Document:

Convera Corporation

Exhibit 10.18 

TYSONS INTERNATIONAL
PLAZA  

SECOND AMENDMENT
TO
LEASE 
BY AND BETWEEN 
485 PROPERTIES, LLC 
(Landlord)

AND
CONVERA TECHNOLOGIES, INC.
(Tenant)  

          THIS
SECOND AMENDMENT TO LEASE (this “Second Amendment”) is made this _________ day of
______________, 2004, by and between 485 PROPERTIES, LLC, a Delaware limited liability
company (“Landlord”), and CONVERA TECHNOLOGIES, INC., a Delaware corporation (“Tenant”).   

W I T N E S S E T H:  

          WHEREAS,
Landlord and Excalibur Technologies Corporation, a Delaware corporation and Tenant’s
predecessor-in-interest (“Excalibur”), have entered into that certain Office Lease
Agreement dated March 4, 1999 (the “Original Lease”), pursuant to which Landlord leased
to Excalibur, and Excalibur leased from Landlord, those certain premises located in Tower
II of the Project known as Tysons International Plaza, as follows:  

	  	  	  	Suite 200 	  	  	  	11,125 	  	square feet of GRA 	  	  
	  	  	  	Suite 455 	  	  	  	3,075 	  	square feet of GRA 	  	  
	  	  	  	Suite 750 	  	  	  	4,491 	  	square feet of GRA 	  	  
			
		
	  	  	  	TOTAL: 	  	  	  	18,691 	  	square feet of GRA 	  	  
			
		

(Suite 200, Suite 455 and Suite 750
hereinafter shall be referred to collectively as the “Original Premises.”)  

          WHEREAS,
Tysons Corner Associates II (“Tysons”), Landlord’s predecessor-in-interest, and Excalibur
have entered into that certain Agreement dated November 19, 1998 (the “Storage Lease”),
pursuant to which Tysons leased to Excalibur approximately 585 square feet of storage
space (the “Storage Space”) located on the P-2 level of Tower II.  

          WHEREAS,
Tenant became successor-in interest to Excalibur under the Lease pursuant to the merger
of Excalibur into Tenant.  

          WHEREAS,
Landlord and Tenant have entered into that certain First Amendment to Lease dated August
1, 2001 (the “First Amendment”), pursuant to which Landlord leased to Tenant
approximately 1,811 square feet of GRA located on the second floor of Tower II (the
“Additional Premises #1), upon the terms and conditions set forth in the First Amendment.
(The Original Lease, as modified and amended by the First Amendment, hereinafter shall be
referred to as the “Lease.”)  

          WHEREAS,
the scheduled expiration date of the Lease is October 5, 2004 (the “Scheduled Expiration
Date”).  

          WHEREAS,
Landlord and Tenant desire to amend and modify the Lease and the Storage Lease, as
hereinafter set forth, for the purposes, among others, of (i) extending the Term of the
Lease for a period of thirty-eight (38) months; (ii) reducing the size of the Premises;
and (iii) revising the rent payable by Tenant under the Storage Lease.  

          NOW,
THEREFORE, in consideration of the above premises and of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and adequacy of which
hereby are acknowledged, the parties hereto hereby agree that the Lease is amended as
follows:  

          1.
Incorporation of Recitals. The foregoing recitals of this Second Amendment are all hereby
incorporated in and made a part of this Second Amendment, to the same extent as if herein
set forth in full.   

          2.
Capitalized Terms. All capitalized terms not defined in this Second Amendment shall have
the meanings as are ascribed to such terms in the Lease.   

          3.
Term.   

                    3.1.
The Term of the Lease, as hereby amended, shall be extended for a period commencing on
October 6, 2004 (the “Extended Term Commencement Date”) and shall continue thereafter
until 11:59 p.m. on December 31, 2007 (the “Extended Term”), unless terminated prior
thereto in accordance with the terms and conditions of the Lease, as hereby amended.
Tenant shall have no right or option to extend the Term beyond the Extended Term.  

                    3.2
Notwithstanding the above, the Term of the Lease, as hereby amended, shall terminate and
expire with respect to the Returned Premises on the Holdover Expiration Date (as defined
below).  

          4.
Reduction in Size of Premises. Effective as of December 5, 2004 (the “Holdover Expiration
Date”), the Premises shall be reduced by approximately 7,566 square feet of GRA. Attached
hereto as Exhibit A is an outline of the Premises, which outline sets forth (i) the
portion of the Premises to continue under the Lease, as hereby amended (i.e., 13,172
square feet of GRA, which includes an additional 236 square feet of GRA not previously
leased by Tenant [the “Additional Space”]) (the “Retained Premises”) for the entire
Extended Term, and (ii) the portion of the Premises to be returned and delivered to
Landlord on or before the Holdover Expiration Date (i.e., 7,566 square feet of GRA) (the
“Returned Premises”). On or before the Holdover Expiration Date, Tenant shall deliver the
Returned Premises to Landlord, broom-clean and free of Tenant’s Property.  

