Document:

exv10w4

 

EXHIBIT 10.4

COMMERCIAL ALLIANCE AGREEMENT

          THIS AGREEMENT made and entered into effective the 23rd day of September, 2005,
between VERMEER MANUFACTURING COMPANY, an Iowa corporation, with its principal place of business at
Pella, Iowa (hereinafter referred to as “Vermeer”), and A.S.V., INC., a Minnesota corporation with
its principal place of business at 840 Lily Lane, Grand Rapids, MN 55744 (hereinafter referred to
as “ASV”).

          WHEREAS, Vermeer desires to utilize ASV’s expertise in the design, manufacture and sale of
all-terrain rubber tracked undercarriages to enhance various Vermeer Products; and,

          WHEREAS, Vermeer desires to be the exclusive user of ASV OEM Components (as defined below) in
several product and market categories; and

          WHEREAS, ASV desires to enhance the sale of ASV Posi-Track Rubber Track Loaders by having
Vermeer grant ASV access to Vermeer’s distribution system; and

          WHEREAS, ASV desires to supply ASV OEM Components to Vermeer for inclusion in various Vermeer
Products.

          NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereto agree as follows:

ARTICLE I

DISTRIBUTION OF ASV PRODUCTS TO VERMEER DEALERS

	 	1.	 	Consent by Vermeer. Vermeer hereby consents to ASV signing separate dealer
agreements with Vermeer’s Industrial Dealers for the distribution of ASV products which do
not directly compete with Vermeer products, and will not require that ASV pay a
distribution rights commission to Vermeer. ASV shall be solely responsible for any rights
and obligations arising out of supplying ASV products to Vermeer’s Industrial Dealers.
	 
	 	2.	 	Withdrawal upon Failure of Vermeer Industrial Dealer to Adequately Represent
Vermeer Products. Vermeer reserves the right to withdraw its consent with respect to a
particular Vermeer Industrial Dealer for ASV products to be distributed in the
Vermeer-branded facilities of such Vermeer Industrial Dealer in the event such Vermeer
Industrial Dealer, as a result of the distribution of ASV products by such Vermeer
Industrial Dealer, is not providing the adequate focus, effort, capital, etc. to meet the
reasonable goals and expectations uniformly applied to all Vermeer Industrial Dealers.

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ARTICLE II

SUPPLY OF ASV OEM COMPONENTS

	 	3.	 	Exclusive Supply of ASV OEM Components to Vermeer Target Markets. Subject to
the terms and conditions hereof, ASV agrees to exclusively sell, with respect to the
Vermeer Target Markets, the ASV OEM Components to Vermeer. For purposes of this provision
and this Agreement, ASV OEM Components shall mean any and all undercarriages, tracks and
track assemblies designed, manufactured and/or sold by ASV and any related product
offerings developed during the term of this Agreement. For purposes of this provision and
this Agreement, Vermeer Target Markets shall mean those classes of uses, applications
and/or customer types set forth on Exhibit A hereto or such others as may be added by
mutual agreement of the Parties from time to time. During the term of this Agreement, ASV
agrees not to sell ASV OEM Components to other original equipment manufacturers for use in
direct competition to Vermeer Products in the Vermeer Target Markets.
	 
	 	4.	 	Vermeer Conversion/Development of Products Utilizing ASV OEM Components.
Vermeer agrees that it shall be primarily responsible for Vermeer product development or
enhancement to include the use of ASV OEM Components. Vermeer shall support such
development or adaptation of ASV OEM Components to Vermeer Products in response to market
demands and constraints, mechanical fit-up, performance and economic justification.
	 
	 	5.	 	Application Assistance Adapting ASV OEM Components. ASV agrees to provide
reasonable assistance to Vermeer to convert the ASV OEM Components to be the primary ground
drive system of the Vermeer Products that will utilize such ASV OEM Components. Such
assistance will include, but not be limited to, FEA analyses, computer aided modeling of
ASV OEM Components and the equipment structures affixed thereto, load bearing tests, center
of gravity modeling, durability testing, stress testing and hydraulic system component
application approval.
	 
	 	6.	 	Documentation Assistance Regarding ASV OEM Components. ASV agrees to provide,
at no additional cost to Vermeer, written and/or electronic versions or copies (in editable
form) of Operators, Maintenance/Service and Parts Manuals applicable to the ASV OEM
Components and ASV consents to Vermeer’s commercial use of such materials in the
preparation of any Operators, Maintenance/Service and Parts Manuals for Vermeer Products
containing such ASV OEM Components. ASV agrees to provide updates to Vermeer regarding the
ASV OEM Components previously supplied to Vermeer contemporaneously with the timing of the
release of such updates for ASV’s own use with respect to ASV’s Posi-Track Rubber Track
Loaders utilizing substantially similar components. Vermeer is not required to use ASV
parts numbering scheme or otherwise indicate that the illustration provided is from ASV.

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	 	7.	 	Purchasing and Selling Procedure for ASV OEM Components.

	 	a)	 	Ordering Procedure. All orders by Vermeer for its inventory and/or for
resale to its dealers shall be placed through the issuance by Vermeer of a purchase
order subject to the provisions of this Agreement. ASV will acknowledge each order
stating its acceptance of both quantities and deliveries. In the event of any conflict
between the provisions of any purchase order, order acknowledgement, or other document
and this Agreement, the provisions of this Agreement shall be controlling. Direct
orders from dealers invoiced through Vermeer shall be handled by the dealer purchase
order.
	 
	 	b)	 	Forecast of Orders. Vermeer will provide a rolling twelve (12) month
forecast to ASV to give visibility to its intended usage of ASV OEM Components.
However, the forecast is NOT a firm order. Orders can only be made by issuing a
purchase order as set forth in subsection (a) above.
	 
	 	c)	 	Delivery. The date of delivery shall be set forth on Vermeer’s purchase
order and accepted by ASV on the order acknowledgment. ASV shall establish a firm
delivery schedule in accordance with the respective purchase order. Vermeer may, from
time to time, direct ASV to ship the ASV OEM Components directly to its authorized
dealers or the ultimate retail customer. Risk of loss and responsibility for all
charges and freight for ASV OEM Components ordered by Vermeer shall pass to Vermeer
upon delivery to the common carrier at ASV facility in Grand Rapids, Minnesota.
	 
	 	d)	 	Invoicing and Payment. All ASV OEM Component orders placed by Vermeer
or its dealers shall be invoiced to Vermeer upon shipment in accordance with the
applicable purchase order, as accepted. Such Invoices shall be paid within thirty (30)
days of the date of invoice.

	 	8.	 	Parts Supply for ASV OEM Components.

	 	a)	 	Parts Supply. Vermeer agrees to purchase from ASV 100% of its
requirements for ASV OEM Components parts sourced or manufactured by ASV to its design.
ASV agrees to maintain sufficient supply capabilities for the purpose of providing
Vermeer a reasonable stock of service parts manufactured or sourced by ASV for the ASV
OEM Components sold to Vermeer. ASV’s obligations under this subsection shall be in
effect for a period of not less than ***** (*****) years after delivery of ASV OEM
Components to Vermeer for which service parts are used. Obligations under this
subsection shall not be affected by the termination of this Agreement and shall extend
to parts manufactured or sourced by ASV to its design but shall not extend to
off-the-shelf parts purchased by ASV from outside sources which can be easily obtained
by Vermeer.

 

			
	*****	 	Denotes confidential information that has
been omitted from the exhibit and filed separately, accompanied by a
confidential treatment request, with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

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	 	b)	 	Dual Distribution Activities Regarding Parts. ASV will continue to
have the right to sell parts related to the ASV OEM Components provided to other
original equipment manufacturers for ASV OEM Components not in Vermeer Target Markets.
The following shall be applicable to ASV and Vermeer during the term of parts supply:

	 	i)	 	No comparative claims to Other’s product. Vermeer and
ASV agree not to make comparative, compatibility or similarity claims or other
comparison graphics or matrices, between the ASV OEM Components sold to Vermeer
and the comparable, compatible or similar ASV OEM Components sold directly by a
third party or through a third party’s distribution channel. Neither Party
may issue advertising materials which include printed statements that
acknowledge that the ASV OEM Components are identical, if that is the case.
	 
	 	ii)	 	Exclusion of Other Sales Materials in Product
Packaging. ASV agrees not to provide advertising or other materials
regarding the ASV or other non-Vermeer branded ASV OEM Components in any ASV
OEM Component shipments to Vermeer, its dealers or its customers.
	 
	 	iii)	 	Use of Information Gained Through Vermeer or ASV.
Vermeer and ASV agree to not use any customer lists provided from the other for
other than their intended purpose in carrying out their actions under this
Agreement. Each must independently source materials used to solicit customers
in such channels.

	 	9.	 	Pricing of ASV OEM Components. ASV agrees to provide ASV OEM Components at
prices to be established at a gross margin of ***** percent (*****%). Changes in ASV’s
cost structure necessitating an increase or decrease in the price shall be provided in
writing to Vermeer, to be effective with respect to all orders placed more than thirty (30)
days after delivery of such written notice. ASV will, whenever possible, endeavor to
change prices to coincide with Vermeer’s annual price change to the Vermeer Industrial
Dealers. Every effort will be made to limit changes to such a time frame when possible.
All prices are F.O.B. Grand Rapids, Minnesota.
	 
