Document:

EX-10.34 Multi-Tenant Lease

 

Exhibit 10.34

MULTI-TENANT LEASE

     THIS LEASE AGREEMENT is made and is entered into by and between Westport Business Park
Associates LLP, a Florida limited liability partnership (the “Landlord”) and Mako Surgical Corp., a
Delaware corporation (the “Tenant” or “You” or “you”).

TERMS

     In consideration of the covenants and agreements herein contained, Landlord does hereby lease
to you, and you do take and lease from Landlord the Premises (as hereinafter defined) for the term
indicated at the rentals and upon and subject to the terms and conditions stated herein.

ARTICLE I

DEFINITIONS

     The terms defined in this Article shall, for all purposes of this Lease and all future
agreements which may become supplemental thereto, have the meanings herein specified.

     “Adjustment Date” means the first day of the Lease Year.

     “Affiliate” means an affiliate of yours as defined in Rule 405 promulgated under the
Securities Act of 1933, as amended. The term “Affiliate” shall also include any entity which
succeeds to your business by reason of merger, consolidation or purchase of all or substantially
all of your assets provided that such entity has a net worth (determined in accordance with GAAP)
equal to or exceeding your net worth.

     “Building” means the building within the Development depicted as Building One on the
site plan attached to this Lease as Exhibit A. The Building is comprised of approximately 36,805
rentable square feet of space.

     “City” means the City of Davie, Florida.

     “Commencement Date” means the date that the Interior Modifications have been
Substantially Completed, provided, however, the Commencement Date shall be accelerated by the
number of days of Tenant Delay. (See Article III for additional provisions regarding a Tenant
Delay).

     “Common Areas” means all access openings and roadways outside the Premises and within
the exterior boundary line of the Development, the parking areas serving the Building and
landscaped areas within the Development. The existing parking areas serving the Building are: (i)
186 regular spaces which include 49 spaces located in the truck court area of the Building; and
(ii) 4 handicap spaces.

     “Construction Drawings” means, with respect to the Interior Modifications, the Space
Plan and Scope of Work annexed hereto as Exhibits C 1 and C-2.

     “Controllable Operating Costs” means all Operating Costs other than (i) Taxes, (ii)
insurance premiums, (iii) reasonable security, if any, contracted for by Landlord, (iv) utilities

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and trash removal, (v) the portion of property management fees included in Tenant’s Proportionate
Share of Operating Costs not exceeding four percent (4%) of the base rent and additional rent
payable by Tenant for the measuring period under Section 5.02 (excluding the management fees
itself); and (vii) repairs first incurred after the expiration of a warranty.

     “Development” means the Building together with all other land and improvements within
Westport Business Park. The Development is legally described as all of Parcel A, Westport Business
Park Parcels A & B, according to the Plat thereof, recorded in Plat Book 143, Page 5, of the Public
Records of Broward County, Florida together with a portion of Parcel A1, Westport Business Park
Parcels A & B, according to the Plat thereof, recorded in Plat Book 143, Page 5, of the Public
Records of Broward County, Florida, and being more particularly described as follows: Commencing
at the southern most Southwest corner of Parcel A, as shown on the said Plat of Westport Business
Park Parcels A & B; thence North 14 degrees 44 minutes 23 seconds East, along the east line of said
Parcel A1, a distance of 145.50 feet to the Point of Beginning; thence continue North 14 degrees 44
minutes 23 seconds East, along the Northerly extension of said East line of Parcel A1, a distance
of 230.00 feet; thence South 75 degrees 15 minutes 37 seconds East, a distance of 18.27 feet to a
point on the East line of said Parcel A1; thence South 14 degrees 44 minutes 23 seconds West, a
distance of 230.00 feet; thence North 75 degrees 15 minutes 37 seconds West, a distance of 18.27
feet to the Point of Beginning, the last two herein described courses and distance being along the
East line of said Parcel A1.

     “Effective Date” means the date of this Lease which date shall be deemed to refer to
the last date in point of time on which all parties hereto have executed this Lease.

     “Environmental Law” means any federal, state, or local law, ordinance, regulation,
development order, regulatory guidance or pronouncement relating to pollution or protection of the
environment or public wellfields including the use, analysis, generation, manufacture, handling,
storage, presence, disposal or transportation of any Hazardous Substance. The term “Environmental
Law” includes any applicable best management practices for products being sold or used by you at
the Premises.

     “Event of Default” means (i) your failure to pay an installment of Rent when due, or
any other payment or reimbursement to Landlord required herein when due if such failure continues
for a period of five days from the date such payment was due, provided, however, that with respect
to the first two failures only during any one calendar year, an Event of Default will not exist
unless you fail to make payment within five days of written notice of non payment; (ii) if you fail
to comply with any non-monetary term, provision or covenant of this Lease if such failure continues
more than twenty (20) days after receipt of written notice to you, provided, however, if the nature
of the failure is such that it cannot be reasonably cured within such twenty day period, then the
twenty day period will be extended for up to an additional seventy days provided that you are
continuously and diligently attempting to cure such breach; (iii) if you fail to continuously
operate your business at the Premises for the Permitted Use; or (iv) any other Event of Default
specifically identified in this Lease.

     “Exit Condition” means the Premises in good condition and repair, ordinary wear and
tear excepted and damage by casualty occurrence for any peril covered by insurance to be provided
by Landlord under Section 12.01 excepted. Exhibit D attached hereto contains move

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out standards that are considered part of Exit Condition. Ordinary wear and tear excepted
shall not include damage caused by forklift use or damage caused by any other machinery.

     “Expiration Date” means the last day of the fifth Lease Year.

     “Force Majeure Event” means, without limitation, the following: strikes, lockouts, or
other industrial disturbances, acts of public enemies, acts of terrorism, war, order of any kind of
the government of the United States or the State of Florida, or any of their departments, agencies
or officials, or any civil or military authority, insurrections, riots, epidemics, landslides,
lightning, earthquake, fire, hurricane or other windstorm, storms, floods, washouts, droughts,
explosions, breakage, or any other cause or event not reasonably within the control of the party
usually and customarily included within the definition of force majeure.

     “GAAP” means generally accepted accounting principles consistently applied.

     “Hazardous Substances” means pollutants, contaminants, toxic or hazardous wastes,
medical waste, radioactive waste or any other substances, the removal of which is required or the
use of which is restricted, prohibited or penalized by any Environmental Law.

     “Holdover Rent” means the sum of (i) 200% of the monthly base rent amount in effect on
the termination date of this Lease (150% for the first sixty days of holdover) plus (ii) your
Proportionate Share of Operating Costs plus (iii) all sales tax required to be collected thereon.

     “Interior Modifications” means the construction work that Landlord has agreed to do as
set forth in the Construction Drawings. The Interior Modifications will include the construction
of all necessary tenant separation walls.

     “Landlord’s Broker” means Premier Commercial Realty, Inc.

     “Lease” means this lease agreement including all exhibits attached hereto.

     “Lease Year” means, as to the first Lease Year, the 365 day period beginning on the
Commencement Date (366 day period if February 29 falls within such Lease Year), provided, however,
if the Commencement Date is a day other than the first day of a calendar month, then the first
Lease Year shall instead be measured from the first day of the calendar month immediately following
the calendar month within which the Commencement Date falls. Thereafter, each succeeding Lease
Year shall be the 365 day period (366 day period if February 29 falls within such period)
immediately following the end of the prior Lease Year.

     “Letter of Credit” means an irrevocable, unconditional and confirmed letter of credit
in the amount of $125,000 which is transferrable or assignable (including the right of Landlord to
collaterally assign the Letter of Credit to a Superior Mortgagee) for a nominal fee not to exceed
$100.00. The Letter of Credit must (i) be in form satisfactory to Landlord; (ii) clearly state
that it is a clean site draft in the required amount in favor of Landlord, irrevocable and expiring
no earlier than thirty days immediately following the Lease Expiration Date, or, if the issuer is
unable to or is unwilling to issue a multi-year form of Letter of Credit, then in a form which will
automatically renew from year to year unless the issuer provides Landlord with at least sixty days
advance written notice that the issuer will not be renewing the Letter of Credit; (iii) be

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issued by a bank reasonably approved by Landlord; (iv) be payable after an Event of Default
upon presentation to a bank in Broward County, Florida; and (v) be unconditionally available to
Landlord by Landlord’s drafts, at site, with partial draws permitted after an Event of Default.
The Letter of Credit must specify that the issuer’s obligation to honor Landlord’s draft shall not
be affected by any claim or setoff which the issuer then has or may thereafter acquire against
either you or the Landlord.

     “Market Rent” means base rent determined with reference to the average of normal
values being achieved by landlords in lease renewals entered into with private sector tenants for
comparable space (i.e., the Premises in its as is condition at the time of renewal) in comparable
buildings in equally desirable locations within the same market assuming operating expense and real
estate passthroughs and fixed increases or consumer price index increases corresponding to those
contained in this Lease. Consideration should be given to the value of any concession as may then
be customary in the market for lease renewals, including, without limitation, rental abatements,
cash allowances and/or credits for renewal tenant improvements over the entire renewal term. The
determination of Market Rent shall be made by Landlord. Notwithstanding, you shall have the right
to disagree with Landlord’s determination, and to submit your own determination of Market Rent. If
Landlord does not agree with your determination, then you and Landlord shall mutually select an
independent appraiser qualified to appraise commercial property and who shall have experience in
the appraisal of similar properties within the referenced area. The sole function of the
independent appraiser shall be to determine which among Landlord’s and your determinations of
Market Rent is most correct and the decision of the independent appraiser shall be final and
binding upon the parties. The cost of the independent appraiser shall be paid for equally by the
parties.

     “Operating Costs” means all costs and expenses paid or incurred by Landlord in
operating, maintaining, repairing and managing the Building, including, without limitation, all
Taxes, the costs of maintaining and repairing parking lots including parking lot re-striping and
repaving, parking structures, easements, landscaping, property management fees, utility costs to
the extent not separately metered, insurance premiums, depreciation of the costs of replacements or
improvements to the Building but not including any Structural Repairs which are required to be
capitalized under GAAP. Notwithstanding the foregoing, the term “Operating Costs” does not include:
(i) costs of alterations of tenants’ premises; (ii) costs of curing construction defects; (iii)
interest and principal payments on mortgages, and other debt cost; (iv) real estate brokers’
leasing commissions or compensation; (v) any cost or expenditure for which Landlord is reimbursed,
whether by insurance proceeds or otherwise; or (vi) the cost of any service furnished to any other
occupant of the Building which Landlord does not provide to you hereunder. Notwithstanding
anything contained herein to the contrary, depreciation of any capital improvements which are
intended to reduce Operating Costs, or are required under any governmental laws, regulations or
ordinances which were not applicable to the Building at the time it was constructed, or are
recommended by the N.F.P.A. Life Safety Code, shall be included in Operating Costs. If Landlord
selects the accrual method of accounting rather than the cash accounting method for Operating Costs
purposes, Operating Costs shall be deemed to have been paid when such expenses have accrued.
Certain of the costs of management, operation and maintenance of the Building may be common to all
of the buildings within the Development owned by Landlord and you consent to Landlord’s allocation
of such common costs among the various buildings owned by Landlord within the Development and the
amount of such common

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costs allocated by Landlord to the Building shall be deemed an Operating Cost, provided that
the allocation method used by Landlord is reasonable. Landlord may, in a reasonable manner,
allocate insurance premiums for so-called “blanket” insurance policies which insure other
properties as well as the Building and said allocated amount shall be deemed to be an Operating
Cost. The inclusion of the improvements, facilities, and services set forth in this definition
shall not be deemed to impose an obligation upon Landlord either to have said improvements or
facilities or to provide those services unless said improvements, facilities or services are
already in place at the Development.

     “Parking Proportionate Share” means an amount equal to the number of non exclusive
parking spaces serving the Building multiplied by a fraction the numerator of which is the rentable
area contained in the Premises and the denominator of which is the rentable area contained in the
Building.

     “Permit Drawings” means detailed plans and specifications for the Interior
Modifications prepared by Landlord’s architect consistent with the Construction Drawings.

     “Permitted Use” means the use of the Premises as corporate and administrative offices
for a medical and surgical device company with ancillary warehouse, training, production and
distribution and research and development facilities.

     “Premises” means approximately 20,484 rentable square feet of space within the
Building. Exhibit B shows the approximate location of the Premises within the Building.

     “Prohibited Use” means any use of the Premises that would result in required parking
spaces attributable to the Premises under the applicable zoning for the Building exceeding your
Parking Proportionate Share.

     “Proportionate Share” means a fraction the numerator of which is the rentable area
contained in the Premises and the denominator of which is the rentable area contained in the
Building.

     “Public Accommodation Law” means any and all applicable laws, regulations and building
codes governing non-discrimination and public accommodations and commercial facilities including,
without limitation, the requirements of the Americans with Disabilities Act, 42 USC 12-101 and all
regulations and promulgations thereunder.

     “Punch List Items” means, with respect to the Interior Modifications, details of
construction and mechanical adjustment which, in the aggregate, are minor in character and do not
materially interfere with your use of the Premises.

     “Renewal Notice” means written notice that you intend to exercise an option to extend
granted to you under this Lease. A Renewal Notice, to be effective, must be received by Landlord no
later than six months prior to the Expiration Date, time being of the essence.