2  

          5.
Annual Base Rent.   

                    5.1.
Commencing on the Extended Term Commencement Date and continuing thereafter throughout
the remainder of the Term of the Lease, as hereby amended, Tenant shall pay Landlord
annual Base Rent with respect to the Retained Premises for each such year (or portion
thereof) as follows:  

	 	Year 
	Base Rental Rate

Per Square Foot of

GRA in the Retained Premises 

	  	  
	  	  	1 (commencing on November 1, 2004) 	  	$25.50 	  
	  	  	2 (commencing on November 1, 2005) 	  	$26.27 	  
	  	  	3 (commencing on November 1, 2006) 	  	$27.05 	  
	  	  	4 (commencing on November 1, 2007) 	  	$27.86 	  

In addition, Tenant shall pay
Landlord Base Rent with respect to the Retained Premises for the period October 6, 2004
through October 31, 2004 in the sum of Twenty-Three Thousand Four Hundred Seventy-Five
and 90/100 Dollars ($23,475.90), which sum shall be due and payable on or before October
1, 2004. Annual Base Rent with respect to any partial year shall be pro rated, based upon
the actual number of months. Annual Base Rent shall be payable in equal monthly
installments, at such times, at such place, and in such manner as is otherwise provided
in the Lease. Notwithstanding the above, Base Rent with respect to the Retained Premises
shall be abated and Tenant shall have no obligation to pay the same, with respect to the
first one and one-half months of the Extended Term (i.e., the first $41,985.75 of Base
Rent due hereunder with respect to the Retained Premises for the Extended Term shall be
abated).  

                    5.2.
Commencing on the Extended Term Commencement Date and continuing thereafter through and
including the Holdover Expiration Date, Tenant shall pay Landlord Annual Base Rent with
respect to the Returned Premises in the sum of Thirty-Two and 08/100 Dollars ($32.08) per
square foot of GRA in the Returned Premises, in two (2) equal monthly installments of
Twenty Thousand Two Hundred Twenty-Six and 44/100 Dollars ($20,226.44) each, with the
first such installment due on October 6, 2004 and with the second such installment due on
November 6, 2004.  

          6.
Tenant’s Taxes and Tenant’s Operating Costs Charge. Commencing on the first anniversary
of the Extended Term Commencement Date and continuing thereafter throughout the Extended
Term, Tenant shall continue to pay to Landlord, Tenant’s pro rata share of Tenant’s
Operating Costs Charge and Tenant’s Taxes, in the manner, at such place, and at such
times as is otherwise set forth in the Lease; provided, however, that, effective as of
the Extended Term Commencement Date, the Base Year with respect to the Retained Premises
(but not the Returned Premises) shall be the calendar year 2004. Tenant’s obligations
under this Section 6 to pay Tenant’s pro rata share of Tenant’s Operating Costs Charge
and Tenant’s Taxes with respect to the Returned Premises shall terminate and expire on
the Holdover Expiration Date.  

3  

          7.
Leasehold Improvements and Refurbishments to the Premises.   

                    7.1.
Except as otherwise provided herein, Tenant shall accept and lease the Premises from
Landlord for the Extended Term in its “AS IS” condition.  

                    7.2.
Notwithstanding the above, Tenant may make leasehold improvements and refurbishments to
the Retained Premises, in accordance with the terms and conditions of Exhibit B of the
First Amendment, mutatis mutandis; provided, however, that, in lieu of the Allowances set
forth in said Exhibit B, Tenant shall receive an improvement and refurbishment allowance
in the sum of Eight and 50/100 Dollars ($8.50) per square foot of GRA in the Retained
Premises. In addition, Tenant shall receive an additional sum of Fifty-Two Thousand
Dollars ($52,000.00), to be added to the allowance set forth in the immediately previous
sentence, which amount represents unused construction allowances previously granted
Tenant under the Lease.   

                    7.3.
Notwithstanding the above, Landlord, at Landlord’s cost and expense and not to be
reimbursed from the allowances set forth in Section 7.2 hereof, shall relocate the
drinking water fountain presently outside the rest rooms, to another location within the
common area.  

          8.
Operating Hours. Section 5.2 and Schedule B of the Original Lease are hereby amended to
provided that the operating hours of the Project on Saturdays shall be 9:00 a.m. to 1:00
p.m.   

