Tenant to Landlord under the Lease shall have been fully paid and performed, Guarantor shall have no right of subrogation, and waives any right to enforce any remedy which Landlord now has or may hereafter have against Tenant, and waives any benefit of, and any right to participate in any security now or hereafter held by Landlord. Guarantor waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Guaranty and of the existence, creation or incurring of new or additional indebtedness and all other notices of every kind and nature to which Guarantor might otherwise be entitled as a matter of law.

Any indebtedness of Tenant now or hereafter held by Guarantor is hereby subordinated to the indebtedness of Tenant to Landlord and such indebtedness of Tenant to Guarantor, if Landlord so requests, shall be collected, enforced and received by Guarantor as a trustee for Landlord and be paid over to Landlord on account of the indebtedness of Tenant to it, but without reduction or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty. Until such time as the Lease has been paid and performed in full, Guarantor agrees not to exercise any rights any of them may now or hereafter acquire against Tenant (whether by subrogation, reimbursement, or otherwise) arising out of payments to Landlord hereunder. Guarantor hereby waives and relinquishes in favor of Landlord and Tenant any claim or right to payment Guarantor may now have or hereafter have or acquire against Tenant, by subrogation or otherwise.

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Guarantor agrees that it is not necessary for Landlord to inquire into the powers of Tenant or any officers, directors or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. Guarantor warrants that this Guaranty has been duly authorized by all necessary authorities.

The Guarantor agrees to assume full responsibility for keeping itself informed as to the financial condition of Tenant and all other circumstances bearing upon risk of non-payment or non-performance of the obligations that diligent inquiry would reveal, with Landlord to have no duty to advise the Guarantor of any information, whether known to Landlord or otherwise, regarding the financial or other condition of Tenant.

This Guaranty shall be the joint and several obligation of each of the undersigned, if there be more than one, and shall bind the individual and community property of each of them.

This Guaranty shall bind the heirs and personal representatives of Guarantor and shall inure to the benefit of the heirs, personal representatives, successors, and assigns of Landlord. In the event that the Lease is assigned or transferred by Landlord (“Landlord Assignment”), this Guaranty may likewise be assigned and/or endorsed by Landlord to the assignee of the Lease (assignment of the Lease to also be deemed to be an assignment of this Guaranty), and in such event, the holder of this Guaranty may enforce this Guaranty as if such holder had been originally named as the Landlord hereunder.

This Guaranty shall be governed by and construed in accordance with the laws of the State of Washington. Guarantor hereby irrevocably agrees that any legal action or proceedings against Guarantor with respect to this Guaranty may be brought in the courts of the State of Washington sitting in King County, Washington, or in any United States District Court for the Western District of Washington, or such other court as Landlord may elect and, by Guarantor’s execution and delivery of this Guaranty, Guarantor hereby irrevocably submits to each such jurisdiction and hereby irrevocably waives any and all objections which Guarantor may have as to venue in any of such courts.

Guarantor agrees to pay all costs of enforcement of this Guaranty, including Landlord’s reasonable attorneys’ fees and all costs and expenses of suit and in preparation therefor and on appeal therefrom. Any sums due hereunder which are not paid when due shall bear interest at the rate specified for delinquent payments in the Lease.

This Guaranty shall continue in full force and effect and shall be unaffected by any bankruptcy, reorganization or insolvency of Tenant or any successor or assign of Tenant or any disaffirmance or rejection of the Lease by a trustee of Tenant or any trustee of any successor or assign of Tenant. Guarantor acknowledges and agrees that any payment which accrues with respect to Tenant’s obligations under the Lease (including, without limitation, the payment of rent) after the commencement of any such proceeding (or, if any such payment ceases to accrue by operation of law by reason of the commencement of such proceeding, such payment as would have accrued if said proceedings had not been commenced) shall be included in Guarantor’s obligations hereunder because it is the intention of the parties that said obligations should be determined without regard to any rule or law or order which may relieve Tenant of any of its obligations under the Lease.

The Guarantor hereby waives its right to a jury trial with respect to any legal proceeding involving or enforcing this Guaranty.