     “Rent” means the sum of the monthly base rent plus the additional rent as provided in
Section 5.02 of this Lease together with all sales tax to be collected thereon. Notwithstanding

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anything in the Lease to the contrary, all amounts payable by you to or on behalf of Landlord
under this Lease, whether or not expressly denominated as Rent, shall constitute additional rent.

     “Restoration Period ” means a two hundred (200) day period beginning on the date that
the Building has been damaged or destroyed by a casualty occurrence.

     “Required Delivery Date” means the seventy fifth day immediately following the date
that the building permit for the Interior Modifications is issued by the City, as extended by (i)
each day of Tenant Delay occurring after the building permit for the Interior Modifications is
issued; and (ii) each day of delay caused by a Force Majeure Event occurring after the building
permit for the Interior Modifications is issued. For each five day period of extension there
shall be added those number of weekend days as is fair and equitable to put Landlord in the same
position as if the Force Majeure Event or Tenant Delay had not occurred.

     “Specifications” means electrical lighting placement data, finish selections or any
other information or data requested by Landlord or Landlord’s architect needed in order for
Landlord’s architect to prepare the Permit Drawings or needed for Landlord to complete the Interior
Modifications.

     “Structural Repairs” means repairs and replacements to the Building’s foundations,
loadbearing walls, columns and joists, roof, roof deck, and roof drainage system.

     “Substantial Completion” or “Substantially Complete” or “Substantially
Completed” means the completion of the Interior Modifications, Punch List Items excepted.
Substantial Completion shall be deemed to have occurred upon the issuance by the City of a
certificate of completion or its equivalent (temporary or permanent) permitting you to occupy the
Premises for your Permitted Use.

     “Superior Mortgagee” means a bank, insurance company or other institutional lender now
or hereafter holding a mortgage encumbering the Development. The current Superior Mortgagee is
Teachers Insurance and Annuity Association of America.

     “Taxes” means all ad valorem taxes and non ad valorem assessments, or governmental
charges levied, assessed or imposed on the Building and the land on which the Building is comprised
including parking areas and other Common Areas. If at any time during the term of this Lease the
present method of taxation shall be changed so that in lieu of the whole or any part of any such
Taxes, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly
on the rents received therefrom and/or a franchise tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents for the Building, then all such taxes, assessments,
levies or charges, or the part thereof so measured or based, shall be deemed to be included within
the term “Taxes” for the purposes hereof. The Building is part of a larger tax parcel comprised of
the entire Development (Property ID # 5041 23 01 0010) and therefore real property taxes allocated
to the Building are an equitable proportion of the real property taxes for all of the land and
improvements included within the tax parcel assessed. If Landlord contests any assessment of
Taxes, then the term Taxes shall include the professional fees incurred by Landlord to contest such
Taxes. If Landlord prevails in the contest of any assessment of Taxes, Taxes will nonetheless be
determined using the protested amount until such time as the

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determination of the Value Adjustment Board is final and non appealable. If the county
property appraiser appeals the determination of the Value Adjustment Board, the term “Taxes” will
include the reasonable costs and fees to defend such suit.

     “Tenant’s Broker” means Sara David Realty. .

     “Tenant Delay” means, with respect to the construction of the Interior Modifications,
any one or more of (i) your failure to deliver Specifications to Landlord within the time specified
in Section 3.01; (ii) your failure to approve or disapprove Permit Drawings within the time
specified in Section 3.01; or (iii) any delays in the issuance of the certificate of occupancy
caused by you or your contractors, agents or employees including those subcontractors that you have
requested that Landlord’s contractor retain.

     “Term” or “term” means the primary term of this Lease. If the term of this
Lease has been extended pursuant to an option granted to you under this Lease to extend the term or
pursuant to any amendment to this Lease extending the term, then such extended term shall be
included as part of the term.

     “Transfer Premium” means all rent, additional rent or other consideration payable by
an assignee or subtenant (other than an Affiliate) in excess of the Rent payable by you under this
Lease (on a per rentable square foot basis in the case of a subletting where the subletting is for
less than the entire Premises) after deducting the reasonable expenses incurred by you for (i) any
changes, alterations and improvements to the Premises in connection with the assignment or
subletting, including any reasonable fees or costs incurred with respect thereto; (ii) any
brokerage commissions and reasonable attorney fees in connection with the assignment or subletting;
or (iii) any marketing or promotional fees in connection with the assignment or subletting.

ARTICLE II

PREMISES AND COMMON AREAS

     2.01 Premises. In consideration of your obligation to pay Rent and of the other
terms, provisions and covenants hereof, Landlord hereby leases the Premises to you and you hereby
lease the Premises from Landlord.

     2.02 Common Areas. During the term of this Lease, you and your employees, customers,
licensees and invitees shall have the non-exclusive right to use, in common with others entitled to
such use, the Common Areas as they exist from time to time, subject to any rights, powers, and
privileges reserved by Landlord under the terms hereof or under the terms of any rules and
regulations or covenants, conditions and restrictions governing the use of the Development.
Landlord reserves and may exercise the following rights without affecting your obligations
hereunder: (i) to make changes to the Common Areas, including, without limitation, changes in the
locations, size, shape and number of driveways, entrances, roadways, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways provided that such changes do not
materially adversely affect ingress to or egress from the Premises; (ii) to close temporarily any
of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains
available; (iii) to restrict your use of the parking spaces included as part of

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the Common Areas to the extent your use of such parking spaces exceeds your Parking
Proportionate Share to restrict your use of parking so that you park only in the parking areas
designated for the Building; and/or (iv) to require you, upon reasonable advance notice, to keep
clear any truck dock areas for the purpose of enabling Landlord to have access to manhole covers
and other utility facilities to clean or maintain roof drains, utility lines and utility
facilities.

     2.03 Landlord’s Reservation of Access, Ingress and Egress. During the term of this
Lease, Landlord reserves the right, for its benefit and for the benefit of itself and Landlord’s
tenants and others, to use any access openings or roadways falling within the Development and to
grant easements falling wholly or partly within the Development for any purpose provided that the
granting of any such easement does not interfere with your Permitted Use of the Premises.

     2.04 Parking Lot Refurbishments. As soon as is practical after the Effective Date,
Landlord will re-seal and re-stripe the parking areas serving the Building. The cost of the work
will be included in Operating Costs.

ARTICLE III

CONSTRUCTION OF THE INTERIOR MODIFICATIONS

     3.01 Permit Drawings. If not already done, as soon as is practical following the
Effective Date, Landlord will provide you with a letter detailing those Specifications that
Landlord needs from you in order to enable Landlord’s architect to prepare the Permit Drawings.
You will provide Landlord with the requested information within seven (7) business days of your
receipt of the request. Landlord will notify you in writing as to any deficiency in information and
you will then have seven (7) business days from receipt of such notice to provide Landlord with
revised information sufficient to enable the architect to prepare the Permit Drawings. As soon as
is practical after Landlord receives all required information, Landlord will cause its architect to
prepare the Permit Drawings. Upon completion of the Permit Drawings, Landlord will provide you
with a set of Permit Drawings and you will have seven (7) business days after receipt to approve or
reject the Permit Drawings. If you reject the Permit Drawings, you must specify with sufficient
detail the reason for rejection. Upon approval of the Permit Drawings, Landlord will apply for the
building permit for the Interior Modifications.

     3.02 Selection of General Contractor. The approved general contractor to construct
the Interior Modifications is Global Construction Associates LLC (“Global”). Upon the approval by
you of the Permit Drawings Landlord will enter into a construction contract with Global and then
make application for, and pursue the issuance of the building permit required for the construction
of the Interior Modifications.

     3.03 Commencement of Construction. Upon receipt of the building permit, Landlord will
then pursue to completion the construction of the Interior Modifications. Landlord will construct
the Interior Modifications in accordance with the Permit Drawings within reasonable construction
tolerances and in accordance with all applicable laws, codes and ordinances. Landlord, its general
contractor and any architect or engineer hired by Landlord (collectively the “Construction
Team”) shall not be obligated to or be responsible for designing or constructing the Interior
Modifications to meet any special requirements you might have with respect to machinery or
equipment, including boilers and cranes, whether rooms are designated for such on

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the Permit Drawings or otherwise, unless pursuant to separate written instrument, each member
of the Construction Team has acknowledged in writing that it has an obligation with respect to such
special requirements and specifying what the obligation is. Except to the extent of any express
obligation acknowledged in writing by the Construction Team, it shall be your responsibility, in
reviewing and approving the Permit Drawings, to ensure that the Interior Modifications have been
designed to satisfy any special requirements you may have. Unless otherwise expressly agreed to in
writing by Landlord to the contrary, Landlord shall solely be responsible for making sure that the
Interior Modifications are constructed in accordance with the Permit Drawings within reasonable
construction tolerances and in accordance with all applicable laws, codes and ordinances, and
without regard to any special requirements as to any special requirements you might have. You
shall have the right to cause one or more of your agents to periodically inspect the progress of
construction of the Interior Modifications and at your sole cost and expense, to employ one or more
independent inspectors to inspect the construction of the Interior Modifications to ensure
compliance with the Permit Drawings and your agents or inspectors shall have reasonable access to
the Premises to do so.

     3.04 Notification of Substantial Completion. Landlord will notify you in writing as
soon as Landlord has Substantially Completed the Interior Modifications. The taking of possession
of the Premises by you after Substantial Completion shall be deemed conclusively to establish that
the Landlord has completed all work required to be performed by Landlord to get the Premises ready
for your occupancy and that the Premises are in good and satisfactory condition, as of when
possession was so taken, Punch List Items excepted. Punch List Items must be compiled by you and
submitted to Landlord within ten days of the date of Substantial Completion. Except as otherwise
expressly set forth in this Lease, you acknowledge that no representations as to the repair or
improvement of the Premises or the Development have been made by Landlord.

     3.05 Tenant Set Up Work. As soon as is practical after finalization, Landlord will
provide you with a copy of Landlord’s initial construction schedule and thereafter, any revisions
or updates to the construction schedule. You shall coordinate with Landlord the scheduling of any
Tenant Set Up Work (as hereinafter defined) and subject to the terms and conditions of this
Section, Landlord will grant access to the Premises to you and to your representatives and
contractors, prior to the Commencement Date, to enable you to perform the Tenant Set Up Work. No
such early access shall be deemed to be an acceptance of the Premises by you. Tenant Set Up Work
means (i) your installation of telephone, computer lines and networking equipment, provided,
however, any such installation in the office portion of the Premises must be done before Landlord
commences the installation of a drop ceiling; and (ii) your installation of racking in the
warehouse portion of the Premises, provided, however, that no such racking may be installed by you
until such time as you have received from the City a racking permit. Early access to the Premises
under this Section is subject to the requirement that you do not interfere with Landlord’s
construction of the Interior Modifications and that such early access does not delay the
Substantial Completion of the Interior Modifications or the issuance of any certificate of
occupancy (temporary or permanent) with respect to the Interior Modifications. Your contractors,
subcontractors and labor shall be reasonably approved by Landlord and shall be subject to the
administrative supervision of Landlord’s construction manager. All Tenant Set Up Work shall
conform to and comply with any and all local and state building codes, ordinances and the N.F.P.A.
Life Safety Code.

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     3.06 Landlord’s Inability To Complete Interior Modifications Due To Tenant Delay. If
Landlord cannot Substantially Complete the Interior Modifications as a result of a Tenant Delay,
Landlord may, at its sole and absolute discretion, complete so much of the Interior Modifications
as may be practical under the circumstances and, by written notice to you, establish the
Commencement Date as the date of such partial completion, subject to any accelerations due to any
Tenant Delay, or if you have not cured such Tenant Delay within thirty days of Landlord’s written
notice to you advising of the Tenant Delay and specifying that Landlord has available the remedy of
the right to terminate, then Landlord, in Landlord’s sole and absolute discretion, may elect to
terminate the Lease in which case you shall be liable for, as liquidated damages, all design,
permitting and construction costs expended by Landlord through the date of termination together
with all leasing commissions paid or payable by Landlord with respect to this Lease and together
with Rent that would have been paid for the first Lease Year. In order to claim accelerations due
to a Tenant Delay, Landlord must provide you with written notice no later than ten business days
following the event giving rise to the claimed Tenant Delay and specifying the number of days of
acceleration caused by the Tenant Delay.

     3.07 Landlord’s Inability To Complete Interior Modifications Due To Tenant
Repudiation. For purposes of this Section, “Repudiation” means any one of the following
actions: (i) your written rejection of the Lease; (ii) your written instruction that Landlord
should cease performing the construction of the Interior Modifications; (iii) if you make a general
assignment for the benefit of creditors; (iv) if you commence any case, proceeding or other action
seeking to have an order for relief entered on your behalf as a debtor to adjudicate you as being a
bankrupt or insolvent, or seeking reorganization or relief of debtors or seeking appointment of a
receiver, trustee, custodian or other similar official for you or for all or of any substantial
part of your property, or you take any action to authorize or in contemplation of any of the
foregoing actions; (v) if you fail to get dismissed, within thirty days of its filing, any case,
proceeding or other action against you seeking to have an order for relief entered against you as a
debtor or to adjudicate you as bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of your debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, custodian or other similar official for you or for all or any substantial part of your
property; or (vi) if a receiver or trustee shall be appointed for all or substantially all of your
assets. If a Repudiation occurs prior to the Substantial Completion of the Interior Modifications,
then Landlord, in Landlord’s sole and absolute discretion, may elect to terminate the Lease in
which case you shall be liable for, as liquidated damages, all design, permitting and construction
costs expended by Landlord through the date of termination together with all leasing commissions
paid or payable by Landlord with respect to this Lease and together with Rent that would have been
paid for the first Lease Year.