	 	10.	 	Pricing of ASV OEM Component Parts. ASV shall sell ASV OEM Component parts
directly to Vermeer for distribution through Vermeer’s parts distribution system. The
parts will be sold to Vermeer at ASV’s dealer net price minus ***** percent (*****%).
	 
	 	11.	 	Other Product and Distribution Opportunities. Compact Skid-Steers,
mini-excavators and other products, markets and distribution opportunities may be added to
Exhibit A to this Agreement as mutually agreed upon by the Parties.

 

			
	*****	 	Denotes confidential information that has
been omitted from the exhibit and filed separately, accompanied by a
confidential treatment request, with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

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	 	12.	 	Term of Agreement. This Agreement shall commence on the date hereof and shall
remain in force for eight (8) years with automatic one-year renewal periods unless either
party gives the other party prior written notice of termination at least 6 months before
the end of the current term. Notwithstanding the foregoing, this Agreement may be
terminated earlier by mutual agreement of the Parties or as set forth in subsections (a),
(b) or (c) below:

	 	a)	 	Termination by ASV. If Vermeer fails to perform this Agreement in any
material respect (and does not remedy such failure to the satisfaction of ASV within
sixty (60) days after written notice thereof has been delivered to Vermeer), or becomes
insolvent, bankrupt or consents to the appointment of a trustee or receiver, or if a
trustee or receiver is appointed for Vermeer without the consent of Vermeer and such
trustee or receiver is not discharged within sixty (60) days, or if any bankruptcy,
reorganization, arrangement or liquidation proceedings are instituted by Vermeer or
instituted against it and consented to by Vermeer or permitted to remain undismissed
for sixty (60) days, or if Vermeer’s shares, management, ownership or substantially all
Vermeer’s property is confiscated, nationalized, expropriated or otherwise taken by
governmental action, then in such event(s), ASV may terminate this Agreement
immediately upon written notice to Vermeer.
	 
	 	b)	 	Termination by Vermeer. If ASV fails to perform this Agreement in any
material respect (and does not remedy such failure to the satisfaction of Vermeer
within sixty (60) days after written notice thereof has been delivered to ASV), or
becomes insolvent, bankrupt or consents to the appointment of a trustee or receiver, or
if a trustee or receiver is appointed for ASV without the consent of ASV and such
trustee or receiver is not discharged within sixty (60) days, or if any bankruptcy,
reorganization, arrangement or liquidation proceedings are instituted by ASV or
instituted against it and consented to by ASV or permitted to remain undismissed for
sixty (60) days, or if ASV’s shares, management, ownership or substantially all ASV’s
property is confiscated, nationalized, expropriated or otherwise taken by governmental
action, then in such event(s), Vermeer may terminate this Agreement immediately upon
written notice to ASV.
	 
	 	c)	 	Change in Control of ASV. In the event of a change in control of ASV
(as defined below) Vermeer shall have the right to terminate this Agreement effective
immediately. For purposes of this subsection (c), “Change in Control” shall mean:

	 	i)	 	The acquisition by any third party or group of parties acting
in concert of at least thirty percent (30%) of the outstanding shares of common
stock of ASV; or
	 
	 	ii)	 	A change in a majority of the directors of ASV occurring in a
period of less than one year, excluding, to the extent no solicitation in
opposition has theretofore been announced or commenced, changes in directors
resulting from the election of directors at the next regularly scheduled annual
meeting of ASV’s shareholders; or

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	 	iii)	 	The sale, exchange, transfer or other disposition to a third
party of all or substantially all the assets of ASV.

	 	d)	 	Change in Control of Vermeer. In the event of a change in control of
Vermeer (as defined below) ASV shall have the right to terminate this Agreement
effective immediately. For purposes of this subsection (d), “Change in Control” shall
mean:

	 	i)	 	The acquisition by any third party or group of parties (other
than current Vermeer shareholders) acting in concert of at least thirty percent
(30%) of the outstanding shares of common stock of Vermeer; or
	 
	 	ii)	 	The sale, exchange, transfer or other disposition to a third
party of all or substantially all the assets of Vermeer.

	 	13.	 	Product Responsibility.

	 	a)	 	Design Responsibility for ASV OEM Components. ASV shall be completely
and solely responsible for final decisions on the design, safety labeling or
instruction, development, engineering and research concerning ASV OEM Components.
Vermeer may from time to time suggest new features or changes in the design of ASV OEM
Components and ASV shall incorporate such new features and/or design changes wherever
it believes that such will not adversely affect the performance, durability or safety
of ASV OEM Components or cause such ASV OEM Components to infringe on any intellectual
property rights of third parties.
	 
	 	b)	 	Disclosure of Failures. ASV shall also provide Vermeer with a report
of product liability insurance claims made during the preceding five (5) years which
includes, to the best of ASV’s knowledge, the names of any persons alleged to have been
injured for reasons alleged to be caused by the ASV OEM Components, the circumstances
surrounding such claim(s) and the resolution of such claim(s). ASV shall have a
continuing duty during the term of this Agreement and for five (5) years after its
termination to generate such report upon the specific request of Vermeer. As of the
date of this Agreement, ASV represents and warrants that, to the best of ASV’s
knowledge there are no present or threatened claims asserted by any persons with regard
to the ASV OEM Components.

	 	14.	 	Intellectual Property Rights.

	 	a)	 	Intellectual Property Relating to Vermeer Machines. Any patents,
copyrights, trade secrets, designs, drawings, know-how or any other intellectual
property developed by either Party or jointly developed by the Parties specifically for
the Vermeer machine shall be owned by Vermeer. ASV agrees to acknowledge and deliver
promptly to Vermeer without charge such written instruments as may be necessary to vest
the entire right, title and interest in the same in Vermeer.

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	 	 	 	Vermeer agrees to negotiate in good faith with ASV for licensing such intellectual
property to ASV on a non-exclusive, reasonable royalty basis, if so requested by
ASV.

	 	b)	 	Intellectual Property Relating to ASV OEM Components. Any patents,
copyrights, trade secrets, designs, drawings, know-how or any other intellectual
property developed by either Party or jointly developed by the Parties specifically for
the ASV OEM Components shall be owned by ASV. Vermeer agrees to acknowledge and
deliver promptly to ASV without charge such written instruments as may be necessary to
vest the entire right, title and interest in the same in ASV. ASV agrees to negotiate
in good faith with Vermeer for licensing such intellectual property to Vermeer on a
non-exclusive, reasonable royalty basis, if so requested by Vermeer.
	 
	 	c)	 	Intellectual Property Jointly Developed. Any patents, copyrights,
trade secrets, designs, drawings, know-how or any other intellectual property jointly
developed by the Parties which is not covered by Sections 14(a) or 14(b) shall be
jointly owned by the Parties; provided, however, that a party shall seek the express,
written approval of the other before the jointly developed intellectual property is
licensed by such party to another, with appropriate provisions made for accounting of
royalties received on such joint intellectual property.

	 	15.	 	ASV Quality Agreement.

	 	a)	 	Workmanship shall be such that the ASV OEM Components will be free of any
defects, improper manufacturing or assembly practices that are detrimental to the
performance of the ASV OEM Components.
	 
	 	b)	 	A quality system shall be maintained and documented. Detailed test and
inspection methods used to assure the quality of the ASV OEM Components must be
submitted for Vermeer’s review. ASV OEM Components shall be numbered with ASV serial
numbers. ASV and Vermeer shall cooperate in recording and tracking units.
	 
	 	c)	 	Inspection records of all inspections, tests, audits, and critical/major
characteristic inspection shall be maintained and available for Vermeer’s review during
regular business hours. At least a quarterly on-site review by a Vermeer
representative is anticipated.
	 
	 	d)	 	Service parts manufactured by ASV will be governed by all of the above items.

	 	16.	 	Warranty. ASV expressly warrants that all ASV OEM Components sold to Vermeer
pursuant to this Agreement will conform to the specifications, drawings, samples, or other
descriptions furnished and specified by ASV and will be free of defects in design,
material, workmanship, manufacturing, warning or instruction material at the time of
delivery to Vermeer and as set forth below.

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	 	a)	 	Replacement or Credit Prior to Retail Sale. ASV will, without expense
to Vermeer, replace or credit to the account of Vermeer as ASV may elect, any of such
ASV OEM Components which, prior to resale by Vermeer, may be found not to meet this
warranty and which are returned to ASV with prior notification.
	 
	 	b)	 	Warranty. ASV agrees to a one (1) year warranty from date of final
customer purchase on product defects due to design, material, workmanship or
manufacturing, warning or instruction material. ASV liability for repair will be
limited to repair or replacement of defective parts and a provision for reasonable
labor to make such repair in accordance with the rates established under Vermeer’s
dealer warranty reimbursement program and shall be a credit to Vermeer’s account with
ASV in the event Vermeer provides the required part or labor reimbursement on to its
dealer performing the warranty service. Warranty work must be performed by the selling
Vermeer authorized dealer. The machine owner is responsible for causing the delivery
of the machine to that selling authorized Vermeer dealer. ASV will not reimburse
transportation, rental or inconvenience costs. ASV reserves the right to inspect the
part prior to any decision involving a warranty claim. In no case shall ASV grant a
remedy that exceeds the purchase price of the component or part. ASV warrants its
rubber tracks pursuant to its standard warranty attached hereto as Exhibit B.
	 
	 	c)	 	Widespread Failure. In addition to the obligations hereunder imposed
upon ASV, should any widespread failure due to design, material, workmanship or
manufacturing on ASV OEM Components occur, then and in such instance, ASV shall be
responsible for parts and labor (or at ASV’s option pay for Vermeer labor) as shall be
required to remedy such failure, both with respect to ASV OEM Components in use and in
inventory of Vermeer or affiliated companies and that of their dealer organizations.
Vermeer, pending correction of the failure, may defer further purchases of the ASV OEM
Components affected. If within sixty (60) days of advise from Vermeer of a widespread
failure ASV shall not have instituted reasonable procedures for the rectification of
such failure, Vermeer may return to ASV for full purchase price credit (including
freight) all ASV OEM Components affected by the failure then in the inventory of
Vermeer or its affiliated companies and of their dealer organizations, together with
such ASV OEM Components as have been returned by users thereof, and Vermeer shall be
relieved of any and all obligation to purchase any additional ASV OEM Components
hereunder and at Vermeer’s election either terminate the contract or defer an
obligation until such time that the failure has been rectified. For purposes of this
Paragraph 16.c., “widespread failure” shall mean the occurrence of defects and failures
in the warranty period in excess of *****% on units purchased, after a minimum
population of twelve (12) months of sales is established.
	 
	 	d)	 	Widespread Failure Exemption. *****.