Any notices to be sent to Guarantor shall be given by and be effective upon personal delivery or deposit in the United States mail or any recognized overnight delivery services (such as Federal Express), to the address set forth below the signature line below (or at any replacement address designated in writing received by Landlord not later than ten (10) days prior to any such notice by Landlord), and Landlord shall use commercially reasonable efforts to send a courtesy copy of any such notice via e-mail to legal@glu.com (or such other e-mail address as my be specified in a written notice from Guarantor to Landlord from time to time).

This Guaranty may not be changed, modified, discharged, or terminated orally or in any manner other than by an agreement in writing signed by Guarantor and Landlord.

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If any provision of this Guaranty or the application thereof to any person or circumstances shall, for any reason and to any extent, be invalid or unenforceable, the remainder of this Guaranty and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the extent permitted by law. This Guaranty shall be construed without regard to any presumption or other rule requiring construction against the party causing this Guaranty to be drafted.

This Guaranty shall continue in effect until one year and one day following the final payment and performance by Tenant under the Lease.

[Remainder of the Page Left Blank; Signature Page Follows]

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[Signature Page to Guaranty of Lease by Glu Mobile Inc.]

IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of this day of June 2013.


GUARANTOR

GLU MOBILE INC., a Delaware corporation

By:		/s/ Eric R. Ludwig
		Name: Eric R. Ludwig
		Its: EVP and CFO

By:		/s/ Scott J. Leichtner
		Name: Scott J. Leichtner
		Its: VP, General Counsel & Corporate Secretary

Address: Glu Mobile Inc.
		45 Fremont Street, Suite 2800
		San Francisco, California 94105
		Attention: General Counsel

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GUARANTOR ACKNOWLEDGMENT


State of California		)
		)
County of San Francisco		)

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.


Signature Diana Polyakov (Notary Seal)

State of California		)
		)
County of San Francisco		)

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature Diana Polyakov (Notary Seal)

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EXHIBIT 10.08

GLU MOBILE INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK UNIT AWARD

GRANT NUMBER:

The terms defined in Glu Mobile Inc.’s (the “ Company ”) 2007 Equity Incentive Plan (the “ Plan ”) shall have the same meanings in this Notice of Restricted Stock Unit Award (the “ Notice of Grant ”).


Name:

Address:

You (“ Participant ”) have been granted an award of Restricted Stock Units (“ RSUs ”), subject to the terms and conditions set forth in this Notice of Grant, the attached Award Agreement (Restricted Stock Units) (hereinafter the “ RSU Agreement ”), including any country-specific terms and conditions for Participant’s country attached in an appendix to the RSU Agreement (the “ Appendix ” and collectively, the “ Agreement ”) and the Plan (available in hard copy by request), all of which are incorporated herein by reference, as follows:


Number of RSUs:

Date of Grant:

Vesting Commencing Date:

Expiration Date:		The date on which settlement of all RSUs granted hereunder occurs, with earlier expiration upon the Termination Date as further described in Section 5 of the RSU Agreement.

		Vesting Schedule: Subject to your continued service as an employee, director or consultant of the Company or a Subsidiary, the RSUs will vest as follows:

If any portion of the RSUs vest on a date that is a non-trading day on The NASDAQ Global Market, then the award will vest on the next trading day.

Participant understands that his or her continued service relationship with the Company or a Subsidiary is for an unspecified duration, can be terminated at any time (to the fullest extent permitted by applicable law), and that nothing in this Notice of Grant, the Agreement or the Plan changes the ability of the Company or the employing Subsidiary to terminate the service relationship. Participant acknowledges that the vesting of the RSUs pursuant to this Notice of Grant is earned only by continuing service as an employee, director or consultant of the Company or a Subsidiary. Participant also understands that this Notice of Grant is subject to the terms and conditions of the Agreement and the Plan, both of which are incorporated herein by reference. Participant has read both the Agreement and the Plan.


PARTICIPANT						GLU MOBILE INC.

Signature:						By:

Print Name:						Its:

GLU MOBILE INC.