     3.08 Warranty for Interior Modifications. Notwithstanding anything to the contrary
contained in the Lease, for the 365 day period immediately following the Commencement Date,
Landlord hereby provides a warranty in favor of you to repair or replace (if needed) any defect in
the Interior Modifications so long as the need for such repair or replacement is not caused by the
negligence or willful misconduct of you or your agents, employees or contractors. In addition,
Landlord assigns to you, on a non exclusive basis, any warranty received from the general
contractor and any subcontractor warranties that are assignable. Landlord will use reasonable

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efforts to enforce any subcontractor warranties that run to Landlord that are not assignable
to you.

     3.09 Warranty for HVAC, Mechanical and Plumbing. Notwithstanding anything to the
contrary contained in the Lease and to the extent not covered in the warranty pursuant to Section
3.08 of this Lease, for the 180 day period immediately following the Commencement Date, Landlord
hereby provides a warranty in favor of you to repair or replace (if needed) the HVAC units serving
the Premises and the base building mechanical and plumbing systems serving the Premises. The
foregoing warranty shall not apply to repair or replacements caused by the negligence or willful
misconduct of you or your agents, employees or contractors. The foregoing warranty as to the HVAC
units is subject to you keeping in force and effect the HVAC maintenance contract required to be
maintained by you pursuant to Paragraph 7.04(b) of this Lease.

     3.10 Landlord’s Failure to Substantially Complete On or Before Required Delivery Date.
If Landlord fails to Substantially Complete the Interior Modifications by the Required Delivery
Date, then in such event Landlord grants to you a credit to be used against Rent first due and
owing, in an amount equal to $554.78 multiplied by the number of days from the Required Delivery
Date through but not including the date of Substantial Completion of the Interior Modifications.

ARTICLE IV

TERM

     4.01 Primary Term. The primary term of this Lease shall begin on the Commencement
Date and the primary term of this Lease shall end on the Expiration Date. After the Commencement
Date, you shall, upon demand, execute and deliver to Landlord a letter of acceptance of delivery of
the Premises. After the Commencement Date and at the request of either party, the parties will
enter in to a document titled “Clarification of Lease Terms” which will set forth the Commencement
Date, Expiration Date, and post office address for the Premises assigned by the City, if not
already stated in the definition of the Premises.

     4.02 Holding Over. If Landlord agrees in writing that you may hold over after the
expiration or termination of this Lease, unless the parties hereto otherwise agree in writing on
the terms of such holding over, the hold over tenancy shall be subject to termination by either
party upon not less than thirty (30) days advance written notice, and all of the other terms and
provisions of this Lease shall be applicable during that period, except that you shall pay Landlord
from time to time upon demand, as rental for the period of any hold over, an amount equal to the
Holdover Rent, computed on a daily basis for each day of the hold over period. If Landlord does
not consent to your holdover, then you shall also pay to Landlord all damages sustained by Landlord
resulting from such unconsented to holdover. No holding over by you, whether with or without
consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided.
The preceding provisions of this paragraph shall not be construed as consent for you to hold over.

     4.03 Option to Extend. Landlord reserves the right to refuse to allow you the option
of extending the term of this Lease if you or a permitted assignee or sublessee are not occupying

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and doing business from the Premises (other than as a result of casualty) at the time an
option to extend is exercised or at the time an extended term commences or if there exists an
uncured Event of Default, either at the time the option to extend is exercised or at the time the
extended term commences or if you fail to timely provide Landlord with the Renewal Notice. Subject
to the foregoing, Landlord hereby grants to you the option to extend the term of this Lease for a
three year extended term (the “First Extended Term”), the First Extended Term to begin on
the day after the end of the primary term of this Lease. To effectively exercise your First
Extended Term option, you must timely provide the Landlord with the Renewal Notice. If Landlord
does not timely receive the Renewal Notice, time being of the essence, you shall not be entitled to
exercise your First Extended Term option. If you exercised your First Extended Term option, and
subject to the first sentence of this Section, Landlord grants to you the option to extend the term
of this Lease for a second three year extended term (the “Second Extended Term”), the
Second Extended Term to begin on the day after the end of the First Extended Term. To effectively
exercise your Second Extended Term option, you must timely provide the Landlord with the Renewal
Notice. If Landlord does not timely receive the Renewal Notice, time being of the essence, you
shall not be entitled to exercise your Second Extended Term option.

ARTICLE V

RENT

     5.01 Base Rent. Base Rent shall be payable during the primary or during any extended
term, in accordance with this Section 5.01.

          5.01(a) Base Rent During Primary Term. You agree to pay to Landlord base rent for the
Premises for the entire primary term hereof beginning on the Commencement Date, at the initial
rate of $16,643.25 a month, provided, however, if the Commencement Date is a day other than the
first day of a calendar month, then for the initial partial month, you agree to pay a per diem base
rental of $554.78 a day for each day of the partial month beginning on the Commencement Date and
ending on the last day of the partial month in which the Commencement Date falls. On each
Adjustment Date falling within the primary term of this Lease beginning with the Adjustment Date
corresponding with the first day of the second Lease Year, the monthly base rent amount shall
increase to 103% of the monthly base rent amount then in effect immediately prior to such
Adjustment Date.

          5.01(b) Base Rent During Extended Term. If you exercised an Extended Term option,
then you agree to pay to Landlord monthly base rent for the Premises, in advance, without demand,
deduction or set off, for the entire Extended Term hereof at an initial rate equal to 95% of Market
Rent, or if greater, at an initial rate equal to 103% of the monthly base rent amount in the last
Lease Year of the expiring term. On each Adjustment Date falling within the Extended Term
beginning with the Adjustment Date corresponding to the first day of the second Lease Year of the
Extended Term, the monthly base rent amount shall increase in accordance with the annual
escalations specified as part of the determination of Market Rent.

     5.02 Additional Rent for Tenant’s Proportionate Share of Operating Costs. Beginning
on the Commencement Date and continuing during the entire term, you agree to pay to Landlord as
additional rent, your Proportionate Share of Operating Costs. Any payments with respect to any
partial calendar year in which the term commences or ends shall be prorated.

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You agree to pay $6,742.65 per month as an estimated amount for Operating Costs. Landlord
may, at any time, deliver to you its estimate (or revised estimate) of such additional amounts
payable under this Section for each calendar year. On or before the first day of the next month and
on or before the first day of each month thereafter, you shall pay to Landlord as additional rent
such amount as Landlord reasonably determines to be necessary to bring and keep you current. As
soon as practicable after the close of each calendar year, Landlord shall deliver to you a
statement showing the total amount payable by you under this Article. If such statement shows an
amount due from you that is less than the estimated payments previously paid by you, it shall be
accompanied by a refund of the excess to you or at Landlord’s option the excess shall be credited
against the next monthly installment of Rent. If such statement shows an amount due from you that
is more than the estimated payments paid by you, you shall pay the deficiency to Landlord, as
additional rent, which payment shall be due within thirty (30) days after the date of Landlord’s
statement to you. You or your representatives shall have the right after seven (7) days prior
written notice to Landlord to examine Landlord’s books and records of Operating Costs during normal
business hours within thirty (30) days following the furnishing of the statement to you. Unless
you take written exception to any item within thirty (30) days following the furnishing of the
statement to you (which item shall be paid in any event), such statement shall be considered as
final and accepted by you. The taking of exception to any item shall not excuse you from the
obligation to make timely payment based upon the statement as delivered by Landlord.

     5.02A First Year Cap on Operating Costs. Notwithstanding anything in Section 5.02 to
the contrary, your Proportionate Share of Operating Costs for the first Lease Year shall not exceed
$3.95 r.s.f.

     5.02B Cap on Controllable Operating Costs. Notwithstanding anything in Section 5.02
to the contrary, beginning with the first day of the second Lease Year and continuing during the
remainder of the primary term, the increase in your Proportionate Share of Controllable Operating
Costs shall not exceed 5% from one year to the next, on a cumulative basis. By way of example of
what is meant by a cumulative basis, if your Proportionate Share of Controllable Operating Costs
for calendar year 2008 increased by 4% from calendar year 2007, then your maximum Proportionate
Share of Controllable Operating Costs for calendar year 2009 would be 106% of the calendar year
2008 amount. Short years will be annualized in a fair and equitable manner reasonably determined
by Landlord for purposes of determining any cap pursuant to the foregoing.

     5.03 Sales Tax. With each installment of Rent, you shall pay to Landlord all sales
taxes due thereon.

     5.04 Time For Payment of Rent. Prepaid Rent in the amount of $24,789.05 shall be paid
simultaneously with the execution of this Lease to be applied against Rent first due and owing.
Thereafter, each monthly installment of Rent shall be due and payable on or before the first day of
the calendar month for which such Rent is payable. Rent shall be payable without demand, deduction
or right of set off.

     5.05 Place for Payment. All Rent and other payments required to be made by you to
Landlord shall be payable to: Westport Business Park Associates LLP or to such other entity at

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such address as Landlord may specify from time to time by written notice delivered in
accordance herewith. Notwithstanding anything herein to the contrary, if the Building is
encumbered by an assignment of leases and rents made by Landlord and recorded in the Public Records
of the County in which the Building is located, then upon the written demand of the lender named in
such assignment of leases and rents or the successor in interest to such lender (hereinafter the
“Lender”), you agree to pay all Rent and other payments required to be made by you
hereunder to such Lender and Landlord agrees that you will be credited by Landlord for any payments
so made.

     5.06 Accord and Satisfaction. Payment by you or receipt by Landlord of a lesser
amount than the Rent herein stipulated or any other rent required to be paid by you hereunder may
be, at Landlord’s sole option, deemed to be on account of the earliest due stipulated Rents or
other rent, or deemed to be on account of Rent or other rent owing for the current period only,
notwithstanding any instructions by or on your behalf to the contrary, which instructions shall be
null and void, and no endorsement or statement on any check or any letter accompanying any check
payment as Rent or other rent shall be deemed an accord and satisfaction, and Landlord shall accept
such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or
other rent or pursue any other remedy in this Lease against you.

     5.07 Prohibition Against Percentage Rents Based on Net Receipts. The provisions of
this Section are required to be inserted in this Lease pursuant to an Assignment of Leases and
Rents entered into by Landlord in favor of the Superior Mortgagee recorded in the Public Records of
Broward County, Florida. Your obligation to pay Rent and any additional rent under this Lease is
not based in any way on the income or profits derived from the Premises. If a Succession (as
defined in Section 18.03) occurs, and if the Superior Mortgagee is advised by its counsel that all
or a portion of the Rent or additional rent payable under this Lease is or may be deemed to be
unrelated business income within the meaning of the Internal Revenue Code of 1986, as amended from
time to time, as in effect at that time (the “Code”), or within the meaning of U.S. Treasury
Regulations promulgated under the Code, the Superior Mortgagee may elect to amend unilaterally the
calculation of the Rent or additional rent, and you agree to execute such amendment, so that none
of the Rent or additional rent payable to the Superior Mortgagee under the Lease will constitute
unrelated business income provided that such amendment may not increase your payment obligations or
other liability under the Lease or reduce Landlord’s obligations under this Lease.

ARTICLE VI

LETTER OF CREDIT

     You agree to deliver the Letter of Credit to Landlord no later than the tenth business day
immediately following the Effective Date, time being of the essence. If the Letter of Credit is
not delivered within such period, then until such time as it is delivered, you agree to pay to
Landlord a penalty of $100.00 a day for each day until delivered and until such time as it is
delivered, Landlord shall have the right to terminate this Lease. Upon an Event of Default,
Landlord may, from time to time, without notice to you and without prejudice to any other remedy
available to Landlord, draw upon the Letter of Credit to the extent necessary to make good any
arrears of Rent or other payments due Landlord hereunder, and any other damage, injury, expense or
liability caused by your default, and you shall pay to the issuer of the Letter of

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Credit on demand by Landlord the amount so applied in order to restore the Letter of Credit to
its original amount. Provided that you have complied with all of the terms and conditions of the
Lease, the Letter of Credit will be returned to you no later than 30 days after the Lease
Expiration Date. If the Letter of Credit is in the form of one year automatic renewals, and if the
issuer decides not to renew the Letter of Credit and if you fail to provide Landlord with a
replacement Letter of Credit (or, at your option, a cash security deposit in an amount equal to the
face amount of the required Letter of Credit) on or before the fifteenth day immediately preceding
the stated expiry date of the Letter of Credit that is not being renewed, then the failure to
provide Landlord with a replacement Letter of Credit shall be an Event of Default which can be
cured solely by providing Landlord with the replacement Letter of Credit and in addition to any
other remedy available to Landlord under this Lease, Landlord shall have the right to draw on the
Letter of Credit until such time as the replacement Letter of Credit is provided to Landlord.