 

			
	*****	 	Denotes confidential information that has
been omitted from the exhibit and filed separately, accompanied by a
confidential treatment request, with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

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	 	e)	 	Disclaimer of Other Warranties. THIS WARRANTY IS IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

	 	17.	 	Product Liability.

	 	a)	 	Duty to Indemnify, etc. ASV agrees, now and hereafter, to defend,
protect, hold harmless and indemnify Vermeer and its affiliates from and against any
and all claims for injury, loss or damage of any kind, whether direct or consequential,
compensatory or punitive, which results or allegedly results from a defect in design,
material, workmanship, manufacturing, safety labeling, warning or instructional
material of the ASV OEM Components. Said indemnity shall include all expenses and
reasonable attorney’s fees attributable thereto. Vermeer agrees to promptly notify ASV
of any such claim or suit and ASV shall be obligated to defend, settle or otherwise
dispose of such claim or suit through counsel of its own choosing. This undertaking to
indemnify and hold harmless by ASV is understood by the Parties to deal with
negligence, as well as other grounds of liability, and shall not be avoided on the
ground that contractual indemnification of a party against its own actual or alleged
negligence is unenforceable or contrary to public policy due to the absence of a clear
undertaking.
	 
	 	b)	 	Duty to Indemnify, etc. Vermeer agrees, now and hereafter, to defend,
protect, hold harmless and indemnify ASV and its affiliates from and against any and
all claims for injury, loss or damage of any kind, whether direct or consequential,
compensatory or punitive, which results or allegedly results from a defect in design,
material, workmanship, manufacturing, safety labeling, warning or instructional
material of the Vermeer machines, excluding the ASV OEM Components. Said indemnity
shall include all expenses and reasonable attorney’s fees attributable thereto. ASV
agrees to promptly notify Vermeer of any such claim or suit and Vermeer shall be
obligated to defend, settle or otherwise dispose of such claim or suit through counsel
of its own choosing. This undertaking to indemnify and hold harmless by Vermeer is
understood by the Parties to deal with negligence, as well as other grounds of
liability, and shall not be avoided on the ground that contractual indemnification of a
party against its own actual or alleged negligence is unenforceable or contrary to
public policy due to the absence of a clear undertaking.
	 
	 	c)	 	Insurance. ASV agrees to purchase and maintain, from an insurance
company acceptable to Vermeer, product and completed operation liability and blanket
contractual liability insurances (providing coverage at least equivalent to that under
the rating bureau’s standard comprehensive general liability policy) with limits of
$***** per occurrence and in the aggregate annually for bodily injury

 

			
	*****	 	Denotes confidential information that has
been omitted from the exhibit and filed separately, accompanied by a
confidential treatment request, with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

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	 	 	 	and property damage. ASV agrees to submit to Vermeer upon execution hereof and
thereafter to keep on file with Vermeer a current Certificate of Insurance
evidencing compliance with the aforementioned insurance requirements and obligating
the insurer to give Vermeer at least thirty (30) days’ prior written notice of
cancellation, material change or intent not to renew. In the event ASV fails to
purchase the aforementioned insurance or to pay any premium thereon when due,
Vermeer, at its option, may, after giving written notice to ASV, purchase such
insurance or pay any premium due and subsequently charge ASV for the amount thereof
or offset said amount from any balances due ASV.

	 	18.	 	Safety Standards. ASV OEM Components shall comply with all North American
industry and governmental standards in effect at the time of shipment, including labeling
requirements of such standards. Additional safety features developed by ASV or common to
other similar ASV OEM Components, will be incorporated into ASV OEM Components sold to
Vermeer as soon as practical and at least as soon as similar features are incorporated into
ASV’s other similar ASV OEM Components.
	 
	 	19.	 	Modification of ASV OEM Component Design and New Designs. The Parties agree to
cooperate to ensure that ASV OEM Components are modified and improved to remain fully
competitive in the market. ASV agrees to provide Vermeer a 30-day option (from the date
the working prototype is submitted for evaluation) to purchase, exclusively for the Vermeer
Target Markets, any new ASV OEM Components ASV develops, under the terms of this Agreement.
	 
	 	20.	 	Parts Return Option. Vermeer may, at its election, annually return to ASV
***** percent (*****%) of the previous year’s dollar volume of new, saleable and undamaged
repair parts. Annual periods under this Paragraph shall be the Vermeer fiscal year,
November 1 to October 31. Vermeer shall be credited upon such return an amount equal to
***** percent (*****%) of the Vermeer invoice prices not later than October 31 of each
year. All costs of redelivering such parts to the place of business of ASV shall be borne
by Vermeer.
	 
	 	21.	 	Patents. In the event a suit or proceeding is brought against either Party, so
far as it is based on a claim that any ASV OEM Component, or any part thereof furnished
under this Agreement, constitutes an infringement of any patent of the U.S. or other
sovereign nation, ASV shall defend such suit or proceeding at its sole expense. ASV shall
pay all damages and costs awarded therein. In case said ASV OEM Component or part thereof
is in such suit held to constitute infringement and the use of said ASV OEM Components or
part is enjoined, then ASV shall at its expense, either procure for Vermeer the right to
continue using the ASV OEM Components or part, replace the infringing element with a
noninfringing substitute, or modify the ASV OEM Components so it becomes noninfringing, or
remove the ASV OEM Components and refund the purchase price and the transportation cost
thereof.

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	 	22.	 	Force Majeure. Notwithstanding these provisions or other Paragraphs to the
contrary, neither ASV nor Vermeer shall be liable for failure to perform hereunder arising
from causes or events beyond the control and without fault or negligence of ASV or
including without limitation causes or events such as strikes, insurrection, war, riot,
natural disaster, shortage of material or Acts of God.
	 
	 	23.	 	Confidential Information. The Parties hereto agree to use reasonable efforts
to prevent the disclosure to third parties, during the term of this Agreement, of all
confidential information which may be or has been disclosed by either Party to the other
(including business information of the Parties which is exchanged in developing and
operating under this Agreement), and agree to maintain such information in confidence for a
period of not less than five (5) years after termination of this Agreement; provided,
however, that each of the Parties hereto shall be free to use and disclose such information
if it: (a) was in its possession prior to the effective date of this Agreement without
obligation of confidentiality to the other party hereto (any prior confidentiality
agreements entered into between the parties hereto shall remain in effect); or (b) is
acquired from a third party who had the right to convey the information; or (c) is
otherwise publicly available; provided further, that either Party may make any public
disclosure it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly traded securities (in which case the disclosing
Party will use its reasonable best efforts to advise the other Party prior to making the
disclosure.)-
	 
	 	24.	 	Notice. Notice to be given by either party under this Agreement shall be in
writing and shall be given by Certified or Registered Mail.

Notices to ASV shall be sent to:

A.S.V., Inc.

840 Lily Lane

Grand Rapids, MN 55744

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Notices to Vermeer shall be sent to:

Vermeer Manufacturing Company

Underground Installation Solutions Segment

P.O. Box 200

1210 Vermeer Road East

Pella, Iowa 50219

With a copy to:

Vermeer Manufacturing Company

P.O. Box 200

1210 Vermeer Road East

Pella, Iowa 50219

Attn.: Legal Dept.

	 	25.	 	Entire Agreement. This Agreement contains the entire and only agreement
between the parties hereto relating to the ASV products and ASV OEM Components and wholly
cancels, terminates and supersedes any agreement written or verbally made or purported to
have been made heretofore between the parties with respect to the manufacture and sale of
ASV OEM Components and ASV products unless referred to herein.
	 
	 	26.	 	Amendment. No amendment or addition to or deletion from this Agreement or any
of the provisions thereof shall be binding upon the parties unless made in writing and
signed by duly authorized employees of both.
	 
	 	27.	 	Waiver. No departure from or waiver of or omissions to require compliance with
any of the terms hereof by either party shall be deemed to authorize any prior or
subsequent departure or waiver or permit or agree to any subsequent departure or waiver.
	 
	 	28.	 	Assignment. This Agreement shall not be assignable by either party without the
express written consent of the other party. This Agreement shall, however, be binding upon
any successor to the business of either party.
	 
	 	29.	 	Choice of Law. This Agreement shall be governed and construed in accordance
with the laws of the State of Delaware.
	 