2007 EQUITY INCENTIVE PLAN

AWARD AGREEMENT (RESTRICTED STOCK UNITS)

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan, as amended (the “ Plan ”), shall have the same defined meanings in this Award Agreement (Restricted Stock Units) (this “ RSU Agreement ”).

Participant has been granted Restricted Stock Units (“ RSUs ”) subject to the terms, restrictions and conditions of the Plan, the Notice of Restricted Stock Unit Grant (“ Notice of Grant ”) and this RSU Agreement, including any country-specific terms and conditions for Participant’s country attached in an appendix to this RSU Agreement (the “ Appendix ” and collectively, the “ Agreement ”).

1. Settlement . Settlement of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in the Notice of Grant. Unless otherwise set forth in this Agreement, settlement of RSUs shall be in Shares.

2. No Stockholder Rights . Unless and until such time as Shares are issued in settlement of vested RSUs, Participant shall have no ownership of the Shares allocated to the RSUs and shall have no right to receive dividends or other distributions on such Shares or to vote such Shares.

3. Dividend Equivalents . Dividends, if any (whether in cash or Shares), shall not be credited to Participant.

4. No Transfer . The RSUs and any interest therein shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of.

5. Termination . If Participant’s service Terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights of Participant to such RSUs shall immediately terminate.

For purposes of this grant of RSUs, the Termination Date is deemed to occur on the date Participant is no longer actively providing services to the Company or a Subsidiary (regardless of the reason for such Termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employee agreement, if any), and will not be extended by any notice period (e.g., Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any).

If there is any dispute as to whether Termination has occurred, the Committee shall have sole discretion to determine whether such Termination has occurred and the effective date of such Termination.

6. Acknowledgement . The Company and Participant agree that the RSUs are granted under and governed by the Notice of Grant, this Agreement and by the provisions of the Plan (incorporated herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with their provisions, and (c) accepts the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice of Grant.

7. Nature of Grant . In accepting the grant, Participant acknowledges, understands and agrees that:

(a) the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;

(b) all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Committee;

(d) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(e) Participant is voluntarily participating in the Plan;

(f) the future value of the Shares is unknown, indeterminable and cannot be predicted with certainty;

(g) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs upon Termination of Participant’s service relationship (whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s service agreement, if any), and in consideration of the grant of the RSUs to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company and any Subsidiary, waives Participant’s ability, if any, to bring any such claim, and releases the Company and any Subsidiary from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agreed to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(h) unless otherwise provided in the Plan, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company or be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and

(i) neither the Company and any Subsidiary shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.

8. No Advice Regarding Grant . The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan or Participant’s acquisition or sale of the Shares. Participant is hereby advised to consult with Participant’s own personal tax, legal and financial advisors regarding Participant’s participation in the Plan before taking any action related to the Plan.

9. Data Privacy . Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement and any other RSU grant materials by and among the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.

Participant understands that the Company and any Subsidiary may hold certain personal information about him or her, including, but not limited to, name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all RSUs or any other entitlement to shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

Participant understands that Data will be transferred to E*Trade Financial Services or such other stock plan service provider designated by the Committee which may be assisting the Company presently or in the future with the implementation, administration and management of the Plan. Participant understands that the recipients of the Data may be located in the U.S. or elsewhere, and that the recipients’ country (e.g., the U.S.) may have different data privacy laws and protections than Participant’s country. Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting Participant’s local human resources representative. Participant authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing Participant’s participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Participant’s local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Company or any Subsidiary will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant RSUs or other equity awards or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that Participant may contact his or her local human resources representative.

10. Appendix . Notwithstanding any provisions in this RSU Agreement, the RSUs shall be subject to any special terms and conditions set forth in the Appendix to this RSU Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this RSU Agreement.

11. Imposition of Other Requirements . The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

12. Responsibility for Taxes . Regardless of any action the Company or, if different, Participant’s employer (the “ Employer ”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to participation in the Plan and legally applicable to Participant (“ Tax-Related Items ”), Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Participant further acknowledges and agrees that the Company and/or the Employer: (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the issuance of Shares upon settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if Participant is subject to Tax-Related Items in more than one jurisdiction between the date of grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Before any relevant taxable or tax withholding event, as applicable, Participant will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to any Tax-Related Items by one or a combination of the following:

(i) withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Employer; or

(ii) withholding from proceeds of the sale of Shares acquired upon settlement of the RSUs either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization); or

(iii) withholding in Shares to be issued upon settlement of the RSUs.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Share equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of Participant’s participation in the Plan.