          9.
Parking. Effective as of the Extended Term Commencement Date and continuing thereafter
throughout the Extended Term, Landlord shall cause the Parking Garage operator to provide
to Tenant, at the then-prevailing market rate(s) specified from time to time by the
Parking Garage operator, a number of unreserved parking spaces based upon the ratio of
3.5 parking spaces per 1,000 square feet of GRA in the Premises, as the same is
constituted from time to time. (The rate currently charged by the Parking Garage operator
for unreserved parking spaces is $60.00 per month.) Said parking spaces shall be located
within the Parking Garage for Tenant’s non-exclusive use. Said parking spaces shall be
available and accessible to Tenant for Tenant’s use twenty-four (24) hours per day, seven
(7) days per week.   

          10.
Storage Space. Landlord and Tenant hereby agree that the Storage Lease shall continue and
remain in full force and effect in accordance with the terms and conditions thereof;
provided, however, that throughout the term of said Storage Lease, the annual rent
payable to Tenant to Landlord shall be Twelve Dollars ($12.00) per square foot of Storage
Space.   

          11.
Brokers’ Commissions.   

                    11.1
In connection with the leasing of the Premises hereunder and the entry by the parties
into this Second Amendment, Tenant represents that it has dealt directly with and only
with Newmark of Washington, DC, LLC (“Newmark”) as its authorized representative, and
Landlord and CBRE (as defined below) shall recognize Newmark as Tenant’s authorized
representative. Landlord shall pay Newmark for its services in connection with this
Second Amendment and the leasing of the Premises hereunder pursuant to a separate
agreement.  

4  

                    11.2
In connection with the leasing of the Premises hereunder and the entry by the parties
into this Second Amendment, Landlord represents that it has dealt directly with and only
with CB Richard Ellis Real Estate Services, Inc. (“CBRE”) as its authorized
representative, and Tenant and Newmark shall recognize CBRE as Landlord’s authorized
representative. Landlord shall pay CBRE for its services in connection with this Second
Amendment and the leasing of the Premises hereunder pursuant to a separate agreement.  

                    11.3
Each party further represents to the other that it has dealt with no other broker, finder
or other person who may be entitled to brokerage commissions or finder’s fees in
connection with the execution of this Second Amendment and the leasing of the Premises
hereunder, other than as specifically set forth above. Landlord and Tenant each agree to
defend, indemnify and hold harmless the other against and from all liability arising from
any breach of such representation or obligation by the indemnifying party, including
without limitation the reasonable cost of attorneys’ fees in connection therewith.  

          12.
Security Deposit. The parties hereto acknowledge and agree that the balance of the
Security Deposit currently held by Landlord under the Lease is Seventy-One Thousand and
Two Hundred Dollars ($71,200.00), which Landlord shall continue to hold as the Security
Deposit throughout the Extended Term.   

          13.
Patriot Act. Tenant represents and warrants that Tenant (i) has not been designated as a
“specifically designated national and blocked person” on the most current list published
by the U.S. Treasury Department Office of Foreign Assets Control at its official website,
<http://www.treas.gov/ofac/t11 sdn.pdf> or at any replacement website or other
replacement official publication of such list; (ii) is currently in compliance with and
will at all times during the term of the Lease, as hereby amended, remain in compliance
with the regulations of the Office of Foreign Assets Control of the Department of the
Treasury and any statute, executive order (including the September 24, 2001, Executive
Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism), or other governmental action relating thereto; and (iii)
has not used and will not use funds from illegal activities for any payment made under
the Lease, as hereby amended.   

          14.
Ratification of Lease. The Lease and the Storage Lease, and all of the terms and
conditions thereof (as modified by this Second Amendment), are hereby in all respects
ratified, confirmed and approved by both parties hereto.   

          15.
Counterparts. This Second Amendment may be executed in any number of counterparts by each
party hereto on separate counterparts, each of which when so executed and delivered shall
be deemed an original and all of which taken together shall constitute but one and the
same binding instrument.   

          16.
Captions. Paragraph and section headings used herein are for convenience of reference
only and shall not affect the construction of any provision of this Second Amendment.   

5  

          17.
Entire Agreement. The Lease and the Storage Lease, as hereby amended and modified by this
Second Amendment, contains the entire understanding of the parties with respect to the
subject matters covered hereby and thereby and may be modified only by a written
instrument signed by Landlord and Tenant. Landlord and Tenant intend that, to the maximum
extent possible, the invalidity or unenforceability of any provision of this Second
Amendment shall not affect any of the other provisions hereof or any provision of the
Lease or the Storage Lease.   