	 	30.	 	Exclusive Remedy. The parties agree that all claims, controversies and
disputes which arise out of or relate to this Agreement, or which relate to the
interpretation or breach of this Agreement (hereinafter collectively referred to as
“claims”) shall be resolved in accordance with mediation and arbitration provisions
specified herein.
	 
	 	31.	 	Mediation, Arbitration. If a dispute, controversy, or claim arises out of or
relates to this Agreement, its termination or non-renewal, or the alleged breach thereof,
and if said dispute cannot be settled through direct discussions between the Parties, the
Parties agree to first endeavor to settle the dispute in an amicable manner by mediation
with an independent mediator selected by mutual agreement of the Parties.

Page 12 of 17

 

	 	 	 	If the Parties are unable to agree on a mediator, mediation shall be administered by the
American Arbitration Association under its Commercial Mediation Rules. If the matter
has not been resolved through mediation within thirty (30) days of the commencement of
such mediation (which period may be extended by mutual agreement in writing), then any
unresolved dispute, controversy, or claim arising out of or relating to this Agreement,
its termination or non-renewal, or the alleged breach thereof, shall be settled by
arbitration administered by the American Arbitration Association in accordance with its
Commercial Arbitration rules, and judgment upon the award rendered by the arbitrator,
may be entered in the Iowa District Court for Polk County or any state or federal court
having jurisdiction. The arbitration shall be conducted by a single arbitrator. The
arbitration proceedings shall be governed by and conducted in accordance with Iowa Code
Chapter 679A (1998), as amended from time to time, as supplemented by the Commercial
Arbitration Rules of the American Arbitration Association, to the extent not
inconsistent with Chapter 679A. The arbitrator shall allow each Party to conduct
limited relevant discovery. The arbitrator shall have no authority to award punitive
damages or any damages not measured by the prevailing Party’s actual damages, and may
not, in any event, make any ruling, finding or award that does not conform to the terms
and conditions of this Agreement. All fees and expenses of the arbitration shall be
borne equally by the Parties; provided, however, each Party shall bear the expenses of
their respective counsel, experts, witnesses, and preparation and presentation of the
arbitration matters. Any such arbitration shall be conducted in Polk County, Iowa,
unless mutually agreed in writing by the Parties. The provisions of this Article of
this Agreement shall survive the termination of this Agreement and shall be a complete
bar and defense to any suit, action or proceeding instituted in any court or tribunal
with respect to any controversy or dispute which is arbitrable as set forth in this
Agreement.

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their
respective officers authorized in that behalf.

	 
	Vermeer Manufacturing Company

	 

	By   /s/ Kevin
L. Alft

	 

	Title  Kevin
L. Alft, VP — Underground 

	 

	A.S.V., Inc.

	 

	By   /s/ Mark
S. Glasnapp

	 

	Title  Mark
S. Glasnapp, President

Page 13 of 17

 

EXHIBIT A

VERMEER TARGET MARKETS

*****

 

			
	*****	 	Denotes confidential information that has been omitted from the exhibit and filed
separately, accompanied by a confidential treatment request, with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

Page 14 of 17

 

EXHIBIT B

[See attached ASV Rubber Track Warranty]

Page 15 of 17

 

ASV WARRANTY

R-Series All Surface Loader Rubber Track

A.S.V., Inc. warrants new rubber tracks sold by it for use on ASV Rubber Track loaders to be
free from defects in material and workmanship.

The warranty is subject to the following:

Warranty Period

The warranty period is 24 months or 1000 operating hours, whichever occurs first, starting from
date of delivery to the first user.

ASV Responsibilities

If a disabling defect in material or workmanship is found during the warranty period, ASV will,
during normal working hours and at a place of business of an ASV dealer or other source approved by
ASV:

	 	•	 	At ASV’s choice, repair or provide an allowance toward the purchase of a new rubber
track. Such allowance will be based on accrued hours. Allowance will be calculated as
follows:

User Allowance

	 	 	 
	Track hours

	 	X 100 = User Cost (%)
	 

1000 hours

	 	 

	 	•	 	Figures can be obtained from your ASV dealer.

User Responsibilities

The user is responsible for:

	 	•	 	Providing proof of the delivery date to the first user.
	 
	 	•	 	The cost associated with transporting the product to and from the place of business of an
ASV dealer or other source approved by ASV.
	 
	 	•	 	Costs associated with labor.
	 
	 	•	 	Local taxes, if applicable.
	 
	 	•	 	Parts shipping charges in excess of those, which are usual and customary.
	 
	 	•	 	Costs to investigate complaints, unless the problem is caused by a defect in ASV material or workmanship.
	 
	 	•	 	Giving timely notice of a warrantable failure and promptly making the product available for repair.

Limitations

ASV is not responsible for failures resulting from:

	 	•	 	Any use or installation, which ASV judges improper.
	 
	 	•	 	Abuse, neglect and/or improper repair.
	 
	 	•	 	User’s delay in making the product available after being notified of a potential product problem.

(Continued on reverse side...)

Page 16 of 17

 

For products operating outside of Australia, Fiji, Nauru, New Caledonia, New Zealand, Papua
New Guinea, The Solomon Islands and Tahiti, the following is applicable:

NEITHER THE FOREGOING EXPRESS WARRANTY NOR ANY OTHER WARRANTY BY ASV, EXPRESS OR IMPLIED, IS
APPLICABLE TO ANY ITEM ASV SELLS WHICH IS WARRANTED DIRECTLY TO THE USER BY ITS MANUFACTURER.

THIS WARRANTY IS EXPRESSLY IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. REMEDIES UNDER THIS WARRANTY ARE
LIMITED TO THE PROVISION OF MATERIAL AND SERVICES, AS SPECIFIED HERIN. ASV IS NOT RESPONSIBLE FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES.

ASV EXCLUDES ALL LIABILITY FOR OR ARISING FROM ANY NEGLIGENCE ON ITS PART OR ON THE PART OF ANY OF
ITS EMPLOYEES, AGENTS OR REPRESENTATIVES IN RESPECT OF THE MANUFACUTRE OR SUPPLY OF GOODS OR THE
PROVISION OF SERVICES RELATING TO THE GOODS.

IF OTHERWISE APPLICABLE, THE VIENNA CONVENTION (CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS) IS
EXCLUDED IN ITS ENTIRETY.

For products operating in Australia, Fiji, Nauru, New Caledonia, New Zealand, Papua New Guinea, the
Solomon Islands and Tahiti, the following is applicable:

THIS WARRANTY IS IN ADDITION TO WARRANTIES AND CONDITIONS IMPLIED BY STATUTE AND OTHER STATUTORY
RIGHTS AND OBLIGATIONS THAT BY ANY APPLICABLE LAW CANNOT BE EXCLUDED, RESTRICTED OR MODIFIED
(“MANDATORY RIGHTS”). ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED (BY STATUTE OR
OTHERWISE), ARE EXCLUDED.

NEITHER THIS WARRANTY NOR ANY OTHER CONDITION OR WARRANTY BY ASV, EXPRESS OR IMPLIED (SUBJECT ONLY
TO THE MANDATORY RIGHTS), IS APPLICABLE TO ANY ITEM ASV SELLS WHICH IS WARRANTED DIRECTLY TO THE
USER BY ITS MANUFACTURER.

TO THE EXTENT PERMITTED UNDER THE MANDATORY RIGHTS, IF ASV IS THE SUPPLIER TO THE USER ASV’S
LIABILITY SHALL BE LIMITED AT ITS OPTION TO (a) IN THE CASE OF SERVICES, THE SUPPLY OF THE SERVICES
AGAIN OR THE PAYMENT OF THE COST HAVING THE SERVICES SUPPLIED AGAIN, AND (b) IN THE CASE OF GOODS,
THE REPAIR OR REPLACEMENT OF THE GOODS, THE SUPPLY OF EQUIVALENT GOODS, THE PAYMENT OF THE COST OF
SUCH REPAIR OR REPLACEMENT OR THE ACQUISITION OF EQUIVALENT GOODS.

ASV EXCLUDES ALL LIABILITY FOR OR ARISING FROM ANY NEGLIGENCE ON ITS PART OR ON THE PART OF ANY OF
ITS EMPLOYEES, AGENTS OR REPRESENTATIVES IN RESPECT OF THE MANUFACTURE OR SUPPLY OF GOODS OR THE
PROVISION OF SERVICES RELATING TO THE GOODS.

ASV IS NOT LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES UNLESS IMPOSED UNDER MANDATORY RIGHTS.

IF OTHERWISE APPLICABLE, THE VIENNA CONVENTION (CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS) IS
EXCLUDED IN ITS ENTIRETY.

This warranty covers every major component of the products. Claims under this warranty should be
submitted to a place of business of an ASV dealer or other source approved by ASV. For further
information concerning either the location to submit claims or ASV as the issuer of this warranty,
write: All Season Vehicles, Inc. (ASV), 840 Lily Lane, Grand Rapids, Minnesota 55744 USA.

Page 17 of 17exv10w2

 

Exhibit 10.2

AMERICAN
EXEC CUPERTINO, INC.

OFFICE CENTER SUB-LEASE

     This Office Center Sub-Lease, hereinafter called “Sub-Lease”, dated this 28th day
of September, 2005, is entered into between AMERICAN EXEC CUPERTINO, INC., a California
Corporation, dba AMERICAN EXECUTIVE CENTER (hereinafter called “LESSOR”) and Zix Corporation
(hereinafter called “LESSEE”).