Finally, Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means described above. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Participant fails to comply with his or her obligations in connection with the Tax-Related Items.

13. Compliance with Laws and Regulations . The issuance and delivery of Shares to Participant will be subject to and conditioned upon compliance by the Company and Participant with all applicable U.S. or foreign state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

14. Successors and Assigns . The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

15. Governing Law; Venue; Severability . The Plan and Notice of Grant are incorporated herein by reference. The Plan, the Notice of Grant and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. For purposes of any action, lawsuit or other proceedings brought to enforce this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation will be conducted in the courts of the City and County of San Francisco, California, or the United States federal courts for the Northern District of California, and no other courts. This Agreement is governed by Delaware law except for that body of law pertaining to conflict of laws. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.

16. Waiver . Participant acknowledges that a waiver by the Company of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other participant.

17. No Rights as Employee, Director or Consultant . Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary, to terminate Participant ^’ s employment or other service relationship for any reason, with or without cause.

18. Language . If Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

19. Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

By your signature and the signature of the Company’s representative on the Notice of Grant, Participant and the Company agree that this RSU is granted under and governed by the terms and conditions of the Plan, the Notice of Grant and this Agreement. Participant has reviewed the Plan, the Notice of Grant and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to signing this Agreement, and fully understands all provisions of the Plan, the Notice of Grant and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice of Grant and this Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address.

APPENDIX

COUNTRY-SPECIFIC TERMS AND CONDITIONS TO

GLU MOBILE INC.

AWARD AGREEMENT (RESTRICTED STOCK UNITS)

Terms and Conditions

This Appendix includes additional terms and conditions that govern the RSUs granted to Participant if Participant resides in one of the countries listed herein. If Participant is a citizen or resident (or is considered as such for local law purposes) of a country other than the country in which Participant is currently residing, or if Participant transfers to another country after the grant but prior to the vesting of the RSUs, the Company shall, in its discretion, determine to what extent the additional terms and conditions contained herein shall be applicable to Participant.

Notifications

This Appendix may also include information regarding certain other issues of which Participant should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control, tax and other laws in effect in the respective countries as of May 2013. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Participant not rely on the information noted herein as the only source of information relating to the consequences of Participant’s participation in the Plan because the information may be out of date at the time Participant vests in RSUs or sells shares acquired upon vesting of the RSUs. In addition, the information is general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any particular result. Accordingly, Participant is advised to seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to his or her individual situation.

If Participant is a citizen or resident (or is considered as such for local law purposes) of a country other than the country in which Participant is currently residing, or if Participant transfers to another country after the grant but prior to the vesting of the RSUs, the notifications contained herein may not be applicable to Participant.

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the RSU Agreement or the Plan.

Canada

Terms and Conditions

RSUs Payable Only in Shares . Notwithstanding any discretion contained in Section 9.3 of the Plan or Section 1 of the RSU Agreement, the grant of RSUs does not provide any right for Participant to receive a cash payment and the RSUs are payable in Shares only.

Termination . The following provision replaces the second paragraph of Section 5 of the RSU Agreement:

For purposes of this grant of RSUs, the Termination Date is deemed to occur effective as of the earlier of (a) the date Participant is no longer actively providing services to the Company or any Subsidiary, and (b) the date Participant receives notice of termination of service from the Employer, regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to statutory law, regulatory law and/or common law).

Notifications

Securities Law Information . Participant will not be permitted to sell or otherwise dispose of the shares acquired upon vesting of the RSUs within Canada. Participant will only be permitted to sell or dispose of any shares acquired under the Plan if such sale or disposal takes place outside of Canada on the facilities on which such shares are traded.