          18.
Binding Effect. This Second Amendment shall bind and inure to the benefit of Landlord and
Tenant, and shall bind and inure to the benefit of their respective successors and
permitted assigns.   

          19.
Confidentiality. Tenant will maintain the confidentiality of the Lease, as hereby
amended, and will not divulge the economic or other terms of the Lease, as hereby
amended, whether verbally or in writing, to any person, other than Tenant’s officers,
directors, partners or shareholders; Tenant’s attorneys, accountants and other
professional consultants; any governmental agencies, if so required; and/or pursuant to
subpoena or other legal process.   

          IN
WITNESS WHEREOF, each party has executed and ensealed this Second Amendment or caused it
to be executed and ensealed on its behalf by its duly authorized representatives, on the
day and year first above written.   

	WITNESS/ATTEST:  	 	LANDLORD:

485 PROPERTIES, LLC,

a Delaware limited liability company  
	 
  
	__________________________ 	 	By:

Name:

Title: 	____________________________(SEAL)

____________________________

____________________________ 

	  	 	TENANT:

CONVERA TECHNOLOGIES, INC.,

a Delaware corporation  
	 
  
	__________________________ 	 	By:

Name:

Title: 	____________________________(SEAL)

____________________________

____________________________ 

6  

EXHIBIT A  

OUTLINE OF RETAINED
PREMISES 
and 
OUTLINE OF RETURNED PREMISES  

(Attached)Deferred Compensation Plan

  
 EXHIBIT 10.9

  
 IRVINE SENSORS, INC. 
 DEFERRED COMPENSATION PLAN 
  
 PREAMBLE 
  
 Irvine Sensors, Inc. (the Corporation), a corporation formed under the laws of the State of Delaware, desires to establish a deferred compensation plan
for the exclusive benefit of a select group of management and highly compensated employees. 
  
 The Corporation intends that any Participant or Beneficiary under the Plan shall have the status of an unsecured general creditor with respect to the Plan. 
  
 The Corporation hereby establishes the Irvine Sensors Deferred Compensation Plan, effective as of September 27, 2002.

  
 ARTICLE I 
  
 DEFINITIONS 
  
 I.1 “Account” shall mean the record maintained by the Committee
showing the number of shares of common stock deemed allocated to the account of each Participant or Beneficiary as well as the amount of any cash contributions, dividends or income or loss thereon deemed allocated to the Participant or Beneficiary.
The term “Account” shall refer only to a bookkeeping entry and shall not be construed to require the segregation of assets or shares on behalf of any Participant or Beneficiary.  
  
 I.2 “Beneficiary” shall mean the Beneficiary designated by each
Participant under the Irvine Sensors Deferred Compensation Plan; provided, however, that a Participant may designate a different Beneficiary hereunder by delivering to the Committee a written beneficiary designation in the form provided by the
Committee, and executed specifically with respect to this Plan. No beneficiary designation shall be effective until received and accepted by the Committee. 
  
 I.3 “Board” shall mean the Board of Directors of the Corporation. 
  
 I.4 “Change in Control” shall mean the occurrence of any one or more of the following events: 
  
 (a) any Person (as defined below) becomes the Beneficial Owner (as defined
below) of securities of the Corporation having fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Corporation; or 
  
 (b) the shareholders of the Corporation approve the sale or other disposal of all or substantially all of the assets of the
Corporation (including a plan of liquidation or dissolution) or the merger or consolidation of the Corporation with or into another corporation, in accordance with the requirements of the Certificate of Incorporation of the Corporation and 

  

 
applicable law; or(c) as a result of or in connection with any tender offer, exchange offer, merger or other business combination, sale of assets or
contested election of directors, or any combination of the foregoing, the individuals who are directors of the Corporation just prior to such event shall cease to constitute the majority of the Board. 
  
 For purposes of this Section 1.4, a “Person” means any individual,
firm, corporation partnership, trust or other entity. Two or more Persons who agree to act together for the purpose of acquiring, holding, voting, or disposing of securities of the Corporation shall be deemed a “Person.” Excluded from the
definition of “Person” are the Corporation and any subsidiaries of the Corporation, whether individually or in any combination. 
  
 For purposes of this Section 1.4, a person is a “Beneficial Owner” of securities of the Corporation if such Person is any of such Person’s
Affiliates (as defined below) or Associates (as defined below) has or shares, directly or indirectly through any contract, arrangement understanding or otherwise, the power to vote or direct the voting of securities of the Corporation or the power
to dispose or direct the disposition of securities of the Corporation. A Person shall be the Beneficial Owner of those securities of the Corporation that such person or any of such Person’s Affiliates or Associates has the right to become the
Beneficial Owner of (whether such right is execrable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants, options or otherwise.