IT IS MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:

     LESSOR hereby leases to LESSEE and LESSEE hereby leases from LESSOR Office No.(s)
104, 19925 Stevens Creek Blvd., Cupertino, CA 950l4-2358, (hereinafter called
“PREMISES”).

     Said leasing is subject to the terms, covenants and conditions herein set forth, and
LESSEE covenants as a material part of the consideration for this Sub-Lease to keep and
perform each and all of said terms, covenants and conditions, and that this Sub-Lease is made
upon the condition of such performance.

     If the LESSOR is unable to deliver possession of the PREMISES at the time herein agreed,
then the LESSOR shall not be liable for any damage caused thereby nor shall this Sub-Lease be
void or voidable, but the LESSEE shall not be liable for any rent until such time as the
LESSOR delivers possession.

1. TERM: Subject to LESSOR executing this Sub-Lease as provided below, the Term of
this Sub-Lease shall be for six (6) months commencing on the 17th
day of October, 2005, if and only if LESSOR gives Notice, as hereafter provided, to
LESSEE by midnight of the third day following receipt by LESSOR of two (2) duplicate original copies of
this Sub-Lease signed and dated by LESSEE for execution by LESSOR. “Notice” for this purpose
shall be by delivery to LESSEE of a duplicate original copy of this Sub-Lease signed and dated
by LESSOR, either at the leased PREMISES or by deposit in the  U.S. Mail, postage
prepaid, addressed to LESSEE at such other address provided to LESSOR by LESSEE at the time
LESSEE delivers to LESSOR the aforementioned two (2) signed duplicate original copies of this
Sub-Lease.

     Upon the ending date set forth herein or any extension thereof, the Sub-Lease herein
granted shall be renewed and extended on a month-to-month basis, upon
the same terms and conditions as contained herein, unless either party notifies the other in
writing, as provided for in paragraph 16 of this Sub-Lease, at least thirty (30) days prior to the
ending date of this Sub-Lease, or the ending of any extensions thereof, that this Sub-Lease will not
be renewed. For any renewal or extension, the monthly rent shall be the current rate being
charged to new lessees at that time for like space.

     Notwithstanding
the provisions of this paragraph 1, solely in the event the Master Lease of
LESSOR for the premises of which these PREMISES are a part is not renewed at its termination
date, LESSOR agrees to notify LESSEE in writing thereof not later than sixty (60) days prior to
the termination of the Master Lease, and the Term of this Sub-Lease shall terminate
concurrent with the termination of the Master Lease. In all other respects, this Sub-Lease is
not altered or modified, and the rights and obligations of LESSOR and LESSEE shall be, and shall
continue during the Term, as herein provided.

-1-

 

2. A. RENT: LESSEE agrees to pay LESSOR, as monthly rent for the PREMISES and for the
facilities and services, subject to the conditions of use, if any, described in Exhibit “A” of this
Sub-Lease, the sum of One thousand seventy eight Dollars ($ 1078.00) in advance
on the first day of each and every calendar month during said Term. In the event the Term of this
Sub-Lease commences on a day other than the first day of a calendar month, then the rental for such
period shall be prorated.

     B. LESSOR DUTY OF CARE: It is expressly agreed between LESSOR and LESSEE that the duty of
care of LESSOR with respect to facilities and services included in LESSEE’s rent and for which
LESSOR will not bill LESSEE a charge is slight care and not ordinary care and that this is
specifically the case for the availability of the space provided by LESSOR for pick up by
LESSEE of mail and any packages received by LESSOR addressed to LESSEE at the PREMISES
address.

     C. ADDITIONAL FACILITIES AND SERVICES AND ADDITIONAL RENT: LESSOR does, at its expense,
provide additional facilities and services which are available to LESSEE, and which include, but
are not limited to, telephone answering, outbound telephone services, administrative/secretarial
services, word processing, photocopies, purchases of supplies, incoming and outgoing mail and
package delivery services, facsimile services, storage locker rental, equipment rental, furniture
rental, Internet access, and web services. These additional facilities and services are described
in Exhibit “B” (“Additional Facilities and Services”) attached to and expressly made a part of this
Sub-Lease by reference. LESSEE may request that LESSOR provide any of these additional facilities
and services to LESSEE under this Sub-Lease, and in that event, LESSOR will bill LESSEE on a
monthly basis for LESSEE’s current charge or charges for each and all of those additional
facilities and services requested of LESSOR by LESSEE. All such charges for these additional
facilities and services are additional rent and shall be payable in addition to the above rental on
the first day of each and every calendar month during said Term.

     D. DELINQUENT PAYMENTS: LESSOR shall deliver a detailed billing on its form to LESSEE on or
before the last day of each calendar month, and this billing shall include rent in advance for the
upcoming month, including the facilities and services described in Exhibit “A”, and additional rent
in arrears for those additional facilities and services described in Exhibit “B” and for LESSOR’s
telecommunications systems/services described in paragraph 3 of this Agreement provided by LESSOR
to LESSEE for the period commencing with the first day following the last day of service billed by
LESSOR for the prior month and continuing through a date prior to the date of billing and the end
of each calendar month. For this purpose “deliver” is defined as delivery by LESSOR to LESSEE’s
mailbox at American Executive Center. All rent and additional rent remaining unpaid by LESSEE after
the tenth (10th) of the month shall be subject to a service charge of five percent (5%)
of the amount of the billing, payable in addition to the billing. Further, if the amount of the
billing is not paid by the tenth day of the month, the amount of the billing, but not the amount of
the service charge, shall bear interest at the greater of ten percent (10%) per annum or a sum
equal to five percent (5%) above the rate charged by the San Francisco Federal Reserve Bank to
Member Banks on the 25th day of the calendar month prior to the date of delinquency as above
provided for. In the event full payment for the amount of rent and additional rent billed to LESSEE
is not received by LESSOR within ten (10) days after date of delinquency on the eleventh day of the
following month, by written notice to LESSEE, LESSOR shall terminate all the additional facilities
and services described in Exhibit “B” requested by LESSEE and covered by the terms of this
Sub-Lease. In the event payment is not received, including any additional charges here provided for
by the twentieth (20th) day of each calendar month, AEC shall have the right granted by
LESSEE to charge any such amounts due AEC to the credit card(s) listed by LESSEE on LESSEE’s Credit
Application or known to AEC at time of such payment delinquency.

-2-

 

3. TELECOMMUNICATIONS PACKAGE: LESSOR will furnish LESSEE with a telecommunications package
which consists of some combination of phone lines, dedicated lines, Internet Access, voice mail,
access to outgoing calling, and access to telephone numbers. All components of the package used by
LESSEE will remain at all times property of the LESSOR. Upon termination of this Sub-Lease, all
telephone numbers being used by LESSEE shall remain the property of LESSOR for LESSOR’s use in the
future operations of its business. LESSEE expressly understands that it may not take telephone
number(s) upon termination, can that LESSOR is specifically permitted to re-assign any and all
telephone numbers previously used by LESSEE, at LESSOR’s sole discretion. LESSEE is not permitted
to install any communication equipment, including telephone or network lines for internal or
external use without prior written approval of LESSOR.

4. PERMITTED USE: Said PREMISES shall, during the Term of this Sub-Lease and any extensions
thereof, be used for the following business purposes only:

 

 

     LESSEE shall not offer to other Lessees at the PREMISES any of the facilities and services or
additional facilities and services which LESSOR provides to its other lessees, including, but not
limited to, those facilities and services described in Exhibit “A” and additional facilities and
services described in Exhibit “B”. In the event LESSEE breaches this provision, LESSOR may, at its
sole option, terminate this Sub-Lease and pursue any legal remedies available to LESSOR.

5. SECURITY DEPOSIT: LESSEE has deposited with LESSOR the sum of
One thousand seventy eight Dollars ($ 1078.00).
Said sum shall be held by LESSOR as security for the faithful performance by LESSEE of all of the
terms, covenants, and conditions of this Sub-Lease during the Term hereof. If LESSEE defaults with
respect to any provision of this Sub-Lease, including but not limited to the provisions relating to
the payment of rent and additional rent, LESSOR may (but shall not be required to) use, apply or
retain all or any part of this security deposit for the payment of any rent, additional rent or any
other sum in default, or for the payment of any other amount which LESSOR may spend or become
obligated to spend by reason of LESSEE’s default, or to compensate LESSOR for any loss or damage
which LESSOR may suffer by reason of LESSEE’s default. If any portion of said deposit is so used or
applied, LESSEE shall, upon demand therefor, deposit cash with LESSOR in an amount sufficient to
restore the security deposit to its original amount, and LESSEE’s failure to do so shall be a
material breach of this Sub-Lease.

     Any time the rent payable by LESSEE to LESSOR increases during the Term of this Sub-Lease and
any renewal, LESSEE shall, upon written request from LESSOR, deposit additional monies with LESSOR
sufficient to maintain the same ratio between the security deposit and the rent as those amounts
are specified in the Sub-Lease for the beginning of the Term.

     LESSOR shall not be required to keep this security deposit separate from its general funds,
and LESSEE shall not be entitled to interest on such deposit. If LESSEE shall fully and faithfully
perform every provision of this Sub-Lease, the security deposit, or any balance thereof, shall be
returned to LESSEE (or, at LESSOR’s option, to the last assignee of LESSEE’s interest hereunder)
within forty-five (45) days after termination of this Sub-Lease provided all sums payable by
LESSEE to LESSOR have been paid in full, including payment to LESSOR of the sum of Twenty-Five
Dollars ($25.00) for each key to the PREMISES not returned to LESSOR by LESSEE by the termination
date of this Sub-Lease.