     Provided that no Event of Default then exists, on and after each Adjustment Date beginning
with the Adjustment Date corresponding to the first day of the second Lease Year, you shall be
permitted to substitute a replacement Letter of Credit in an amount equal to the Letter of Credit
amount then in effect prior to replacement minus $25,000 provided, however, the Letter of Credit
will never be reduced below $25,000. Upon Landlord’s receipt of a replacement Letter of Credit,
Landlord agrees to return to you the then Letter of Credit that Landlord is holding. In the
alternative and at your sole discretion, and once the Adjustment Date is determined, Landlord
consents to an endorsement to the Letter of Credit specifying the reductions on each Adjustment
Date provided that the endorsement clearly identifies each Adjustment Date and clearly identifies
the amount that the Letter of Credit has been reduced to as of such Adjustment Date.

ARTICLE VII

USE OF THE PREMISES

     7.01 Permitted Use. The Premises shall be used for the sole purpose of the Permitted
Use and for no other use or purpose. The Premises may never be used by you, in whole or in part,
for a Prohibited Use. You shall at your own cost and expense obtain any and all licenses and
permits necessary for the operation of your business from the Premises. The overnight parking of
automobiles, trucks or other vehicles is prohibited. Your trucks and trucks visiting the Premises
may only park in the dock areas adjacent to your Premises. The outside storage of property is
prohibited. Trash and garbage must be placed in a dumpster in an area specifically designated by
Landlord. If the dumpster is a dumpster used by more than one tenant, then your use of the
dumpster shall be limited to normal trash from your office and any raw material or other product
disposals must be in a roll away dumpster contracted for and paid for by you. You agree that you
will, at your own cost and expense keep your employees, agents, customers, invitees, and/or
licensees from parking anywhere within the Development other than in those striped parking spaces
serving the Building. You agree that no washing of any vehicles or other property will take place
in the Common Areas. You shall not permit any objectionable or unpleasant odors, smoke, dust, gas,
noise or vibrations to emanate from the Premises, nor take any other action which would constitute
a nuisance or would disturb or endanger any other tenants of the Building or unreasonably interfere
with any tenant’s use of their respective premises or permit any use which would adversely affect
the reputation of the Development. If

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you employ laborers or others who perform their services outside of the Premises, then you
shall arrange to pay your payrolls in a manner not to disturb other tenants of the Development or
you must arrange an alternative site outside the Premises for disbursing payroll.

     7.02 Tenant’s Due Diligence As To Permitted Use. Landlord makes no (and does hereby
expressly disclaim any) covenant, representation or warranty as to the Permitted Use (including any
special equipment or machinery needs you might have) being allowed by or being in compliance with
any applicable laws, rules, ordinances or restrictive covenants now or hereafter affecting the
Premises, and any zoning letters, copies of zoning ordinances or other information from any
governmental agency or other third party provided to you by Landlord or any of Landlord’s agents or
employees shall be for informational purposes only, you hereby expressly acknowledging and agreeing
that you shall conduct and rely solely on your own due diligence and investigation conducted by you
prior to entering in to this Lease with respect to the compliance of the Permitted Use with all
such applicable laws, rules, ordinances and restrictive covenants and not on any such information
provided by Landlord or any of its agents or employees.

     7.03 Compliance With Laws. You covenant to comply with any and all laws, statutes,
ordinances and regulations, federal, state, county or municipal, now or hereinafter in force
applicable to your use or occupancy of the Premises or to the making of repairs thereto required to
be made by you pursuant to the terms of this Lease, or of changes, alterations or improvements
therein, ordinary or extraordinary, structural or otherwise, seen or unforeseen. You also covenant
to comply with any and all regulations and rules applicable to the Premises issued by the Board of
Fire Underwriters, or by any other rating agency exercising similar functions, and insurance
companies writing policies covering the Premises which now or hereafter may become applicable to
the Premises. You shall pay all costs, expenses, claims, fines, penalties and damages that
directly result from your failure to comply with this Section, and in any event, you agree to
indemnify the Landlord from all liability with reference to the same. Landlord and you shall each
promptly give notice to the other in writing of any notice of violation received by you or
Landlord, respectively.

     7.04 Tenant’s Repair and Maintenance Obligations. (a) Subject to Landlord’s warranty
obligation under Sections 3.08 and 3.09, you shall, at your own cost and expense, keep and maintain
all parts of the Premises in a good, clean, safe and sanitary condition, promptly making all
necessary repairs and replacement, whether ordinary or extraordinary, with materials and
workmanship of the same character, kind and quality as the original, including but not limited to,
windows, glass and plate glass (other than damage to plate glass caused by a windstorm), doors, any
special office entries, interior walls and finish work, floors and floor coverings, heating and air
conditioning systems, electrical systems and fixtures, sprinkler systems, life safety systems and
equipment, water heaters, dock board, truck doors, dock bumpers, and plumbing work and fixtures.
As part of your obligation hereunder, you shall keep the whole of the Premises in a clean and
sanitary condition including any dumpster areas, dumpsters and roll away dumpsters. You will as
far as possible keep all parts of the Premises from deteriorating, ordinary wear and tear excepted,
and from falling temporarily out of repair, and upon termination of this Lease in any way, you will
yield up the Premises to Landlord in its Exit Condition. You shall not damage any dividing wall or
disturb the integrity and supports provided by any demising wall and shall, at your sole cost and
expense, properly repair any

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damage or injury to any demising wall caused by you or your employees, agents or invitees, or,
at Landlord’s option where such damage requires access to an adjacent premises, such damage may be
repaired by Landlord and you shall pay as additional rent the cost of such repair. You shall, at
your own cost and expense, as additional rent, pay for the repair of any damage to the Premises,
the Building, or the Development resulting from and/or caused in whole or in part by your
negligence or misconduct, or the negligence or misconduct of your agents, servants, employees,
patrons, customers, or any other person entering upon the Development as a result of your business
activities or caused by your default hereunder.

          (b) At your own cost and expense, you agree to enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor approved by Landlord, for servicing all
heating and air conditioning systems and equipment servicing the Premises and an executed copy of
such contract shall be delivered to Landlord. This service contract must include all services
suggested by the equipment manufacturer within the operations/maintenance manual and must become
effective within thirty (30) days immediately following the date you take possession of the
Premises. Landlord may (but shall not be required to), upon notice to you, elect to enter into such
a maintenance service contract on your behalf or perform the work itself and, in either case,
charge you therefore, together with a reasonable charge for overhead.

     7.05 Utilities. You agree to pay for all gas, heat, light, power, telephone, and
other utilities and services (including trash removal) used on or from the Premises, together with
any taxes, penalties and surcharges or the like pertaining thereto and any maintenance charges for
utilities and any utility hookup fees. Landlord shall in no event be liable for any interruption or
failure of utility services on or to the Premises.

     7.06 End of the Term. You covenant that on the last day of the term, you will
peaceably and quietly leave and surrender the Premises in its Exit Condition and that all payments
required to be made by you in payment of utilities pursuant to Section 7.05 shall have been paid or
provision for payment having been made. If you had any permit issued for alterations or
improvements, whether consented to or not by Landlord, then you covenant that as of the last day of
the term, such permits will be closed. You shall give written notice to Landlord at least thirty
(30) days prior to vacating the Premises and you shall arrange to meet with Landlord for a joint
inspection of the Premises prior to vacating. If you fail to arrange such joint inspection,
Landlord’s inspection at or after you vacate the Premises shall be conclusively deemed correct for
purposes of determining your responsibility for repairs and restoration.

ARTICLE VIII

LANDLORD’S OBLIGATIONS

     8.01 Repairs and Maintenance. Landlord shall maintain the following in a clean and
sanitary condition, reasonable wear and tear and any casualty covered by the provisions of Article
XII excepted, promptly (after actual notice) making all necessary repairs and replacements: the
Building’s roof, roof deck including joists, downspouts, gutters and other portions of the roof
drainage system, foundation, exterior walls and the Common Areas. Landlord’s obligation to
maintain the Common Areas shall include the regular mowing of any grass, trimming, weed removal and
general landscape maintenance, exterior lighting, exterior

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signs and common sewage plumbing and the maintenance of all paved areas including driveways,
parking lots and alleys. You shall promptly after obtaining actual knowledge, give Landlord
written notice of any defect or need for repairs to the Premises, Building or to the Common Areas,
and after receipt of which Landlord shall have a reasonable opportunity to repair the same or cure
such defect. Landlord’s liability with respect to any defects, repairs, or maintenance or the
curing of such defect for which Landlord is responsible under the provisions of this Lease shall be
limited to the cost of such repairs or maintenance or the curing of such defect. Except as
qualified by Paragraph 7.04(a), the term “walls” as used herein shall not include windows, glass or
plate glass, doors, special store front or office entry.

     8.02 Covenant of Quiet Enjoyment. Landlord covenants that it now has good title to
the Premises, free and clear of all liens and encumbrances, excepting only the lien for current
taxes not yet due, mortgages now or hereafter of record, zoning ordinances and other building and
fire ordinances and governmental regulations relating to the use of such property, and easements,
restrictions and other conditions of record. Landlord represents and warrants that it has full
authority and right to enter into this Lease and that for so long as an Event of Default does not
exist, you shall peaceably and quietly have, hold and enjoy the Premises for the term hereof
without hindrance or molestation from Landlord, subject to the terms and provisions of this Lease.
Landlord agrees to make reasonable efforts to protect you from interference or disturbance by other
tenants or third persons; however, as long as Landlord has used such reasonable efforts Landlord
shall not be liable for any such interference or disturbance, nor shall you be released from any of
the obligations of this Lease because of such interference or disturbance.

ARTICLE IX

ALTERATIONS AND SIGNAGE

     9.01 Alterations. You agree that you will not make any alterations, additions or
improvements to the Premises (including, without limitation, the roof and wall penetrations)
without the prior written consent of Landlord, which consent shall not be unreasonably withheld or
delayed. If Landlord consents to any alterations, additions or improvements proposed by you, you
shall construct the same in accordance with all governmental laws, ordinances, rules and
regulations and all requirements of any applicable insurance policies and only in accordance with
plans and specifications approved by Landlord. You may, without the consent of Landlord, but at
your own cost and expense and in good workmanlike manner erect such shelves, bins, machinery and
other trade fixtures as you may deem advisable, without altering the basic character of the
Building and without overloading the floor or damaging the Building, and in each case after
complying with all applicable governmental laws, ordinances, regulations and other requirements,
provided, however, the installation of a boiler, crane or heavy machinery (even if a room for such
item is designated in the Construction Drawings, which designation shall not be deemed to be
consent) will require separate Landlord consent as though it were an addition to the Premises. All
shelves, bins, machinery and trade fixtures installed by you may be removed by you prior to the
termination of this Lease if you so elect, and shall be removed by the date of termination of this
Lease or upon earlier vacating of the Premises if required by Landlord and upon any such removal
you agree to repair any damage to the Premises caused by such removal. All such removals and
restoration shall be accomplished in a good and

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workmanlike manner so as not to damage the primary structure or structural quality of the
Building.

     9.02 Accounting for Cost of Alterations. As soon as is practical promptly following
the completion of any improvements made to the Premises by you, you shall submit to Landlord an
itemized statement setting forth the cost of such improvements. Within thirty days of the request
of Landlord from time to time made but not more than once in any one calendar year (unless such
additional request results from a change in Landlord’s insurance carrier), you shall provide
Landlord with a written appraisal of the then current replacement value of the improvements to the
Premises made by you. Your failure to submit such written appraisal shall not be an Event of
Default, and instead, Landlord shall have the right to estimate the current replacement value of
such improvements and any such estimate provided to Landlord’s insurance carrier shall be binding
upon you to the extent such improvements are covered under insurance required to be maintained by
Landlord.

     9.03 Signs and Window Treatment. You agree that you will not install any signs upon
the Building, provided, however, that you shall be permitted, at your cost and expense, to install
one exterior identification sign on the Building in a place reasonably acceptable to Landlord
provided that such sign conforms with signage criteria that Landlord has promulgated or is
currently in the process of promulgating for the Development. Such sign shall be removed by you
upon termination of this Lease at which time you shall repair any damage to the Premises caused by
such removal. Landlord may from time to time require you to change your identification sign to
conform to a revised standard for the Building, provided Landlord pays the cost of removing and
replacing such sign. Any sign installed by you shall be maintained by you and kept in good
condition and repair. You shall not install drapes, curtains, blinds or any window treatment
without Landlord’s prior written consent.

ARTICLE X

LANDLORD ACCESS TO PREMISES

     Landlord and Landlord’s agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times upon reasonable notice for the purpose of
showing the same to prospective purchasers, lenders, insurance adjustors or tenants, and making
such alterations, repairs, improvements or additions to the Premises or to the Building (including
other tenant spaces), as Landlord may reasonably deem advisable or necessary.

ARTICLE XI

ASSIGNMENT AND SUBLETTING

     11.01 Requirement of Landlord Consent. (a) You shall not have the right to assign,
sublet, transfer or encumber this Lease, or any interest therein, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed. Any attempted
assignment, subletting, transfer or encumbrance by you in violation of the terms and covenants of
this Section shall be void. If Landlord consents to an assignment or subletting, as a condition
thereto which the parties agree is reasonable, you shall pay to Landlord one-half of any Transfer
Premium. Any assignment, subletting or other transfer of your interest in this Lease shall be for

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an amount equal to the then fair market value of such interest. These covenants shall run
with the land and shall bind you and your successors and assigns. No assignment, subletting or
other transfer, whether consented to by Landlord or not, shall relieve you of your liability and
obligations hereunder. Upon the occurrence of an Event of Default, if the Premises or any part
thereof are then assigned or sublet, Landlord, in addition to any other remedies herein provided,
may at Landlord’s option collect directly from such assignee or subtenant all rents becoming due to
you under such assignment or sublease and apply such rent against any sums due to Landlord for you
hereunder, and no such collection shall be construed to constitute a novation or a release of you
from the further performance of your obligations hereunder. Any assignee, sublessee or transferee
of your interest in this Lease (all such assignees, sublessees and transferees being hereinafter
referred to as “successors”), by assuming your obligations hereunder shall assume liability to
Landlord for all amounts paid to persons other than Landlord by such successors in contravention of
the immediately preceding sentence.