The following provisions apply if Participant is a resident of Quebec:

Language Consent . The parties acknowledge that it is their express wish that the RSU Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Les parties reconnaissent avoir exigé la rédaction en anglais de la convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy . The following provision supplements Section 9 of the RSU Agreement:

Participant hereby authorizes the Company and the Company’s representatives to discuss and obtain all relevant information from all personnel, professional or non-professional, involved in the administration of the Plan. Participant further authorizes the Company and any Subsidiary to record such information and to keep such information in Participant’s employment file.

China

Terms and Conditions

The following applies only to Participants who are subject to exchange control restrictions in the People’s Republic of China, as determined by the Company in its sole discretion.

Settlement of RSUs and Sale of Shares . This provision supplements Section 1 of the RSU Agreement:

To facilitate compliance with local regulatory requirements, Participant agrees that the Company is entitled, at its discretion, to sell any Shares to be issued to Participant upon vesting of the RSUs. The sale may occur (a) immediately upon the vesting of the RSUs, (b) following Participant’s Termination, or (c) within any other time frame as the Company determines to be necessary to comply with local regulatory requirements. Participant further agrees that the Company is authorized to instruct its designated broker to assist with the mandatory sale of such Shares (on Participant’s behalf pursuant to this authorization) and Participant expressly authorizes the Company’s designated broker to complete the sale of such Shares. Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay Participant the cash proceeds from the sale, less any brokerage fees or commissions and subject to any obligation to satisfy Tax-Related Items. Participant agrees that the payment of the cash proceeds will be subject to the repatriation requirements described below.

Participant further agrees that any Shares that may be issued to Participant shall be deposited directly into an account with the Company’s designated broker. The deposited Shares may not be transferred (either electronically or in certificate form) from the brokerage account. This limitation shall apply both to transfers to different accounts with the same broker and to transfers to other brokerage firms. The limitation shall apply to all Shares issued to Participant under the Plan, whether or not Participant continues to be employed by the Company or one of its Subsidiaries. If Participant sells Shares issued upon vesting of the RSUs, the repatriation requirements described below shall apply.

Exchange Control Requirements . Participant understands and agrees that, pursuant to local exchange control requirements, Participant will be required to repatriate the cash proceeds from the sale of the Shares issued upon the vesting of the RSUs and any cash dividends paid on such Shares to China. Participant further understands that, under local law, such repatriation of his or her cash proceeds will need to be effectuated through a special exchange control account established by the Company or one of its Subsidiaries, and Participant hereby consents and agrees that any proceeds will be transferred to such special account prior to being delivered to Participant.

Participant further understands that the Company may decide to deliver the proceeds in U.S. dollars or in local currency. If the proceeds are to be delivered in U.S. dollars, Participant understands and agrees that he or she will be required to open a U.S. dollar account into which the proceeds may then be transferred. If the proceeds are to be delivered in local currency, Participant understands and agrees that the Company will be required to convert the proceeds prior to delivery. In this respect, the Participant acknowledges and agrees that the Company is under no obligation to secure any particular exchange conversion rate and that there may be delays in converting the cash proceeds to local currency due to exchange control restrictions. Participant agrees to bear any currency fluctuation risk between the time the cash proceeds are received and the time the cash proceeds are distributed to Participant through the special account described above.

Finally, Participant agrees to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.

Russia

Notifications

Exchange Control Information . Exchange control laws require Participants resident in Russia who sell Shares or receive dividends on such Shares to repatriate the proceeds to Russia within a reasonably short time. Such proceeds must initially be credited to Participant through a foreign currency account opened in Participant’s name at an authorized bank in Russia. After the funds are initially received in Russia, they may be further remitted to a foreign bank subject to the following limitations: (a) the foreign account may be opened only for individuals; (b) the foreign account may not be used for business activities; (c) the Russian authorities must be given notice of the opening/closing of each foreign account within one month of the account opening/closing; and (d) the Russian tax authorities must be given notice of the account balances of such foreign accounts as of the beginning of each calendar year. Participant is strongly encouraged to contact Participant’s personal advisor as exchange control requirements may change and non-compliance with applicable requirements can result in severe penalties for Participant.

Securities Law Information . The RSU Agreement, the Plan and all other materials that Participant may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the Plan has not and will not be registered in Russia; hence, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.