-3-

 

6. HAZARDOUS SUBSTANCES: The term “Hazardous Substance” as used in this Sub-Lease
shall mean any product, substance, chemical material or waste the presence, nature, quantity and/or
intensity of existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the PREMISES, of which is
either: (a) potentially injurious to the public health, safety or welfare, the environment or the
PREMISES; (b) regulated or monitored by any governmental authority; or (c) a basis for liability of
LESSOR to any governmental agency or third party under any applicable statute or common law theory.

     LESSEE shall not engage in any activity in, on or about the PREMISES which constitutes a
Reportable Use of Hazardous Substances without the prior express written consent of LESSOR, which
LESSOR may, in its sole discretion, refuse, and LESSEE shall comply in a timely manner at LESSEE’s
sole cost and expense with all applicable laws. LESSEE shall be required to immediately notify
LESSOR in writing if LESSEE knows, or has reasonable cause to believe, that a Hazardous Substance,
or a condition involving or resulting from same, has come to be located in, on, under or about the
PREMISES. LESSEE shall, at LESSEE’s sole cost and expense, fully, diligently and in a timely manner
comply with all Applicable Law, which term is used in this Sub-Lease to include all laws,
regulations, rules, ordinances, directives, covenants, easements and restrictions of record,
permits, the requirements of any applicable fire insurance underwriter or rating bureau and the
recommendations of LESSOR’s engineers and/or consultants relating in any manner to the PREMISES,
now in effect or which may hereafter come into effect, and whether or not reflecting a change in
policy from any previously existing policy. LESSOR and LESSOR’s agents shall have the right to
enter the PREMISES at any time in the case of an emergency and, otherwise, at reasonable times for
the purpose of inspecting the condition of the PREMISES and for verifying compliance by LESSEE
specifically with the provisions of this paragraph 6. LESSEE shall indemnify, protect, defend and
hold LESSOR, its agents, employees, lenders and Master Lessor to LESSOR, and the PREMISES, harmless
from and against any and all loss of rents and/or damages, liabilities, judgments, costs, claims,
liens, expenses, penalties, permits and attorney’s and consultant’s fees arising out of or
involving any Hazardous Substance brought onto the PREMISES by or for LESSEE or under LESSEE’s
control. LESSEE’s obligations under this paragraph 6 shall include, but not be limited to, the
effects of any contamination or injury to person, property or environment created or suffered by
LESSEE, and the cost of investigation, including consultant’s and attorney’s fees and testing,
removal, remediation, restoration and/or abatement thereof, or any contamination therein involved,
and shall survive the expiration or earlier termination of this Sub-Lease. No Termination,
Cancellation or Release Agreement entered into by LESSOR and LESSEE shall release LESSEE from its
obligations under this Sub-Lease with respect to Hazardous Substances, unless specifically so
agreed by LESSOR in writing at the time of such Agreement.

7. SUB-LEASE TERMINATION AND SURRENDER: On expiration or sooner termination of this Sub-Lease, or
any extension or renewals of this Sub-Lease, LESSEE shall promptly surrender and deliver the
PREMISES to LESSOR in as good condition as they are now at the date of this Sub-Lease, reasonable
wear and tear excepted.

8. ALTERATIONS: LESSEE shall make no alterations, decorations, additions or improvements in or
to the PREMISES without LESSOR’s prior written consent, and only by contractors or mechanics
approved by LESSOR. All such work shall be done at such times and in such manner as LESSOR may
from time to time designate.

     Any alterations, decorations, additions or improvements by LESSEE pursuant to this
Sub-Lease shall, at the sole option of LESSOR, either be retained by LESSOR, or be removed at
LESSEE’s expense at the expiration of the tenancy under this Sub-Lease, and, if removed, the
PREMISES shall be restored to their state and condition at the date of commencement at
LESSEE’s expense.

-4-

 

9. FACILITIES AND SERVICES/BUILDING ACCESS: The “Facilities and Services”
described in Exhibit "A”, and the “Additional Facilities and Services” if requested by LESSEE,
described in Exhibit “B” attached to and expressly made a part of this Sub-Lease by reference,
shall be furnished to the PREMISES during normal business hours. The LESSOR shall not be liable for
any damage caused as a result of furnishing any of the above described facilities and services, or
additional facilities and services requested by LESSEE from LESSOR, or for stoppage or interruption
of any said facilities and services, or additional facilities and services, caused by labor
disturbances, or labor disputes (whether caused by LESSOR or otherwise), accident, repairs or other
cause; nor shall LESSOR be liable under any circumstances for loss or injury to persons or
property, however occurring, through, or in connection with or incidental to, the furnishing of any
of the foregoing or any other facilities and services including those in Exhibit “A” and/or Exhibit
“B” by LESSOR to LESSEE, except only for loss or injury resulting from willful acts or the gross
negligence of LESSOR or any of its employees or agents, nor shall any such failure relieve LESSEE
from the duty to pay the full amount of rent or additional rent herein specified, or constitute or
be construed as constructive or other eviction of LESSEE.

     Provided the LESSEE shall not be in default hereunder, and subject to the provisions elsewhere
herein contained, the LESSOR agrees to furnish to the PREMISES in reasonable quantities and during
normal business hours, electric current for lighting and normal office use only, common restroom
facilities with hot and cold water, and heating and air conditioning. LESSEE shall also have the
right to use the facilities described during non-business hours in which case heating and air
conditioning will be provided on an hour-by-hour basis by means of a one-hour timer operated by
LESSEE.

     LESSOR shall have the right, at all reasonable times, to enter the PREMISES to inspect the
same and to make such repairs and alterations as LESSOR shall see fit, or (within thirty days prior
to termination of this Sub-Lease) to show the leased PREMISES to prospective Lessees.

10. REPAIR: By entry hereunder, LESSEE accepts the PREMISES as being in good, sanitary order,
condition and repair. LESSEE shall, at LESSEE’s sole cost and expense, keep the PREMISES, and every
part thereof, including all windows and doors, in good condition and repair, ordinary wear and tear
excepted. LESSOR shall have no obligation to alter, remodel, improve, repair, decorate or paint the
PREMISES or any part thereof, and the parties hereto affirm that LESSOR has made no representations
to LESSEE respecting the condition of the PREMISES or the Building except as specifically herein
set forth.

11. INSURANCE: The LESSEE, at his expense, will provide insurance for LESSEE’s furniture,
furnishings and other personal property. LESSEE will provide liability insurance for the PREMISES
with a combined single limit for bodily injury and property damage liability of $500,000 minimum.
The LESSOR will be endorsed as an additional named insured on the liability policy, and LESSEE will
provide a certificate of insurance to LESSOR, which will also provide that the insurance will not
be terminated or not renewed without not less than twenty (20) days prior written notice to LESSOR.
The LESSOR will not carry insurance on LESSEE’s possessions and personal property.

12. SIGNS AND AUCTIONS: LESSEE shall not place any sign upon the PREMISES or Building or
conduct any auction thereon without LESSEE’s prior written consent.

13. CHOICE OF LAW AND VENUE: This Sub-Lease shall be governed by the laws of the State of
California. The exclusive venue shall be the Municipal Court or Superior Court of the County of
Santa Clara, California having jurisdiction.

-5-

 

14. SUBLET AND LICENSE: Neither the LESSEE, nor anyone claiming by, through or under the
LESSEE, shall mortgage or assign this Sub-Lease or sublet or license the PREMISES or any part
thereof or permit the use of the PREMISES by any person other than the LESSEE without prior written
consent of LESSOR.

15. BUILDING RULES: The “Rules and Regulations of the Building” attached hereto as Exhibit “C” are
expressly made a part of this Sub-Lease by reference, and LESSEE hereby expressly covenants and
agrees to abide by all of said Rules and Regulations, as well as such reasonable modifications
thereof as may be hereafter adopted and written notice thereof given to LESSEE by LESSOR,
including, but not limited to, reasonable rules and regulations relating to parking provided by
LESSOR for use by all Lessees in the building in which the PREMISES are located. LESSOR shall have
no responsibility to LESSEE for the violation or non-performance by any other tenant of said
Building of any of said Rules and Regulations.

16. WRITTEN NOTICES: All notices by LESSOR to LESSEE, or by LESSEE to LESSOR, shall be in writing.
Notices shall be deemed to be duly given if personally delivered by LESSEE to the office of LESSOR,
and by LESSOR to the PREMISES of LESSEE, under the terms of this Sub-Lease; or if mailed by
certified or registered mail, return receipt requested, postage prepaid, by LESSEE addressed to
LESSOR at its office at the location of the PREMISES, and by LESSOR addressed to LESSEE at the
PREMISES. Notices may not be given by Facsimile; except that solely in the event LESSEE gives
notice by Facsimile and LESSOR acknowledges in writing to LESSEE receipt of the Facsimile Notice
from LESSEE, then only shall such Facsimile Notice constitute Notice with respect to the
requirements of Written Notice under this Sub-Lease.