          (b) If you are not a publicly traded corporation or a publicly traded limited partnership,
then a change in control shall constitute an assignment requiring Landlord’s consent. The transfer
of 50% or more of your stock, if you are a corporation, or a change in 50% or more of your
partners, if you are a general partnership or limited partnership, or a change in your general
partner if you are a limited partnership, shall constitute a change in control for this purpose,
requiring Landlord’s consent. If the change in control results from the issuance of additional
shares of your capital stock (as opposed to a sale of shares by existing stockholders) to venture
capital investors, the such change in control will not require Landlord consent.

          (c) Your involvement in a merger transaction, if you are not the surviving corporation in the
merger, shall be considered an assignment of this Lease requiring Landlord’s consent.

     11.02 Effect of Unconsented to Assignment or Subletting. An assignment or subletting
of your interest in this Lease without Landlord’s specific written prior consent (where Landlord’s
consent is required pursuant to the terms of this Lease) shall be an Event of Default curable after
a ten day notice period and in addition to all rights and remedies available to Landlord under this
Lease, and if Landlord does not elect to terminate the Lease, Landlord shall have the right to
increase the monthly base rent to the Holdover Rent amount as if you were holding over during any
period of time such unconsented to assignee or subtenant is in possession of any or all of the
Premises.

     11.03 Sub-Lease Termination: Merger. Unless specifically stated otherwise in writing
by Landlord, the voluntary or other surrender of this Lease by you, the mutual termination or
cancellation hereof, or a termination hereof by Landlord for an uncured Event of Default by you,
shall automatically terminate any sublease or lesser estate in the Premises, provided, however,
Landlord shall, in the event of any such surrender, termination or cancellation, have the option to
continue any one or all of any existing subtenancies. Landlord’s failure within 10 days following
any such event to make a written election to the contrary by written notice to the holder of any
such lesser interest, shall constitute Landlord’s election to have such event constitute the
termination of such interest.

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     11.04 Third Party Payments. You acknowledge that Landlord may not fully
scrutinize and examine each Rent or other payment to see that the check submitted in payment is
your check and not a third party check. Accordingly, if a third party check is tendered for
payment of Rent or any other payment due under this Lease from you, and if such payment is accepted
by Landlord, such acceptance shall not confer any rights upon the third party payor or entitle the
third party payor to make a claim as an assignee or subtenant of yours nor shall such acceptance
entitle the third party payor to occupy the Premises or create a landlord/tenant relationship
between the third party payor and Landlord.

     11.05 Assignment to an Affiliate. Notwithstanding anything in Section 11.01 to the
contrary, you shall have the right to assign your leasehold interest in the Premises to an
Affiliate without Landlord’s consent provided that (i) you provide Landlord with advance written
notice of the assignment; (ii) you provide Landlord, in advance, with proof that the Affiliate has
all insurance in place required to be maintained under this Lease including naming Landlord as an
additional insured; (iii) you provide Landlord, in advance, with a fully executed assignment and
assumption of lease document reasonably acceptable to Landlord including an acknowledgment that
such assignment does not release you from liability; and (iv) you provide Landlord with an
administrative charge payment of $700.00 to reimburse Landlord for the administrative and legal
costs Landlord can reasonably be expected to incur regarding such assignment.

     11.06 Subletting to an Affiliate. Notwithstanding anything in Section 11.01 to the
contrary, you shall have the right to sublet all or a portion of the Premises to an Affiliate
without Landlord’s consent provided that (i) you provide Landlord with advance written notice of
the subletting; (ii) you provide Landlord, in advance, with proof that the Affiliate has all
insurance in place required to be maintained under this Lease including naming Landlord as an
additional insured; (iii) you provide Landlord, in advance, with a fully executed sublease
reasonably acceptable to Landlord; and (iv) you provide Landlord with an administrative charge
payment of $700.00 to reimburse Landlord for the administrative and legal costs Landlord can
reasonably be expected to incur regarding such subletting.

ARTICLE XII

INSURANCE

     During the term of this Lease, Landlord and you shall carry and maintain the following types
of insurance and in the amounts specified in this Article, all as follows:

     12.01 Fire and Casualty Damage. Landlord agrees to maintain insurance covering the
Building in an amount not less than full insurable value (subject to any applicable deductible)
insuring against loss or damage by fire and other hazards included within the term “special causes
of loss”, “all risk” or “extended coverage” and against such other hazards as Landlord may deem
advisable or which a Superior Mortgagee requires. Such insurance will not, however, insure your
personal property. Subject to the provisions of subparagraph 13.01(c) below, such insurance shall
be for the sole benefit of Landlord and under its sole control.

     12.02 Personal Property. You shall procure and maintain throughout the term of this
Lease a policy or policies of insurance, at your sole cost and expense, insuring all personal
property situated within the Premises against loss or damage by fire and other hazards included

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within the term “special causes of loss”, “all risk” or “extended coverage” and against such
other hazards as Landlord may reasonably require in the full insurable value.

     12.03 Tenant’s Liability Insurance. You shall procure and maintain throughout the
term of the Lease a policy or policies of insurance, at your sole cost and expense, insuring both
Landlord and you (and, if requested by Landlord, insuring the Superior Mortgagee) against all
claims, demands or actions arising out of or in connection with: (i) the Premises; (ii) the
condition of the Premises; (iii) your operations in and maintenance and use of the Premises; and
(iv) your liability assumed under this Lease, the limits of such policy or policies to be in the
amount of not less than $2,000,000 per occurrence in respect to injury to persons (including
death), and in the amount of not less than $250,000 per occurrence in respect to property damage or
destruction, including loss of use thereof. If Landlord has also obtained comprehensive liability
insurance, then the insurance required to be maintained by you pursuant to this Section shall be
primary and non contributing with respect to any policies carried by Landlord and any coverage
carried by Landlord shall be excess insurance.

     12.04 Workers’ Compensation and Employer Liability Insurance. You shall procure and
maintain throughout the term of the Lease a policy or policies of insurance, at your sole cost and
expense, all workers’ compensation coverage as required by law and employer’s liability insurance.

     12.05 Proof of Insurance. Insurance required to be procured and maintained by you
pursuant to this Article shall be procured by you from responsible insurance companies reasonably
satisfactory to Landlord. Certificate(s) of insurance reasonably acceptable to Landlord evidencing
your compliance with the provisions of Sections 12.02, 12.03 and 12.04 shall be delivered to
Landlord prior to the Commencement Date. Not less than fifteen (15) days prior to the expiration
date of any such policies, updated certificate(s) of insurance shall be delivered to Landlord.
Such policies shall further provide that not less than thirty (30) days written notice shall be
given to Landlord before such policy may be canceled or changed to reduce insurance provided
thereby.

     12.06 Waiver of Claims. To the maximum extent permitted by law, Landlord and you each
hereby waives any claim against the other which is insurable under the property insurance required
to be carried under Sections 12.01 and 12.02 of this Lease, irrespective of whether Landlord or you
actually maintains such insurance. Notwithstanding the preceding, if the damage or destruction to
the Building was caused by your negligence, then you agree, upon demand, to reimburse Landlord for
the deductible expended by Landlord under Landlord’s policy of insurance (but not in excess of
$20,000) to repair or rebuild the Building or part thereof after such damage or destruction. You
and the Landlord each agree to request the insurance carriers to include in the policies of
property insurance required to be carried under Sections 12.01 and 12.02 of this Lease, a waiver of
subrogation provision consistent with the foregoing waiver of claims.

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ARTICLE XIII

CASUALTY AND CONDEMNATION

     13.01 Damage or Destruction. (a) If the Building should be totally destroyed by fire,
tornado or other casualty, or if the Building should be so damaged thereby that rebuilding or
repairs cannot in Landlord’s reasonable estimation be completed within the Restoration Period, this
Lease shall terminate and the Rent shall be abated during the unexpired portion of this Lease,
effective upon the date of the occurrence of such damage.

          (b) If the Building should be damaged by any peril covered by insurance to be provided by
Landlord under Section 12.01, but only to such extent that rebuilding or repairs can in Landlord’s
estimation be completed within the Restoration Period, this Lease shall not terminate, and Landlord
shall at its sole cost and expense thereupon proceed with reasonable diligence to rebuild and
repair the Building to substantially the condition in which it existed prior to such damage
(including damage to plate glass caused by a windstorm), except that Landlord shall not be required
to rebuild, repair or replace any part of the partitions, fixtures, additions and other
improvements which may have been placed in, on or about the Premises by you except that Landlord
may elect not to rebuild if such damage occurs during the last year of the term of the Lease
exclusive of any option which is unexercised at the time of such damage. If the Premises are
untenantable in whole or in part following such damage, the Rent payable hereunder during the
period in which they are untenantable shall be reduced to such extent as may be fair and reasonable
under all of the circumstances. If Landlord should fail to complete the repairs and rebuilding
within the Restoration Period, you may, at your option, terminate this Lease by delivering written
notice of termination to Landlord as your exclusive remedy, whereupon all rights and or obligations
hereunder shall cease and terminate. Should construction be delayed because of a Force Majeure
Event, the Restoration Period shall be extended for the time Landlord is so delayed.

          (c) Notwithstanding anything herein to the contrary, if a Superior Mortgagee requires that the
insurance proceeds be applied to the indebtedness secured by a mortgage encumbering the Building,
then Landlord shall have the right to terminate this Lease by delivering written notice of
termination to you within fifteen (15) days after such requirement is made by the Superior
Mortgagee, whereupon all rights and obligations hereunder shall cease and terminate.

     13.02 Condemnation. If the whole or any substantial part of the Premises or Building
should be taken for any public or quasi-public use under governmental law, ordinance or regulation,
or by right of eminent domain, or by private purchase in lieu thereof, this Lease shall terminate
effective when the legal taking or private purchase in lieu thereof shall occur. If less than the
whole or less than a substantial part of the Premises or Building is thus taken or sold, Landlord
may nonetheless terminate this Lease by giving written notice to you in which event this Lease
shall terminate effective when the legal taking or private purchase in lieu thereof shall occur.
If this Lease is not terminated upon such taking or private sale in lieu thereof, the Rent payable
hereunder during the unexpired portion of this Lease shall be reduced to such extent as may be fair
and reasonable under all of the circumstances and Landlord shall undertake to restore the Premises
to a condition suitable for your use, as near to the condition thereof immediately prior to such
taking as is reasonably feasible under all the circumstances. All amounts awarded

23

 

from the legal taking or private purchase in lieu thereof shall belong to Landlord and you
shall not be entitled to and you expressly waive any claim to any of such proceeds, provided,
however, you shall be entitled to pursue a separate claim for your trade fixtures paid for by you
and for relocation expenses.

ARTICLE XIV

LANDLORD’S LIABILITY

     14.01 Liability and Indemnification. Landlord shall not be liable to you or your
employees, agents, patrons or visitors, or to any other person whomsoever, for any injury to person
or damage to property on or about the Premises, resulting from and/or caused in part or whole by
your negligence or misconduct or by the negligence or misconduct of your agents, servants or
employees or any other person entering upon the Premises, or caused by the buildings and
improvements located on the Premises becoming out of repair, or caused by leakage of gas, oil,
water or steam or by electricity emanating from the Premises, or due to the existence of mold or
mildew, or due to any cause whatsoever other than the grossly negligent or intentional acts of
Landlord, and you hereby covenant and agree that you will at all times indemnify and hold safe and
harmless the Building, the Landlord, Landlord’s agents and employees from any loss, liability,
claims, suits, costs, expenses, including without limitation attorney’s fees and damages, both real
and alleged, arising out of any such damage or injury; except injury to persons or damage to
property the sole cause of which is the gross negligence of Landlord or the failure of Landlord to
repair any part of the Building which Landlord is obligated to repair and maintain hereunder within
a reasonable time after the receipt of written notice from you of needed repairs.

     14.02 Tenant Remedies. In the event of any default by Landlord, your exclusive remedy
shall be an action for damages or for specific performance or other injunctive relief if specific
performance or injunctive relief is a commercially reasonable remedy given the circumstances, but
prior to any such action you must give Landlord written notice specifying such default with
particularity, and Landlord shall thereupon have thirty (30) days in which to commence to cure such
default and proceed diligently thereafter to cure such default. Unless and until Landlord fails to
commence to cure such default within such thirty (30) day period and to proceed diligently
thereafter to cure such default, you shall not have any remedy or cause of action by reason
thereof.

     14.03 Limitation on Liability. If Landlord shall fail to perform any covenant, term
or condition of this Lease upon Landlord’s part to be performed, and if as a consequence of such
default you shall recover a money judgment against Landlord, such judgment shall be satisfied only
out of the proceeds of sale received upon execution of such judgment and levied thereon against the
right, title and interest of Landlord in the Building and out of the rents or other income from the
Building receivable by Landlord, or out of the consideration received by Landlord from the sale or
other disposition of all or any part of Landlord’s right, title and interest in the Building,
including insurance and condemnation proceeds, subject, nevertheless, to the rights of a Superior
Mortgagee, and neither Landlord nor any of the stockholders, partners or members comprising the
entity which is Landlord herein shall be liable for any deficiency.