When Participant acquires Shares upon vesting, the Shares will be held for Participant in a U.S. brokerage account. Participant will not be permitted to request share certificates and hold the certificates in Russia. Participant may sell his or her Shares on a U.S. stock market, but is not permitted to sell Shares directly to other Russian individuals.

Labor Law Information . If Participant continues to hold Shares after an involuntary termination of Participant’s employment, Participant may not be eligible to receive unemployment benefits in Russia.

United Kingdom

Terms and Conditions

Withholding of Taxes . This provision supplements Section 12 of the RSU Agreement:

If payment or withholding of the income tax due is not made within 90 days of the event giving rise to the income tax or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by Participant to the Employer, effective as of the Due Date. Participant agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“ HMRC ”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 12 of the RSU Agreement. Notwithstanding the foregoing, if Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax. If Participant is a director or executive officer and income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax will constitute a benefit to Participant on which additional income tax and national insurance contributions (“ NICs ”) will be payable. Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer (as applicable) for the value of the employee NICs due on this additional benefit.

United States

Terms and Conditions

Termination . This provision replaces the second paragraph of Section 5 of the RSU Agreement:

For purposes of this grant of RSUs, the Termination Date is deemed to occur on the date Participant is no longer actively providing services to the Company or a Subsidiary (regardless of the reason for such Termination). If Participant is an employee of the Company or a Subsidiary, Participant’s employment constitutes employment at-will, and nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or if applicable, Subsidiary of the Company, to terminate Participant ^’ s employment, for any reason at any time.

Responsibility for Taxes . The following provisions supplement Section 12 of the RSU Agreement:

Participant acknowledges that there will be tax consequences upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and Participant should consult a tax adviser regarding Participant’s tax obligations prior to such settlement or disposition. Upon vesting of the RSU, Participant will include in income the fair market value of the Shares subject to the RSU. The included amount will be treated as ordinary income by Participant and will be subject to withholding by the Company when required by applicable law. Unless the Company notifies Participant in writing (where email will suffice) that Participant will make arrangements to pay the Company applicable income and employment taxes in cash, the Company shall withhold a number of Shares with a fair market value (determined on the applicable vesting date of the RSU) equal to the minimum amount the Company is required to withhold for income and employment taxes. Upon disposition of the Shares, any subsequent increase or decrease in value will be treated as short-term or long-term capital gain or loss, depending on whether the Shares are held for more than one year from the date of settlement. Further, a RSU is considered a deferral of compensation that is subject to Section 409A of the Code. Section 409A of the Code imposes special rules to the timing of making and effecting certain amendments of this RSU with respect to distribution of any deferred compensation. Participant should consult his or her personal tax advisor for more information on the actual and potential tax consequences of this RSU.

For purposes of the Agreement and to the extent applicable to a Participant, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Internal Revenue Code and the regulations thereunder (“ Section 409A ”). Notwithstanding anything else provided herein, to the extent any payments/consideration provided under this Agreement constitute deferred compensation subject to Section 409A, and Participant is deemed at the time of such termination of employment or service to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (a) the expiration of the six-month period measured from the separation from service from the Company or (b) the date of Participant’s death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Participant including, without limitation, the additional tax for which Participant would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this provision are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

Exhibit 31.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A)/15D-14(A)

OF THE SECURITIES EXCHANGE ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Niccolo M. de Masi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Glu Mobile 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 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 any 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.

5. The Registrant’s other certifying officer 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.

Exhibit 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A)/15D-14(A) OF THE

SECURITIES EXCHANGE ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Eric R. Ludwig, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Glu Mobile Inc.;

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.

Exhibit 32.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned, Niccolo M. de Masi, the President and Chief Executive Officer of Glu Mobile Inc. (the “Company”), pursuant to 18 U.S.C. §1350, hereby certifies that:

(i) the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 of the Company (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Exhibit 32.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned, Eric R. Ludwig, Executive Vice President and Chief Financial Officer of Glu Mobile Inc. (the “Company”), pursuant to 18 U.S.C. §1350, hereby certifies that:

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.