  
 For purposes of Section 1.4 only, an “Affiliate” of
a specified Person is a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified. 
  
 For purposes of this Section 1.4, an “Associate” of a specified Person is (i) any corporation or organization
(other than the Corporation or any subsidiary of the Corporation) of which such Person is an officer or partner or is, directly or indirectly, the Beneficial Owner of ten percent (10%) or more of any class of equity securities, (ii) any trust or
other estate in which such Person has substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, or (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same
home as such Person or who is a director or officer of the Corporation or any subsidiary of the Corporation. 
  
 I.5 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and the rules and regulations promulgated
hereunder. 
  
 I.6 “Committee” shall mean the Committee
appointed by the Board of Directors of the Corporation to administer this Plan, or if none is appointed, the Board of Directors. 
  
 I.7 “Corporation” shall mean Irvine Sensors, Inc. or its successors. 
  
 I.8 “Disability” shall mean that a Participant is permanently impaired to such an extent that he or she cannot
perform the material duties of his or her position of employment with the Corporation. The determination hereunder as to whether and when a Participant has a Disability shall be made by the Committee, and for purposes of assisting the Committee in
making any such determination, the Committee may require the Participant to submit to an examination by a competent physician or medical clinic selected by the Committee. 
  

 I.9 “Effective Date” shall mean September 27, 2002. 
  
 I.10 “Normal Retirement Age” shall mean the age of Sixty Five (65)
years. 
  
 I.11 “Participant” shall mean an individual
who has been designated by the Committee as being eligible to participate in the Plan. 
  
 I. 12 “Plan” shall mean the Irvine Sensors Deferred Compensation Plan, as amended from time to time. 
  
 I.13 “Plan Year” shall mean the annual period beginning January 1 and ending December 31, both dates inclusive of each year, except for the
initial Plan Year that shall be a partial year, beginning September 27, 2002 and ending December 31, 2002. 
  
 I.14 “Valuation Date” shall mean each business day on which the financial markets are open for trading activity. 
  
 ARTICLE II 
  
 ELIGIBILITY 
  
 Participation in the Plan shall be made available to a select group of
individuals, as determined by the Committee, in its sole discretion, who are providing services to the Corporation in key positions of management and responsibility or who are highly compensated employees of the Corporation. Such individuals may
elect to participate hereunder by executing a participation agreement in such form and at such time as the Committee shall require, within thirty (30) days of the date on which he or she is notified by the Committee of his/her eligibility to
participate in the Plan. The determination as to the eligibility of any individual to participate in the Plan shall be in the sole and absolute discretion of the Committee, whose decision in that regard shall be conclusive and binding for all
purposes hereunder. 
  
 ARTICLE III 

 
 CREDITING OF CONTRIBUTIONS AND INCOME 

 
 III.1 As of each Valuation Date, the Committee shall credit to each
Participant’s Account the deemed income or losses attributable thereto, determined pursuant to the provisions of Section 3,2 below, as well as any other applicable credits to or charges against such Account, on account of deemed Company
Contributions or distributions to participants or similar transactions or adjustments to such Account. 
  
 III.2 The Corporation may, in its sole discretion, make one or more deemed Company Contributions to the Plan in such dollar amounts or shares of common
stock of the Corporation as the Corporation, in its sole discretion determines. Deemed Company Contributions shall be allocated among the Accounts of Participants as specified by the 

  

 
Corporation in its sole discretion, as of the Valuation Date immediately following the date of the Company Contribution, or as provided in a
Participant’s participation agreement. 
  
 III.3 Each
Participant’s Account shall be deemed to be invested in common stock of the Employer, plus any cash contributions or cash dividends which would have been paid on such shares had such shares been owned by the Participant. The Account of each
Participant shall be deemed to be credited with the amount of dividends, income, gains and losses attributable thereto, as if the amounts credited to such Account had been invested in common stock of the Corporation except to the extent that the
Company specifies that deemed contributions shall be in cash. . 
  
 ARTICLE IV 
  
 BENEFITS 
  
 IV. 1 As provided in Article V, as
soon as practicable following the death of a Participant, the Beneficiary of such Participant shall be paid the number of shares of common stock deemed credited to such Participant’s Account. In addition the Beneficiary shall be paid the amount
of deemed cash contributions and deemed cash dividends, if any, which were allocated to the Participant’s Account plus any earnings or losses thereon in the form of cash. The amount of any such deemed cash contributions and deemed cash
dividends shall be determined as of the Valuation Date coincident with or next preceding the date such amount is distributed. 
  