17. COMPLIANCE WITH LAW: LESSEE shall, at LESSEE’s own cost and expense, comply with all
statutes, ordinances, regulations and requirements of all governmental agencies, whether
federal, state, county or municipal, relating to LESSEE’s use and occupancy of said PREMISES
whether such statutes, ordinances, regulations and requirements be now in force or hereinafter
enacted.

18. INSURANCE HAZARDS: LESSEE shall not commit nor permit the commission of any acts on said
PREMISES nor use or permit the use of said PREMISES in any manner that will increase the existing
rates for or cause the cancellation of any fire, liability, or other insurance policy insuring the
PREMISES or the improvements to the PREMISES. LESSEE shall, at his/its own cost and expense, comply
with any and all requirements of LESSOR’s insurance carriers necessary for the continued
maintenance of and reasonable rates for the fire and liability insurance policies of LESSOR for the
PREMISES and the improvements to the PREMISES.

19. TAXES AND FEES: LESSEE shall file timely all reports and shall pay, before they become
delinquent, all taxes, assessments, or other charges levied or imposed by any governmental entity
on LESSEE’s business, the Sub-Lease of the PREMISES (except on the rental payments) and on the
furniture, trade fixtures, appliances and other personal property furnished by LESSEE, in, on, or
about the PREMISES.

20. HOLD HARMLESS: LESSEE agrees to indemnify and to hold LESSOR and the property of LESSOR,
including the PREMISES, free and harmless from any and all claims, liability, loss, damage, or
expenses resulting from LESSEE’s negligence in the occupation and use of the PREMISES and Building.

21. DEFAULT AND ABANDONMENT BY LESSEE: Should LESSEE breach this Sub-Lease and abandon the PREMISES
prior to the natural expiration of the Term of this Sub-Lease, LESSOR may: (a) continue this
Sub-Lease in effect by not terminating LESSEE’s right to possession of said PREMISES,

-6-

 

in which event LESSOR shall be entitled to enforce all its rights and remedies under this
Sub-Lease, including the right to recover the rents and other obligations, if any, of LESSEE
specified in this Sub-Lease as they become due under this Sub-Lease; or (b) terminate this
Sub-Lease and recover from LESSEE (i) The worth, at the time of award, of the unpaid rent which had
been earned at the time of termination of the Sub-Lease; (ii) The worth, at the time of award, of
the amount by which the unpaid rent which would have been earned after termination of the Sub-Lease
until the time of award exceeds the amount of rental loss that LESSEE proves could have been
reasonably avoided; (iii) The worth, at the time of award, of the amount by which the unpaid rent
for the balance of the Term of this Sub-Lease after the time of the award exceeds the amount of
rental loss that LESSEE proves could be reasonably avoided; and (iv) Any other amount necessary to
compensate LESSOR for all detriment approximately caused by LESSEE’s failure to perform his
obligations under this Sub-Lease.

     Should LESSEE default in the performance of any of the covenants, conditions, or agreements
contained in this Sub-Lease or any addendum to this Sub-Lease, LESSEE shall have breached the
Sub-Lease and LESSOR may, in addition to the remedies specified in
this paragraph, re-enter and
regain possession of said PREMISES in the manner provided by the Laws of Unlawful Detainer of the
State of California then in effect.

     The remedies given to LESSOR in this paragraph shall not be exclusive but shall be cumulative
and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this
Sub-Lease. The waiver by LESSOR of any breach by LESSEE of any of the provisions of this Sub-Lease
shall not constitute a continuing waiver or a waiver of any subsequent breach by LESSEE either
of the same or another provision of this Sub-Lease.

22. EMPLOYEES OF LESSOR: LESSEE agrees not to offer or have offered employment to any employees, or
to employ any employees of the LESSOR during the LESSEE’s stay within the PREMISES or for a period
of six (6) months following the termination of this Sub-Lease. LESSOR and LESSEE agree that the
damages to LESSOR that would result from a breach of this provision by LESSEE cannot reasonably be
determined at the time of entering into this Sub-Lease and,
therefore, that LESSOR shall be entitled
to payment of the sum of Ten Thousand Dollars ($10,000.00) from LESSEE as liquidated damages, in
accordance with the provisions of the California Civil Code, with respect to each such breach. It
is also agreed that LESSOR shall be entitled to injunctive relief against LESSEE in the event of
any such breach or allegation thereof, including an ex parte application and issuance of
injunction.

23. ATTORNEY’S FEES: If LESSOR incurs any legal fees for services provided by an attorney consulted
by LESSOR with respect to any breach or alleged breach by LESSEE of this Sub-Lease, to recover
rent, additional rent, or other sums due, to terminate the tenancy of the PREMISES or to enforce,
protect or establish any term, condition or covenant of this Sub-Lease, LESSEE shall be obligated
to reimburse LESSOR the full amounts thereof within ten (10) calendar days of receipt of a written
demand from LESSOR which shall itemize the sums expended by LESSOR and repayable to LESSOR by
LESSEE.

     Should any litigation, arbitration or mediation be commenced between the parties to this
Sub-Lease concerning the PREMISES, this Sub-Lease or the rights and duties of either in relation
thereto, the party, LESSOR or LESSEE, prevailing in said litigation, arbitration or mediation
shall be entitled, in addition to such other relief as maybe granted in the litigation,
arbitration or mediation, to a reasonable sum as and for his/its attorneys fees in such
litigation, arbitration or mediation, which shall be determined by the Court in such litigation,
arbitration or mediation, or in a separate action brought for determining such sum.

-7-

 

24. PARTIAL INVALIDITY: Should any provision of this Sub-Lease be held by a Court of competent
jurisdiction to be either invalid, void or unenforceable, the remaining provisions of this
Sub-Lease shall remain in full force and effect, unimpaired by the holding.

25. SOLE AND ONLY AGREEMENT: This instrument, together with any addenda thereto, constitutes the
sole and only agreement between LESSOR and LESSEE respecting the PREMISES, and correctly sets forth
the obligations of LESSOR and LESSEE to each other as of this date. Any agreements or
representations respecting the PREMISES, or their leasing by LESSOR to LESSEE, not expressly set
forth in this instrument are null and void.

-8-

 

Executed on the date specified below at Cupertino, Santa Clara County, California.

	 	 	 	 	 	 
	“LESSOR”	 	 
	 
	 	 	 	 
	AMERICAN EXEC CUPERTINO, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Milann Garcia	 	Milann Garcia
	 

	 	 
	 	 
	 

	 	Signature, Title
	 	Print Name
	 
	 	 	 	 
	 	 	10/3/05

	 	 
	 

	 	 	 	 
	 

	 	Date	 	 
	 
	 	 	 	 
	“LESSEE”	 	 
	 
	 	 	 	 
	Zix Corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Brad Almond, CFO
	 	Almond, Brad
	 

	 	 
	 	 
	 

	 	Signature, Title
	 	Print Name
	 
	 	 	 	 
	 	 	9/30/05

	 	 
	 

	 	 	 	 
	 

	 	Date	 	 
	 
	 	 	 	 
	Personal Guarantee	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Signature of Guarantor
	 	Print Name
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Date	 	 

-9-

 

Exhibit “A”

Facilities and Services

AMERICAN EXECUTIVE CENTER

          The following facilities and services are provided to LESSEE, in addition to the PREMISES,
each month in consideration for the monthly rent paid to LESSOR by LESSEE pursuant to paragraph
2.A. of this Sub-Lease:

	 	•	 	Full-time receptionist during normal business hours and reception area with
seating for
visitors.
	 
	 	•	 	Up to ten (10) hours use per billing period of any available conference rooms on
a time-shared, sign-up basis with other Lessees.
	 
	 	•	 	Use of a kitchen/lunch area including microwave oven and refrigerator/freezer.
	 
	 	•	 	Coffee for tenants and visitors.
	 
	 	•	 	Janitorial service five times per week.
	 
	 	•	 	All utilities except electrical current for extraordinary equipment.
	 
	 	•	 	Reasonable use of parking facilities.
	 
	 	•	 	Access to building 7 days /week, 24 hours / day.
	 
	 	•	 	Listing of LESSEE’s business name on lobby directory and office door.

-10-

 

Exhibit “B”

Additional Facilities and Services

AMERICAN EXECUTIVE CENTER

          The following additional facilities and services are provided to LESSEE each month, if
requested by LESSEE, pursuant to paragraph 2.B. of this Sub-Lease. If applicable charges apply,
they will be charged according to the then current published price list for those additional
facilities and services.

	 	•	 	Electronic PBX telephone system.
	 
	 	•	 	Personalized telephone answering service during normal business hours (8:30 a.m.
to 5:00 p.m., Monday through Friday, except holidays).
	 
	 	•	 	Digital voice processing system for messaging.
	 
	 	•	 	Mail and package handling.
	 
	 	•	 	Other available facilities and services, including additional conference room
hours for an hourly charge. (See a current published price list for available facilities and services.)

-11-

 

Exhibit “C”

Rules and Regulations of the Building

AMERICAN EXECUTIVE CENTER

1. No sign, placard, picture, advertisement, name or notices shall be inscribed, displayed,
printed or affixed on or to any part of the outside or inside of the Building or the PREMISES;
except that the business name will be displayed by LESSOR on its Directory in its lobby and on the door to
the PREMISES. LESSOR shall have the right to remove any unauthorized sign, placard, picture,
advertisement, name or notice without notice to, and at the sole expense of, LESSEE.

     LESSEE shall not place anything or allow anything to be placed near the glass of a window,
door, partition or wall, which may appear unsightly from outside the PREMISES. LESSEE shall not,
without consent of LESSOR, sunscreen any window.