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ARTICLE XV

TENANT DEFAULT

     Upon the occurrence of an Event of Default and in addition to all rights or remedies afforded
to Landlord elsewhere in this Lease or at law or in equity, Landlord shall have the following
rights and remedies:

     15.01 Retake Possession of the Premises and or Termination. Upon the occurrence of an
Event of Default, Landlord shall have the immediate right to reenter the Premises, either by
summary proceedings or without summary proceedings if such reentry can be done peaceably, and to
disposes you and all other occupants from the Premises and remove and dispose of all property
situated within the Premises, or at Landlord’s election, to store such property in a public
warehouse or elsewhere at your cost and for your account, all without any service of notice of
intention to reenter and with or without resort to legal process (which requirement of legal
process is hereby waived by you as long as such reentry can be done peaceably) and without Landlord
being deemed guilty of trespass or becoming liable for any loss or damage which may be occasioned
thereby. Upon the occurrence of any such Event of Default, Landlord shall also have the right, at
its option, in addition to and not in limitation of any other right or remedy available under this
Lease or at law or in equity, to terminate this Lease by giving you notice of cancellation and upon
the mailing of such notice, this Lease and the Term shall end and expire as fully and completely as
if the date of said notice were the date herein definitely fixed for the end and expiration of this
Lease and the Term and thereupon, unless Landlord shall have previously elected to reenter the
Premises, Landlord shall have the immediate right of reentry in the manner aforesaid, and you and
all other occupants shall quit and surrender the Premises to Landlord but you shall remain liable
to Landlord as set forth herein. No reentry or taking possession of the Premises or acceptance of
keys to the Premises voluntarily given by you following an Event of Default, shall be construed as
an election on the part of Landlord to terminate this Lease unless written notice of such intention
be given by Landlord to you or unless the termination thereof shall result as a matter of law or be
decreed by a court of competent jurisdiction. Notwithstanding any retaking of possession for your
account or reletting for your account, Landlord may at any time thereafter elect to terminate this
Lease.

     15.02 Reletting of the Premises. If by reason of the occurrence of an Event of
Default, the Term shall end before the date originally fixed herein, or if by reason of an Event of
Default Landlord retook possession of the Premises without an early termination of the Lease and
the Term, or if you are ejected, dispossessed, or removed from the Premises by summary proceedings
or in any other manner as a result of an Event of Default, Landlord at any time thereafter may
relet all or a part of the Premises, either in the name of Landlord or as agent for you, for a term
or terms which, at Landlord’s option may be less than or exceed the period of the remainder of the
Term or which otherwise would have constituted the balance of the Term had such Term not been
sooner terminated and grant concessions and free Rent. Landlord shall in no event be liable in any
way for Landlord’s failure to relet the Premises or to collect any rent receivable from such
reletting. Landlord is hereby authorized and empowered to make such repairs, alterations,
subdivisions or other preparations for the reletting of the Premises as Landlord deems fit,
advisable and necessary, without in any way releasing you from any liability hereunder. Landlord
shall receive the rents from such reletting and apply the same, first, to the payment of any
monetary obligation due under this Lease other than Rent, second to the payment

25

 

of any expenses as Landlord may have incurred in connection with reentering, ejecting
removing, dispossessing, reletting, altering, repairing, subdividing or otherwise preparing the
Premises for reletting, including reasonable brokerage and reasonable attorney fees, and the
residue, if any, Landlord shall apply to your fulfillment of the terms, conditions and covenants
hereunder and you waive any right to the surplus, if any. The residue, if any, is herein referred
to as the “net rents received by Landlord from reletting”.

     15.03 Damages for Rent. In addition to any damages for unpaid Rent and any additional
rent that accrues up until the time that Landlord regains possession of the Premises, you shall be
liable for and shall pay to Landlord as damages any deficiency between the Rent reserved herein and
the net rents received by Landlord from reletting, if any, for each month of the period which
otherwise would have constituted the balance of the Term. You shall pay such deficiency on an
accelerated basis as provided for herein or, at Landlord’s sole option, in monthly installments on
the due date for such Rent installment as specified in this Lease, and any suit or proceeding
brought to collect the deficiency for any month, either during the Term or after any termination
thereof, shall not prejudice or preclude in any way the rights of Landlord to collect the
deficiency for any subsequent month by a similar suit or proceeding. Unless Landlord elects to
forego the acceleration of Rent, accelerated Rent shall be calculated as the present value of the
Rent due for the remainder of the Term, or, in the case of a termination, which would have been due
for the remainder of the Term had such Term not been sooner terminated as a result of the Event of
Default. For these purposes, the discount rate to be used for purposes of calculating the present
value shall be the average rate established and announced for United States Treasury Bills, with a
maturity of thirteen weeks at the four weekly auctions held immediately prior to the date that
Landlord obtained possession of the Premises. Landlord shall, however, account to you for the net
rents received by Landlord from reletting on a monthly basis only if you have paid to Landlord the
damages recoverable by Landlord from you as provided for herein and only to the extent of such
payments.

     15.04 Landlord’s Self Help Remedy. If an Event of Default occurs and if Landlord
elects not to reenter the Premises to take possession, then notwithstanding, Landlord shall have
the right to enter upon the Premises, without being liable for prosecution or any claim for damages
therefore, and do whatever you were obligated to do under the terms of this Lease to cure the Event
of Default, and you agree to reimburse Landlord on demand for any expenses which Landlord may incur
in thus effecting compliance with your obligations under this Lease, and you further agree that
Landlord shall not be liable for any damages resulting to you from such action, whether caused by
the negligence of Landlord or otherwise.

     15.05 Late Charges/NSF Checks. If you fail to pay any installment of Rent hereunder
as when such installment is due, or if you fail to pay any additional rent or any other payment
required to be made by you to Landlord hereunder, then to help defray the additional cost to
Landlord for processing such late payment, you agree to pay to Landlord a late charge in an amount
equal to five (5%) percent of such installment or payment. The provision for such late charge
shall be in addition to all of Landlord’s other rights and remedies hereunder or at law and shall
not be construed as liquidated damages or as limiting Landlord’s remedies in any manner. If your
check, given to Landlord in payment, is returned by the bank for non-payment, you agree to pay all
expenses incurred by Landlord as a result thereof.

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     15.06 Waiver. No waiver by Landlord of an Event of Default by you shall be deemed a
waiver of any other, term, covenant or condition hereof, or of any subsequent Event of Default by
you of the same or any other term, covenant or condition hereof. If Landlord executes this Lease
and delivers a counterpart original to you prior to your tender of any payments required hereunder
including prepaid Rent and Security Deposit, such action shall not be deemed to be a waiver of the
requirement for immediate payment of the prepaid Rent and Security Deposit and Landlord shall have
the right to declare an immediate Event of Default for your failure to tender the prepaid Rent and
Security Deposit if not paid within three days of receipt of demand from Landlord (which demand may
be made in the transmittal letter or transmittal memo enclosing the executed counterpart of the
Lease).

ARTICLE XVI

RIGHTS RESERVED TO LANDLORD

     In addition to any other rights reserved to Landlord pursuant to this Lease, Landlord reserves
and may exercise the following rights without affecting your obligations hereunder: (a) to change
the name or the street address of the Building or the Development; and (b) to install and maintain
a sign or signs on the exterior of the Building or the Development.

ARTICLE XVII

omitted

ARTICLE XVIII

ESTOPPEL STATEMENT, SUBORDINATION AND ATTORNMENT

     18.01 Estoppel Statement. You shall, without charge, at any time and from time to
time, within ten (10) days after receipt by you of written request made by Landlord or made by any
Superior Mortgagee (or prospective Superior Mortgagee), deliver a duly executed and acknowledged
certificate or statement to the party requesting said certificate or statement or to any other
person, firm, corporation or other entity designated by Landlord, certifying: (a) that this Lease
is unmodified and in full force and effect, or, if there has been any modification, that the same
is in full force and effect as modified, and stating any such modification; (b) the Commencement
Date and Expiration Date of this Lease; (c) that Rent is paid currently without any offset or
defense thereto; (d) the dates to which Rent has been paid, and the amount of Rent, if any, paid in
advance; (e) whether or not there is then existing any claim of Landlord’s default hereunder and,
if so, specifying the nature thereof; and (f) any other information relating to the status of this
Lease as shall be reasonably requested; provided that, in fact, such facts are accurate and
ascertainable.

     18.02 Subordination. You are accepting this Lease subject and subordinate to any
mortgage and/or deed of trust now or at any time hereafter constituting a lien or charge upon the
Building or the Premises, without the necessity of any act or execution of any additional
instrument of subordination; provided, however, that if the mortgagee, trustee, or holder of any
such mortgage or deed of trust elects to have your interest in this Lease superior to any such
instrument, then by notice to you from such mortgagee, trustee or holder, this Lease shall be
deemed superior to such lien, whether this Lease was executed before or after said mortgage or deed
of trust. You shall at any time within ten days of demand, execute any instruments,

27

 

releases or other documents which may be required by any Superior Mortgagee for the purpose of
evidencing the subjection and subordination of this Lease to the lien of any such mortgage or for
the purpose of evidencing the superiority of this Lease to the lien of any such mortgage as may be
the case.

     18.03 Attornment. If a Superior Mortgagee or any other party succeeds to the interest
of Landlord under the Lease in any manner, including but not limited to foreclosure, exercise of
any power of sale, succession by deed in lieu or other conveyance (a “Succession”), then
upon written notice from the Superior Mortgagee or other party succeeding to the interest of
Landlord under the Lease (the “New Landlord”), you will attorn to and be bound to the New
Landlord upon such Succession and will recognize the New Landlord as the landlord under the Lease.
Such attornment is effective and self-operative without the execution of any further instrument.
Upon the request of the New Landlord, you will sign and deliver any instruments reasonably
requested to evidence such attornment. You waive the provisions of any statute or rule of law, now
or hereafter in effect, which may give or purport to give you any right or election to terminate or
otherwise adversely affect the Lease and your obligations hereunder as a result of any such
Succession. Upon any Succession, the New Landlord shall not be (a) liable for any act or omission
of the Landlord under the Lease occurring prior to the Succession, (b) subject to any offsets or
defenses which you may have against Landlord arising or occurring prior to the Succession, or (c)
bound by any rent or additional rent which you may have paid to Landlord for more than the current
month.

     18.04 Superior Mortgagee Cure Rights. No act or failure to act on the part of
Landlord which would entitle you, under the express terms of this Lease or by law, to be relieved
of your obligations under this Lease or to terminate this Lease, shall result in a release of such
obligations or a termination of this Lease unless: (i) You have given notice by certified mail,
return receipt requested, to the Superior Mortgagee; and (ii) you offer the Superior Mortgagee an
opportunity to cure such default within thirty (30) days next following receipt of such notice, or
if such default cannot be cured within thirty days, to commence to cure the default within the
thirty day period and to proceed diligently thereafter to cure the default.

     18.05 Remedies. Your failure to execute any statements or instruments necessary or
desirable to effectuate the foregoing provisions of this Article within the time limits specified
in this Article (which time limits are not subject to any grace period), shall constitute an Event
of Default. In the event of such failure, Landlord, in addition to any other rights or remedies it
might have, shall have the right by not less than ten (10) days’ notice to you to declare this
Lease terminated and the term ended, in which event this Lease shall cease and terminate on the
date specified in such notice with the same force and effect as though the date set forth in such
notice were the date originally set forth herein and fixed for the expiration of the term; upon
such termination you shall vacate and surrender the Premises, but shall remain liable for all
obligations arising during the original stated term as provided in this Lease by reason of said
Event of Default.

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ARTICLE XIX

MECHANICS LIENS

     You (the Tenant) shall have no authority, express or implied, to create or place any lien or
encumbrance of any kind or nature whatsoever upon, or in any manner to bind the interests of
Landlord in the Premises or to charge the rentals payable hereunder for any claim in favor of any
person dealing with you, including those who may furnish materials or perform labor for any
construction or repairs and nothing contained in this Lease shall be construed as a consent on the
part of the Landlord to subject the estate of the Landlord to liability under the Construction Lien
Law of the State of Florida, it being expressly understood that the Landlord’s estate shall not be
subject to liens for improvements made by you and each such claim shall affect and each such lien
shall attach to, if at all, only the leasehold interest granted to you by this instrument. You
covenant and agree that you will pay or cause to be paid all sums legally due and payable by you on
account of any labor performed or materials furnished in connection with any work performed on the
Premises on which any lien is or can be validly and legally asserted against its leasehold interest
in the Premises or the improvements thereon and that you will save and hold Landlord harmless from
any and all loss, cost or expense based on or arising out of asserted claims or liens against the
leasehold estate or against the right, title and interest of the Landlord in the Premises or under
the terms of this Lease. You agree to give Landlord immediate written notice if any lien or
encumbrance is placed on the Premises.