 IV.2 As provided in Article V, as soon as practicable following a Participant’s Disability, termination of employment or attainment of Normal
Retirement Age, such Participant shall be paid the number of shares of common stock deemed credited to such Participant’s Account, plus any earnings or losses thereon, in the form of cash. The amount of any such deemed cash contributions and
deemed cash dividends shall be determined as of the Valuation Date coincident with or next preceding the date such amount is distributed. 
  
 A Participant shall be deemed to have terminated employment only upon his actual termination of employment with the Corporation, and not upon a leave of
absence or other temporary cessation of services. 
  
 IV.3 Each
Participant’s Account shall be fully vested and nonforfeitable.  
  
 ARTICLE V 
  
 FROM OF PAYMENT OF BENEFITS 
  
 V.1 Payment of a
Participant’s benefit as determined in accordance with Article IV on account of termination of employment following the attainment of Normal Retirement Age shall be made in the form of common stock of the Company to the extent that the
Participant’s Account is deemed to be invested in common stock of the Company and in cash to the extent that the Participant’s Account is deemed to be invested in cash or other property and shall be made in the method of either a lump sum
or payments in annual installments over a period not to exceed 5 years, such method of payment to be irrevocably determined in the sole discretion of the Committee at the time the distribution is made. Payment shall 

  

 
commence as soon as practicable following the date on which the Participant attains Normal Retirement Age. 
  
 V.2 Payment of a Participant’s benefit as determined in accordance with
Article IV on account of death shall be made in the form of common stock of the Company to the extent that the Participant’s Account is deemed to be invested in common stock of the Company and in cash to the extent that the Participant’s
Account is deemed to be invested in cash or other property in the form of a lump sum. Payment of a Participant’s death benefit shall be made to his Beneficiary as soon as practicable following the Committee’s receipt of proper
notice of such Participant’s death. 
  
 V.3 Payment of a
Participant’s benefit as determined in accordance with Article IV on account of Disability or termination of employment for reasons other than death or before attainment of Normal Retirement Age shall be made in the form of common stock of the
Company to the extent that the Participant’s Account is deemed to be invested in cash or other property and shall be made in the method of such payment to be irrevocably determined in the sole discretion of the Committee at the time the
distribution is made. In the case of payment on account of a Participant’s Disability, payment shall commence either (i) as soon as practicable after the Committee’s determination of such Disability or (ii) as soon as practicable after the
Participant attains the age of fifty-five (55) years, such method of payment to be determined in the sole discretion of the Committee. 
  
 V.4 If cash installment payments are made, such payments shall be charged pro rata to the individual investment options in which amounts credited to the
Participant’s Account are deemed to be invested, pursuant to the provisions of Section 3.2 hereof. Furthermore, the Committee shall continue to credit the unpaid balance of the Participant’s Account with the deemed income and losses
attributable thereto, determined pursuant to the provisions of Section 3.2 hereof, as well as with any other credits to or charges against the unpaid balance of such Account, during the period for which installment payments are made. 
  
 V.5 Notwithstanding the provisions of Sections 5.1, 5.2 or 5.3, the benefits
payable hereunder may be paid in a lump sum in cash or shares of common stock even if they are not otherwise payable if, based on a change in the federal or applicable state tax or revenue laws, a published ruling or similar announcement issued by
the Internal Revenue Service, a regulation issued by the Secretary of the Treasury, a decision by a court of competent jurisdiction involving a Participant or a Beneficiary, or a closing agreement made under section 7121 of the Code that is approved
by the Internal Revenue Service and involves a Participant, the Committee determines that a Participant has or will recognize income for federal state income tax purposes with respect to amounts that are or will be payable under the Plan before they
otherwise would be paid. The amount of any payments pursuant to this Section 5.5 shall not exceed the lesser of (a) the amount in the Participant’s Account or (b) the amount of taxable income with respect to which the tax liability is assessed
or determined. 
  

 ARTICLE VI 
  
 ADMINISTRATION OF THE PLAN 
  
 VI. 1 The Corporation may set aside funds or shares of common stock for payment of all or a portion of the benefits payable
pursuant to the Plan. The set aside funds shall be subject to the claims of general creditors of the Corporation in the event the Corporation becomes insolvent. 
  

VI.2 The Plan shall be administered by the Committee who shall be appointed by the Board of Directors of the Corporation. The members of the Committee
shall not receive compensation with respect to their services for the Committee. The members of the Committee shall serve without bond or security for the performance of their duties hereunder unless applicable law makes the furnishing of such bond
or security mandatory or unless required by the Corporation. Any member of the Committee may resign by delivering his written resignation to the Corporation and to the other members of the Committee. 
  