2. LESSEE shall not bring any Telecommunications Equipment or Systems to the Premises
and shall solely use those provided by LESSOR pursuant to paragraph 3 of the Office Center Sub-Lease between LESSOR and LESSEE.

3. The sidewalks, halls, passages, exits and entrances, and other common areas, shall not be
obstructed by any LESSEE or used by any LESSEE for any purpose other than for ingress and egress
from the PREMISES of LESSEE.

4. LESSEE shall not alter any lock or install any new or additional locks or any bolts on any
doors of the PREMISES.

5. The toilet rooms, toilets, wash bowls and other apparatus shall not be used for any purpose
other than the purpose for which they were constructed, and no foreign substance of any kind
whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting
from the violation of this rule shall be borne by the LESSEE who, or whose employees or invitees,
shall have caused it.

6. LESSEE shall not overload the floor of the PREMISES or in any way deface the PREMISES
or any part thereof.

7. No furniture, freight or equipment of any kind shall be brought into the Building without
the prior notice and consent of LESSOR, and all moving of the same into or out of the Building
shall be done at such time and in such manner, as LESSOR shall designate. LESSOR shall have the right to
prescribe the weight, size and position of all safes and other heavy equipment brought into the
Building and also the times and manner of moving the same in and out of the Building. Safes or
other heavy objects shall, if considered necessary by the LESSOR, stand on supports of such
thickness as is necessary to properly distribute the weight. LESSOR will not be responsible for loss of, or
damage to, any such safe or property from any cause, and all damage done to the Building by
moving or maintaining any such safe or other property shall be repaired at the expense of LESSEE.

8. LESSEE shall not use or occupy the PREMISES for any purpose other than the PERMITTED
USE provided for in paragraph 4 of this Sub-Lease and the occupancy and use by LESSEE for that use
shall be limited expressly and specifically to that use and for General Office Use and Occupancy.
The failure of LESSEE to comply with the provisions of paragraph 4 and with this Rule/Regulation No. 8
shall constitute grounds for immediate termination by LESSOR, subject only to LESSOR first giving
LESSEE notice in writing stating the violation or violations under this Rule/Regulation No. 8 and
under this Sub-Lease and, thereafter, either where such violation or violations continue for a
period

- 12 -

 

of ten (10) days after such written notice by LESSOR to LESSEE, or the recurrence of the violation,
in which event a further notice of the type described above shall not be required. It is agreed
that the following are examples of prohibited activities, but that they are not all-inclusive: Use
or keeping of any foul or noxious gas or substance in the PREMISES, permit the PREMISES to be
occupied or used by LESSEE, LESSEE’s employees or invitees or others in any manner other than
general office use and the occupancy or presence on the PREMISES of any person or persons other
than the employees or LESSEE performing business responsibilities for LESSEE, expressly including
the exclusion of children from the PREMISES; the use or occupancy of the PREMISES in any manner
offensive or objectionable to LESSOR or other occupants of the building by reason of noise, odors
and/or vibrations, the occurrence or likelihood of occurrence of any event other than the direct
performance of business duties of LESSEE by LESSEE’S regular employees, or interference in any way
with other LESSEES or those having business therein; nor shall any animal, bird, or fish be brought
in or kept in or about the PREMISES or the building.

9. No cooking shall be done or permitted by any LESSEE in the PREMISES, nor shall the
PREMISES be used for the storage of merchandise, for lodging, or for any improper or objectionable
purposes.

10. LESSEE shall not use or keep in the PREMISES or the Building any kerosene, gasoline or
inflammable or combustible fluid or material, or use any method of heating or air conditioning
other than that supplied by LESSOR.

11. No boring, drilling or cutting and no installation of attached wiring or other additions to
the Premises or any portion shall be done by LESSEE, its employees, agents or persons acting under
LESSEE’s authority, except after compliance with paragraph 8 of the Office Center Sub-Lease and in
addition expressly without the prior written consent of LESSOR respecting introduction to or
installation in the Premises of any such alteration or addition described above and solely in the
event of prior written approval of LESSOR, which it shall not be required to give, to maintenance,
repair, replacement and to removal or non-removal during or at termination of the Term.

12. On Saturdays, Sundays, legal holidays and on other days when the Building is not open for
business, access to the Building is restricted, and access may be refused in some circumstances.
LESSEE shall be responsible for all persons that LESSEE authorizes to be in the Building at those
times. LESSEE shall be responsible for making sure that the exterior doors to the Building are kept locked
during those periods, except when LESSEE or invitees of LESSEE are entering or leaving the
Building.

13. LESSOR reserves the right to exclude or expel from the Building any person who, in the
judgment of LESSOR, is intoxicated or under the influence of liquor or drugs, or who shall, in
any manner, do any act in violation of any of the Rules and Regulations of the Building.

14. No vending machine, water dispenser or other machines of any description shall be
installed, maintained or operated upon the PREMISES without the prior written approval of LESSOR.

15. LESSOR shall have the right, exercisable without notice and without liability to LESSEE, to
change the name and street address of the Building of which the PREMISES are a part.

16. LESSEE shall not disturb, solicit, or canvass any occupant of the Building and shall
cooperate to prevent same.

17. LESSOR shall have the right to control and operate those portions of the Building other than
the PREMISES, and the public facilities, and heating and air conditioning, as well as facilities
furnished for the common use of the Lessees, in such a manner as it deems best for the Lessees generally.

- 13 -

 

18. All entrance doors to the PREMISES shall be kept locked when the PREMISES are not
occupied, and shall be kept closed at all times except for normal ingress and egress to and from
the PREMISES.

19. LESSEE will not damage or deface the walls, floors or ceilings nor drill holes for the
hanging of pictures without the prior written consent of LESSOR. LESSEE will not make any
unlawful, improper or offensive use of the PREMISES, nor commit any act that may damage
structural parts of the Building or disturb the quiet enjoyment of any other tenant in the
Building.

20. It is understood that neither LESSEE nor any invitees or guests of LESSEE are permitted to
smoke any cigarette, cigar or pipe in any area within American Executive Center.

21. LESSEE shall not install photocopy equipment of any kind without the prior written
approval of LESSOR. LESSEE specifically acknowledges that a portion of LESSOR’S business is to
provide, at reasonable cost, such equipment to all Lessees and said installation of such equipment
by LESSEE would adversely affect LESSOR’s cost of operation, thus requiring an adjustment in rent.

     LESSEE shall not install any equipment of any kind that uses electric current, except for
personal computers, fax machines, calculators, adding machines, radios and other ordinary
low-current devices, without the prior written approval of LESSOR. In the event the installation of
equipment using excessive electric current is approved by LESSOR, LESSEE agrees to pay to LESSOR
each month a fair and reasonable amount, mutually agreed to by LESSEE and LESSOR, to cover the
additional utility expense.

22. In the event of invasion, mob, riot, earthquake, public excitement or other commotion,
LESSOR reserves the right to restrict or prevent access to the Building during any period or the
threat of, commencement, or continuance of any such activity, and for that purpose shall have the right to
secure the access to the PREMISES and to take all other reasonable measures to protect the
Building, the Lessees and their invitees and employees and the property in the Building.

23. LESSEE agrees that it will abide by, keep and observe all reasonable rules and regulations
that LESSOR may make or establish from time to time for the management, safety, care and
cleanliness respecting the parking areas and the areas for loading and unloading the vehicles, as
well as those rules and regulations made or established for the convenience of other Lessees and Sub-Lessees and their invitees, including, but not limited to, rules and regulations regarding the
issuance of parking permits and/or other written authorization or identification documents and reasonable
rules respecting their use by LESSEE, its employees and invitees.

- 14 -

 

FIRST ADDENDUM

Office Center Sub-Lease

First Addendum to Sub-Lease between AMERICAN EXEC CUPERTINO, INC., a California Corporation, dba
AMERICAN EXECUTIVE CENTER, and Zix Corporation, dated this 5th day of
October, 2005.

IT IS FURTHER AGREED TO WITH RESPECT TO THE OFFICE CENTER SUB-LEASE TO WHICH THIS FIRST ADDENDUM
IS ATTACHED AND EXECUTED:

	1)	 	LESSOR will provide furniture for office(s) 104.

     a) U-shaped desk, lateral file, bookcase, desk chair and two side chairs in office 104.

	2)	 	LESSOR agrees to pay, as additional rent, and for the entire term of the Sub-Lease and any
renewals or extensions thereof, the amount of $95.00 per month for the rental of said
furniture. This amount shall be billed on LESSEE’s monthly invoice as “Furniture Rental”
and shall be due and payable in accordance with the provisions detailed in Paragraphs 2A,
2B, 2C, and 2D of the Office Center Sub-Lease to which this First Addendum is attached.

Wherefore, LESSOR and LESSEE further and concurrently agree the date below.

American Exec Cupertino, Inc., a California Corporation, dba American Executive Center

	 	 	 	 	 	 	 
	By:

	 	/s/ Milann Gorda, Center Manager
	 	 	 	Date: 10/5/05           
	 

	 	 	 	 	 	 
	 

	 	      Signature, Title	 	 	 	 
	 
	 	 	 	 	 	 
	Zix Corporation	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Howard Rouse, Assistant Controller
	 	 	 	Date:
10/10/05           
	 

	 	 	 	 	 	 
	 

	 	      Signature, Title

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