     Notwithstanding any provision of this Lease relating to improvements, additions, alterations,
repairs or reconstruction of or to the Premises, you and the Landlord each agree and confirm that:
(i) Landlord has not consented nor will Landlord ever consent to the furnishing of any labor or
materials to the Premises that would or may result in any mechanic’s or materialman’s lien
attaching to Landlord’s interest in the Premises; (ii) you are not the agent of Landlord for the
purposes of any such improvements, additions, alterations, repairs or reconstruction; and (iii)
except as expressly provided herein, Landlord has retained no control over the manner in which any
such improvements, additions, alterations, repairs or reconstruction are accomplished, and has made
no agreement to make or be responsible for any payment to or for the benefit of any person
furnishing labor or materials in connection therewith. No one furnishing labor or materials to or
for your account shall be entitled to claim any lien against the interest of Landlord in the
Premises and such entities shall look solely to you and your leasehold interest under this Lease
for the satisfaction of any such claims.

     You shall be liable for all taxes levied or assessed against personal property, furniture or
fixtures placed by you in the Premises. If any such taxes for which you are liable are levied or
assessed against Landlord or Landlord’s property and if Landlord elects to pay the same or if the
assessed value of Landlord’s property is increased by inclusion of personal property, furniture or
fixtures placed by you in the Premises, and Landlord elects to pay the taxes based on such
increase, you shall pay to Landlord upon demand that part of such taxes.

29

 

ARTICLE XX

NOTICES

     Each provision of this instrument or of any applicable governmental laws, ordinances,
regulations and other requirements with reference to the sending, mailing or delivery of any notice
shall be deemed to be complied with when and if the following steps are taken:

          (a) Unless specifically stated to the contrary in this Lease, any notice, demand, request or
other instrument which may be or is required to be given by you under this Lease or by law shall be
in writing and sent by United States certified mail, return receipt requested, postage prepaid or
by recognized overnight delivery service, and shall be deemed to have been given upon receipt of
same by Landlord (or delivery refused); or, if required to be given by Landlord under this Lease or
by law, such notice, demand, request or other instrument shall be in writing and sent by United
States certified mail, return receipt requested, postage prepaid, by recognized overnight delivery
service, by personal delivery or by other comparably reliable means, and shall be deemed to have
been given upon receipt of same by you (or delivery refused); and shall be addressed (a) if to
Landlord c/o C.B. Richard Ellis, Inc., 2100 Park Central Boulevard North, Suite 900, Pompano Beach,
Florida 33064 or at such other address as Landlord may designate by written notice, together with
copies thereof to such other parties designated by Landlord; or (b) if to you at the Premises
address, or such other address as you shall designate by written notice, provided, however, prior
to the Commencement Date, notices to you shall be sent to you at 2901 Simms Street, Hollywood,
Florida 33020.

          (b) If and when included within the term “Landlord”, or “Tenant”, as used in this instrument,
there is more than one person, firm or corporation, all shall jointly arrange among themselves for
their joint execution of such a notice specifying some individual at some specific address for the
receipt of notices and payments. All parties included within the terms “Landlord” and “Tenant”
respectively, shall be bound by notices given in accordance with the provisions of this paragraph
to the same effect as if each had received such notice.

ARTICLE XXI

MISCELLANEOUS

     21.01 Words of any gender used in this Lease shall be held or construed to include any other
gender, and words in the singular number shall be held to include the plural, unless the context
otherwise requires.

     21.02 The terms, provisions and covenants and conditions contained in this Lease shall apply
to, inure to the benefit of, and be binding upon, the parties hereto and upon their respective
heirs, legal representatives, successors and permitted assigns, except as otherwise herein
expressly provided. Landlord shall have the right to assign any of its rights and obligations under
this Lease and Landlord’s grantee or Landlord’s successor, as the case may be, shall upon such
assignment, become Landlord hereunder, thereby freeing and relieving the grantor or assignor, as
the case may be, of all covenants and obligations of Landlord hereunder so long as the grantee or
successor has assumed in writing Landlord’s obligations hereunder arising from and after the date
of transfer. Nothing herein contained shall give any other tenant in the Building any enforceable
rights either against Landlord or you as a result of the covenants and obligations of

30

 

either party set forth herein. If there is more than one tenant, your obligation shall be
joint and several. Any indemnification of, insurance of, or option granted to Landlord shall also
include or be exercisable by Landlord’s agents and employees.

     21.03 The captions inserted in this Lease are for convenience only and in no way define, limit
or otherwise describe the scope or intent of this Lease, or any provision hereof, or in any way
affect the interpretation of this Lease.

     21.04 This Lease constitutes the entire understanding and agreement between you and the
Landlord with respect to the subject matter of this Lease, and contains all of the covenants and
agreements of Landlord and you with respect thereto. You and the Landlord each acknowledge that no
representations, inducements, promises or agreements, oral or written, have been made by Landlord
or you, or anyone acting on behalf of Landlord or you, which are not contained herein, and any
prior agreements, promises, negotiations, or representations not expressly set forth in this Lease
are of no force or effect. You have not relied upon any representation of Landlord or its agents,
other than items contained in this Lease, as an inducement to enter into this Lease. No
alteration, amendment, change or addition to this Lease shall be binding upon Landlord or you
unless reduced to writing and signed by each party (which signatures may be by facsimile
transmission and such facsimile transmission shall be deemed to be an original as to any such
alteration, amendment, change or addition to this Lease).

     21.05 All of your obligations not fully performed as of the expiration or earlier termination
of the term of this Lease shall survive the expiration or earlier termination of the term,
including without limitation, all payment obligations with respect to Operating Costs and all
obligations concerning the condition of the Premises. Upon the expiration or earlier termination
of the term, and prior to you vacating the Premises, you shall pay to Landlord any amount
reasonably estimated by Landlord as necessary to put the Premises, including without limitation
heating and air conditioning systems and equipment therein, in its Exit Condition. Any work
required to be done by you prior to your vacation of the Premises which has not been completed upon
such vacation, shall be completed by Landlord and billed to you at cost, which cost may include any
construction management fee required to be paid by Landlord to Landlord’s property manager. You
shall also, prior to vacating the Premises, pay to Landlord the amount, as estimated by Landlord,
of your obligation hereunder for Operating Costs. All such amounts shall be used and held by
Landlord for payment of your obligations hereunder, with you being liable for any additional costs
therefore upon demand by Landlord, or with any excess to be returned to you after all such
obligations have been determined and satisfied, as the case may be.

     21.06 If any clause, provision or portion of this Lease or the application thereof to any
person or circumstance shall be invalid or unenforceable under applicable law, such event shall not
affect, impair or render invalid or unenforceable the remainder of this Lease nor any other clause,
phrase, provision or portion hereof, nor shall it affect the application of any clause, phrase,
provision or portion hereof to other persons or circumstances, and it is also the intention of the
parties to this Lease that in lieu of each such phrase, provision or portion of this Lease that is
invalid or unenforceable, there be added as a part of this Lease, a clause, phrase, provision or
portion which is valid.

31

 

     21.07 Submission of this Lease shall not be deemed to be a reservation of the Premises.
Landlord shall not be bound hereby until its delivery to you of an executed copy hereof signed by
Landlord, already having been signed by you, and until such delivery Landlord reserves the right to
exhibit and lease the Premises to other prospective tenants. Execution of this Lease by you shall
be irrevocable for a period of ten business days immediately following delivery to Landlord.
Notwithstanding anything contained herein to the contrary Landlord may withhold delivery of
possession of the Premises from you until such time as you have paid to Landlord any Prepaid Rent
as required hereunder, and any other sums required hereunder and delivered to Landlord the
certificate(s) of insurance required to be provided by you hereunder.

     21.08 Time is of the essence of this Lease. However, whenever a period of time is herein
prescribed for the taking of any action by Landlord or you, then Landlord or you, as applicable,
shall not be liable or responsible for, and there shall be excluded from the computation of such
period of time, any delays due to a Force Majeure Event. The provisions of the immediately
preceding sentence shall not, however, extend the due date of the payment of any Rent or any other
payment required to be made pursuant to this Lease nor shall the provisions of the immediately
preceding sentence extend the time period during which any right granted under this Lease, if any,
to extend, terminate early or expand may be exercised.

     21.09 If Landlord desires to finance, refinance, or sell the Building, the Development or any
part thereof, you agree to, at the request of Landlord, deliver to any potential lender or
purchaser designated by Landlord such financial statements of yours as may be reasonably required
by such lender or purchaser, including but not limited to your financial statements for the past 3
years. All such financial statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

     21.10 Each party represents and warrants to the other that such party has dealt with no
broker, agent or other person in connection with this transaction, and that no broker, agent or
other person brought about this transaction, other than Landlord’s Broker and Tenant’s Broker and
each party agrees to indemnify and hold the other harmless from and against any and all claims to
pay any other broker, agent or other person claiming a commission or other form of compensation by
virtue of having dealt with such party with regard to this leasing transaction.

     21.11 Landlord and you each waive trial by jury in any action, proceeding or counterclaim
brought by either of the parties against the other on any matter arising out of or in any way
connected with this Lease, the relationship of Landlord and you or your use and occupancy of the
Premises.

     21.12 If any party brings an action or proceeding to enforce the terms hereof or declare
rights hereunder, the prevailing party in any such proceeding shall be entitled to reasonable
attorneys’ fees and court costs.

     21.13 This Lease may be executed in multiple counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same document.

     21.14 The parties acknowledge that each has read this Lease, consulted with an attorney
regarding its terms, and agrees with its terms as though that party had drafted this Lease itself.

32

 

The parties agree that although this Lease was, by necessity, printed and assembled by
Landlord and drafted by Landlord’s attorney, this Lease reflects the terms as agreed to by the
parties and that if a term or provision of this Lease is considered ambiguous, neither party shall
be considered the draft person for the purpose of causing the terms of this Lease to be construed
against that party.

ARTICLE XXII

PUBLIC ACCOMMODATION LAWS

     Responsibility for compliance of the Premises with any and all Public Accommodation Laws is
hereby allocated among the parties as follows: (i) Landlord shall be responsible for providing
that the Common Areas and the Interior Modifications are in compliance with the Public
Accommodations Laws; and (ii) you shall be responsible for compliance with the Public
Accommodations Laws with respect to any special use of the Premises by you and with respect to any
alterations or improvements made to the Premises by you. You agree to complete any and all
alterations, modifications or improvements to the Premises necessary in order to comply with all
Public Accommodation Laws during the term of this Lease if the responsibility for compliance has
been allocated to you under this Section. Each party shall indemnify, defend and hold harmless the
other from and against any and all claims, liabilities, fines, penalties, losses and expenses,
including attorneys fees, arising in connection with such party’s failure to comply with the
provisions of this Section. Notwithstanding, Landlord’s indemnification obligation under this
Section shall not be binding upon a Superior Mortgagee or the successor or assign of a Superior
Mortgagee.

ARTICLE XXIII

ENVIRONMENTAL MATTERS

     23.01 Environmental Matters. You hereby agree that: (i) no activity will be
conducted on the Premises that will produce any Hazardous Substance, except for such activities
that are part of the ordinary course of your business (the “Permitted Activities”) provided
said Permitted Activities are conducted in accordance with all Environmental Laws and provided that
you have obtained all applicable permits and licenses; (ii) the Premises will not be used in any
manner for the storage of any Hazardous Substances except for the temporary storage of such
materials that are used in the ordinary course of your business (the “Permitted Materials”)
provided such Permitted Materials are properly labeled and stored in a manner and location meeting
all Environmental Laws; (iii) no portion of the Premises or the common areas of the Development
will be used by you as a landfill or dump; (iv) you will not install any underground tanks of any
type within the Development; (v) you will not install any generator or above ground tank of any
type within the Development without the express written consent of Landlord, which consent may be
given in Landlord’s sole and absolute discretion; (vi) you will not cause any surface or subsurface
conditions to exist or come into existence that constitute, or with the passage of time may
constitute, a public or private nuisance; (vii) you will not bring any Hazardous Substances onto
the Premises, except for the Permitted Materials and if so brought or found located thereon, the
same shall be immediately removed, with proper disposal, and all required cleanup procedures shall
be diligently undertaken pursuant to all Environmental Laws. If, at any time during or after the
term of this Lease, the Premises is found to be so contaminated or subject to said conditions, you
agree to indemnify and hold Landlord harmless from all claims,

33

 

demands, actions, liabilities, costs, expenses, damages and obligations of any nature arising
from or as a result of the use of the Premises by you. The foregoing indemnification shall survive
the termination or expiration of this Lease.

     23.02 Environmental Audit; Right of Entry. Landlord shall have the right to require
you to undertake and submit to Landlord a periodic environmental audit from an environmental
company approved by Landlord, which audit shall cover your compliance with this Section. You shall
promptly comply with all requirements of such audit and cure all matters raised therein at your
sole cost. You agree to grant to all interested governmental agencies reasonable access to the
Premises. Notwithstanding the preceding, the cost of the environmental audit will be paid for by
Landlord except and unless the environmental report reflects one or more breaches of your
environmental covenants under this Lease.

     23.03 RADON GAS. Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to persons who are
exposed to it over time. Levels of radon that exceed federal and state guidelines have been found
in buildings in Florida. Additional information regarding radon and radon testing may be obtained
from your county health department.

ARTICLE XXIV

SPECIAL MATTERS

     24.01 Building and Common Area Refurbishments. Prior to the Commencement Date or as
soon thereafter as is practical, Landlord will pressure clean the exterior of the Building and
Landlord will seal-coat and re-stripe the parking area serving the Building and upgrade (as
determined by Landlord in Landlord’s reasonable discretion) the landscaping in front of the
Building and at the entrance to the Development.