 VI.3 The Committee shall perform any act which the Plan authorizes expressed
by a vote at a meeting or in a writing signed by a majority of its members without a meeting. The Committee may, by a writing signed by a majority of its members, appoint any member of the Committee to act on behalf of the Committee. Any person who
is a member of the Committee shall not vote or decide upon any matter relating solely to himself or vote in any case in which his individual right or claim to any benefit under the Plan is particularly involved. If, in any matter or case in which a
person is so disqualified to act, the remaining persons constituting the Committee cannot resolve such matter or case, the Board will appoint a temporary substitute to exercise all the powers of the disqualified person concerning the matter or case
in which he is disqualified. 
  
 VI.4 The Committee may designate
in writing other persons to carry out its responsibilities under the Plan, and may remove any person designated to carry out its responsibilities under the Plan by notice in writing to that person. The Committee may employ persons to render advice
with regard to any of its responsibilities. All of the usual and reasonable expenses of the Committee shall be paid by the Corporation. The Corporation shall indemnify and hold harmless each member of the Committee from and against any and all
claims and expenses (including, without limitation attorney’s fees and related costs), in connection with the performance by such member of his duties in that capacity, other than any of the foregoing arising in connection with the willful
neglect or willful misconduct of the person so acting. 
  
 VI.5
The Committee shall establish rules, not contrary to the provisions of the plan, the administration of the Plan and the transaction of its business. The Committee shall determine the eligibility of any individual to participate in the Plan, shall
interpret the Plan in its sole and absolute discretion, and shall determine all questions arising in the administration interpretation and application of the Plan. A.11 determinations of the Committee shall be final, conclusive and binding on all
employees, participants and Beneficiaries. 
  
 VI.6 Any action to
be taken hereunder by the Corporation shall be taken by resolution adopted by the Board or an executive committee thereof; provided, however, that by resolution, the Board or an executive committee thereof may delegate to any officer of the
Corporation the authority to take any actions hereunder, other than the power to amend or terminate the Plan. 
  

 VI.7 Each Participant will be issued a participation agreement under the Plan which will specify, as to
that Participant; the amount of Company contributions to be made to the Plan on behalf of the Participant, the Participant’s vesting schedule, and any other conditions or benefits the Committee deems in its sole and absolute discretion to be
appropriate. 
  

 ARTICLE VII 
  
 CLAIM REVIEW PROCEDURE 
  
 VII.1 In the event that a Participant or Beneficiary is denied a claim for benefits under this Plan (the
“Claimant”), the Committee shall provide to the Claimant written notice of the denial which shall set forth: 
  

	 	1.	the specific reason or reasons for the denial; 

  

	 	2.	specific references to pertinent Plan provisions on which the Committee based its denial; 

  

	 	3.	a description of any additional material or information needed for the Claimant to perfect the claim and an explanation of why the material or information is needed;

  

	 	4.	a statement that the Claimant may: 

  

	 	(i)	Request a review upon written application to the Committee; 

  

	 	(ii)	Review pertinent Plan Documents; and 

  

	 	(iii)	Submit issues and comments in writing; and 

  
 That any appeal the Claimant wishes to make of the adverse determination must be in writing to the Committee within sixty (60) days after receipt of the Committee’s
notice of denial of benefits. The Committee’s notice must further advise the Claimant that his failure to appeal the action to the Committee in writing within the sixty (60) day period will render the Committee’s determination final,
binding, and conclusive. 
  
 VII.2 If the Claimant should appeal
to the Committee, he, or his duly authorized representative, may submit, in writing, whatever issues and comments he, or his duly authorized representative, feels are pertinent. The Committee shall re-examine all facts related to the appeal and make
a final determination as to whether the denial of benefits is justified under the circumstances. The Committee shall advise the Claimant in writing of its decision on his appeal, the specific reasons for the decision, and the specific Plan
provisions on which the decision is based. The notice of the decision shall be given within sixty (60) days of the Claimant’s written request for review, unless special circumstances (such as hearing) would make the rendering of a decision
within sixty (60) day period infeasible, but in no event shall the Committee render a decision regarding the denial of a claim later than 120 days after its receipt of a request for review. If an extension of time for review is required because of
special circumstances, written notice of the extension shall be furnished to the Claimant prior to the date the extension period commences. The Committee’s notice of denial of benefits shall identify the address to which the Claimant may
forward his appeal. 
  

 ARTICLE VIII 
  
 LIMITATION OF RIGHTS 
  
 The establishment of this Plan shall not be construed as giving to any Participant, employee of the Corporation or any
person whomsoever, any legal, equitable or other -rights against the Corporation, or its officers, directors, agents or shareholders, or as giving to any Participant or Beneficiary any equity or other interest in the assets or business of the
Corporation or shares of Corporation stock or as giving any employee the right to be retained in the employment of the Corporation. All employees of the Corporation and Participants shall be subject to discharge to the same extent they would have
been if this Plan had never been adopted. The rights of a Participant hereunder shall be solely those of an unsecured general creditor of the Corporation. 
  
 ARTICLE IX 
  
 LIMITATION OF ASSIGNMENT AND PAYMENTS TO 
 LEGALLY INCOMPETENT DISTRIBUTEE 
  
 IX.1 No benefits which shall be payable under the Plan to any person shall be subject in any manner to anticipation, alienation, tale, transfer, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, tell,
transfer, assign, pledge, encumber, charge or otherwise dispose of the same shall be void. 
  
 IX.2 No benefit shall in any manner be subject to the debts, contracts, liabilities, engagements or torts of any person, nor shall it be subject to attachment or legal process for or against any person, except to the
extent required by law. 
  
 IX.3 Whenever any benefit which shall
be payable under the Plan is to be paid to or for the benefit of any person who it then a minor or determined by the Committee, on the basis of qualified medical advice, to be incompetent, the Committee need not require the appointment of a guardian
or custodian, but shall be authorized to cause the same to be paid over to the person having custody of the minor or incompetent, or to cause the same to be paid to the minor or incompetent without the intervention of a guardian or custodian, or to
cause the same to be paid to a legal guardian or custodian of the minor or incompetent, if one has been appointed, or to cause the same to be used for the benefit of the minor or incompetent. 
  
 ARTICLE X 
  
 AMENDMENT TO OR TERMINATION OF THE PLAN 

 
 The Corporation reserves the right at any time to amend or terminate the
Plan in whole or in part by resolution of the Board; provided, however, that upon a Change in Control, any amendment of the Plan shall, for a period of two (2) years following the effective date of such Change in Control, require the prior written
consent of a majority of all Participants and Beneficiaries hereunder, including those Participants and Beneficiaries who, at the time of such amendment, are currently entitled to a benefit hereunder, whether or not employed at such time by the
Corporation. No amendment shall have the effect of retroactively changing or depriving Participant or Beneficiaries of rights already accrued under the Plan. In the event that the Corporation shall change its name, the Plan shall be deemed to be
amended to reflect the name change without further action of the Corporation, 

  

 
and the language of the Plan shall be changed accordingly. Notwithstanding any other provision hereunder to the contrary, upon termination of the plan, the
Board shall direct that all vested benefits hereunder will be paid as soon as administratively practicable thereafter, but in no event later that 30 days following such termination. 
  
 ARTICLE XI 
  
 STATUS OF PARTICIPANT AS UNSECURED CREDITOR 
  
 All benefits under the Plan shall be the unsecured obligations of the Corporation and no assets will be placed in trust or
otherwise segregated from the general assets of the Corporation for the payment of obligations hereunder. To the extent that any person acquires a right to receive payments hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Corporation.  
  
 ARTICLE XII 
  
 GENERAL AND
MISCELLANEOUS 
  
 XII.1 In the event that any provision of
this Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of this Plan but shall be fully severable and this Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein. 
  
 XII.2 The section headings and numbers are included only for convenience of reference and are not to be taken as limiting or
extending the meaning of any of the terms and provisions of this Plan. Whenever appropriate, words used in the singular shall include the plural or the plural may be read as the singular. When used herein, the masculine gender includes the feminine
gender. 
  
 XII.3 The validity and effect of this plan and the
rights and obligations of all persons affected hereby shall be construed and determined in accordance with the laws of the State of California unless preempted by federal law. 
  
 XII.4 The Corporation is not required to set aside any assets for payment of the benefits provided under this Plan. A
Participant shall have no security interest in any such amounts. This Plan is intended to be and shall be construed to be a plan which is funded and maintained primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees. 
  
 XII.5 All amounts
payable hereunder shall be reduced by any and all federal, state and local taxes imposed upon the Participant or his Beneficiary which are required to be paid or withheld by the Corporation. 
  
 Irvine Sensors, Corporation Inc has caused its corporate seal to be affixed
hereto and these presents to be duly executed in its name and behalf by its proper officers thereunto duly authorized this 17th day of June, 2003. 
  

			
	 Irvine Sensors, Corporation

		
	By:	 	 /s/ Robert G. Richards

	
	 ATTEST:
  

(Title)
  
 [CORPORATE SEAL]

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