34

 

     Each and every term and provision of this Lease and all exhibits attached hereto, is agreed to
by you, the Tenant, on January 26, 2006.

	 	 	 	 	 	 
	 	

MAKO SURGICAL CORP., a Delaware 
corporation
	 	

 
	
(Witnesses as to Tenant)

 	 
	/s/
Jeanette Levine 

	 
	
 	 
	 

	 
	 	By:  	/s/
Fritz La Porte
 	 
	 	 	Print Name:	 

	 	 	Print Title:	 

	 

Each and every term and provision of this Lease and all exhibits attached hereto, is agreed to by
the Landlord on , 2006.

	 	 	 	 	 
	 	
WESTPORT BUSINESS PARK ASSOCIATES
 LLP, a Florida
limited liability partnership

	
(Witnesses as to Landlord)

	 	
By: Argent Point, Inc., a Florida corporation as an

authorized partner

	/s/ 

	 
	
 	 
	 

	 
	 	By:  	/s/
Jack Azout
 	 
	 	 	Jack Azout, President 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	By: Stone Point, Inc., a Florida corporation as an

authorized partner

 	 
	/s/ 

	 
	
 	 
	 

	 
	 	By:  	/s/
Erwin Sredni
 	 
	 	 	Erwin Sredni, president 	 
	 	 	 	 

35

 

	 	 	 	 	 

EXHIBITS TO ATTACH:

	 	 	 
	Exhibit A

	 	Site Plan of Development
	Exhibit B

	 	Location of Premises Within Building
	Exhibit C-1

	 	Space Plan
	Exhibit C-2

	 	Scope of Work
	Exhibit D

	 	Moveout Standards

36EX-10.1

 

Exhibit __________

 

 

      

      

      

				
	 	 
	 	 
	TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Eligibility
	 	 	1	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	How the Plan Works
	 	 	2	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Your Individual Target Incentive
	 	 	2	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Weighting the Measures
	 	 	3	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Measuring Performance
	 	 	4	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Performance Multipliers
	 	 	4	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Performance Measures
	 	 	5	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Corporate Performance
	 	 	5	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Business Unit Performance
	 	 	6	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Individual Performance
	 	 	7	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Summary — Total Award Calculation
	 	 	8	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Appendix
	 	 	9	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Business Unit Plan Components
	 	 	9	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Administrative Details
	 	 	10	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Definition of Common Terms
	 	 	11	 	 	 	 	 

 

 

				
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

	 	 	 
	 

	 	 	 
	 	 
	 	1

AMERICAN GREETINGS

KEY MANAGEMENT

ANNUAL INCENTIVE PLAN

This brochure provides an overview of the Key Management Annual Incentive Plan — a valuable
component of your total compensation package. It contains details about how the Plan rewards for
Corporate, Business Unit and Individual performance results. In addition, your Incentive
Compensation Statement — provided separately — includes information specific to your participation
in the plan: your assigned business unit and sub-business unit if any, your target

incentive percentage and detailed examples of the incentive calculation under different performance
scenarios. Together, these documents provide the information you need to understand the Plan so you
can maximize your annual incentive award.

n ELIGIBILITY

You are eligible to participate in the Key Management Annual Incentive Plan if you are a Key
Manager or Officer in one of the following primary business units and you do not participate in
another Company-sponsored annual incentive plan:

      

	 	 	 	 	 	 
	 	PRIMARY BUSINESS UNIT	 	 	PARTICIPANTS	 
	 	 	 	 	 	 
	 	Corporate Consolidated

	 	 	Chairman, Chief Executive Officer, President and	 
	 	 

	 	 	Chief Operating Officer and other Section 16	 
	 	 

	 	 	Executive Officers	 
	 	 	 	 	 	 
	 	Total Social Expressions Group (SEG)

	 	 	Associates who are part of:	 
	 	 

	 	 	AGI In Store	 
	 	 

	 	 	Business Intelligence	 
	 	 

	 	 	Canada	 
	 	 

	 	 	Carlton Mexico	 
	 	 

	 	 	Carlton Retail	 
	 	 

	 	 	Corporate Staff (Delta, Finance, HR, ISD, Legal)	 
	 	 

	 	 	Creative	 
	 	 

	 	 	DesignWare & Specialty SBU	 
	 	 

	 	 	Everyday & Seasonal Cards	 
	 	 

	 	 	Field Sales	 
	 	 

	 	 	Field Sales Operations (FSO)	 
	 	 

	 	 	Gift Packaging & Holiday SBU	 
	 	 

	 	 	Global Sourcing	 
	 	 

	 	 	Inbound Licensing	 
	 	 

	 	 	Invention Lab	 
	 	 

	 	 	Plants	 
	 	 

	 	 	All other North American Greeting Card	 
	 	 

	 	 	  Division units	 
	 	 	 	 	 	 
	 	AG Intellectual Properties Group

	 	 	AGIP Corporate Staff	 
	 	 	 	 	 	 
	 	AG Interactive

	 	 	AG Interactive associates	 
	 	 	 	 	 	 
	 	AG Properties

	 	 	AG Properties associates	 
	 	 	 	 	 	 
	 	UK Greetings

	 	 	UK Greetings associates	 
	 	 	 	 	 	 
	 	John Sands Group

	 	 	John Sands Group associates	 
	 	 	 	 	 	 
	 
	Key Managers include individuals in Key Manager 1 and Key Manager 2 job levels. Officers
include Corporate-level Executive Directors, Vice Presidents, Senior Vice Presidents, President and
Chief Operating Officer, Chief Executive Officer, Chairman of the Board and any other job level(s)
that may be designated.

 

 

	 	 	 	 
	 

	 	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

	 	 	 	 
	2

	 	 	 

n HOW THE PLAN WORKS

The Key Management Annual Incentive Plan rewards participants for their contributions to
American Greetings success over a 12-month fiscal year. The Plan rewards for successful results in
three key performance areas:

	§	 	Corporate Performance. At the beginning of each fiscal year, the American Greetings
Board of Directors approves the corporate earnings per share (EPS) goal for the year. Actual
corporate results are compared to this goal at the end of the fiscal year.
	 
	§	 	Business Unit Performance. Every year, each business unit develops an earnings goal —
which is approved by the Board of Directors — based on its strategic direction, business
opportunities and growth projections. Business unit performance is based on actual fiscal year
earnings results for your assigned business unit compared to goal.
	 
	§	 	Individual Performance. Your manager will determine your individual performance
compared to your objectives for the year. Your actual fiscal year-end performance rating
determines the percentage of the target individual incentive amount you earn.

At the end of each fiscal year, incentive amounts are determined based on performance in these
three areas and are added together to determine your total Key Management Annual Incentive Plan
award.

The total award — which is paid in cash — can range from 0% to 200% of your individual target
incentive. This provides significant incentive earnings opportunity when performance in one or more
of these performance areas exceeds expectations.

Let’s take a look at the components of the Plan and how they work.

YOUR INDIVIDUAL TARGET INCENTIVE

At the beginning of each fiscal year, an individual target incentive is established for you based
on your job level. This target incentive is typically communicated as a percentage of your base
earnings but may also be expressed as a dollar amount, determined by multiplying your base earnings
by your target incentive percentage as follows:

The target incentive represents what you would earn if each performance measure in this incentive
plan (Corporate, Business Unit and Individual) were achieved at 100% of goal (i.e., all components
achieve their target performance).

	 	 	 
	 

	 	 

	 

	 	EXAMPLE
	 
	 	 
	 

	 	For example, assume Joe is a Key Manager 1 with base earnings of $60,000. His target incentive
under the Plan is 10%, or $6,000 ($60,000 x 10% = $6,000).
	 
	 	 
	 

	 	We’ll refer to Joe throughout this brochure as we describe how the Plan works.
	 

	 	 

 

 

	 	 	 	 	 	 
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN	 	 	 	 
	 
	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 

	 	 	 	3	 
	 
	 	 	 	 	 

WEIGHTING THE MEASURES

Performance measures are weighted by job level to reflect the degree to which positions within a
job level can affect performance in each of the three performance measurement areas. Accordingly,
associates at higher job levels — who have more impact on the achievement of corporate objectives —
have more weight assigned to the corporate performance measure. Lower job levels, in contrast, have
more weight assigned to the business unit performance measure.

The following chart shows the specific weightings for each job level for fiscal year 2008.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	FISCAL YEAR 2008 WEIGHTINGS
	 	JOB LEVEL	 	 	Corporate	 	 	Business Unit	 	 	Individual
	 	 	 	 	 	 	 	 	 	 	 
	 	Chairman of the Board, CEO, President
and COO, Senior Vice Presidents and other
Section 16 Executive Officers
	 	 	30%	 	 	40%	 	 	30%
	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 	Vice Presidents, Executive Directors,
Key Managers 2, Key Managers 1
	 	 	20%	 	 	50%	 	 	30%
	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

 
EXAMPLE

Joe, a Key Manager 1 with base earnings of $60,000 and a 10% incentive target, would have the
following set of performance measure weightings and target incentive awards:

	Corporate            Business Unit            Individual            Total
Key Manager 1 Weightings 20% 50% 30% 100%

	Joe’s Target Incentive 2% 5% 3% 10% (Percent of Base Earnings) (10% x 20%) (10% x 50%) (10% x
30%)

	Joe’s Target Incentive ($) $1,200$3,000$1,800 $6,000
($ 60,000 x 2%) ($60,000 x 5%) ($60,000 x 3%)

      

 

 

	 	 	 	 
	 	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	 
	 	 	 
	 	 	 	 
	 
	 	 	 
	4
	 	 	 
	 
	 	 	 

MEASURING PERFORMANCE

At the beginning of each fiscal year, the American Greetings Board of Directors approves the
corporate earnings per share (EPS) goal for the coming year. This goal provides the context within
which each business unit then sets its earnings goal.

Corporate and business unit actual earnings performance is determined at the end of the fiscal year
and expressed as a percentage of the earnings goal. In contrast, individual results are evaluated
by your manager at fiscal year-end and communicated as an individual performance rating. If the
corporation’s or your business unit’s results exceed or fall below the earnings goal, Plan payouts
are adjusted.

PERFORMANCE THRESHOLD

The corporate performance threshold is 90% of the fiscal year earnings goal.

	 	n	 	Below Target Performance. If actual earnings results do not meet a minimum level of
performance — the performance threshold — no incentive award is earned for that performance
measure. Earnings results that fall between threshold and goal result in a reduced incentive
award.
	 
	 	n	 	Target Performance. When actual results meet the earnings goal, you receive 100% of
the target incentive award for that performance measure.
	 
	 	n	 	Above Target Performance. When actual results exceed the earnings goal, you can
receive up to 200% of the targeted incentive award for that performance measure.

As described above, there is a precise relationship between actual earnings results and the
corresponding incentive award. As performance rises or falls, so does your incentive award. But how
much your award changes as performance varies is determined by something called a performance
multiplier, which is discussed in the following section.

PERFORMANCE MULTIPLIERS

The performance multiplier is used to calculate the corporate and business unit incentive awards
when performance is above or below goal, provided the performance thresholds have been achieved.

Corporate and business unit performance incrementally increase your incentive award for performance
above goal. They also incrementally decrease your incentive award for performance below goal.

For example, a multiplier of 4 means that for every 1% increase or decrease in the percentage of
goal achieved, there is a corresponding 4% increase or decrease in the percentage of target
incentive earned.

The formula below illustrates the role of the performance multiplier in determining the adjustment
that is made to your incentive target based on actual performance achieved.

	Example of a performance adjustment when the percent of goal achieved is 105% and the
performance multiplier is 4

	100% + ( 4x 5% ) = 120%

	Target            Performance Results Above Performance Performance            Multiplier            Goal            Adjustment

Important Note: Business unit performance multipliers vary by business unit. The multiplier
assigned to your business unit is provided in your fiscal year 2008 Incentive Plan Statement. A
list of all business unit multipliers is provided in the Appendix.

 

 

	 	 	 	 	 	 
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN	 	 	 	 
	 
	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 

	 	 	 	5	 
	 
	 	 	 	 	 

	n	 	PERFORMANCE MEASURES

CORPORATE PERFORMANCE

Corporate performance is based on fiscal year-end corporate earnings per share compared to goal.
Minimum performance of 90% of goal must be attained before any incentive is earned. From that point
forward, incentive awards are determined using a performance multiplier of 4 as illustrated in the
example below.

      

	CORPORATE PERFORMANCE

	+

	BUSINESS UNIT
PERFORMANCE

	+

	INDIVIDUAL PERFORMANCE

EXAMPLE

Joe is a KM1 with $60,000 in base earnings. Let’s assume corporate EPS performance at
year-end is 105% of goal. Joe’s corporate incentive award is calculated in three steps:

	 	1.	 	Determine the corporate performance adjustment factor
	 
	 	2.	 	Apply the corporate performance adjustment to Joe’s target incentive percentage for the
corporate component
	 
	 	3.	 	Multiply the result by Joe’s base earnings

	100% + ( 4 x 5% ) = 120%

	Target Performance Corporate Results Above Goal Performance Adjustment
Performance Multiplier

	CORPORATE INCENTIVE Joe’s Target
Incentive 2%

	Performance Adjustment x 120% Joe’s Base Earnings
x $60,000 Joe’s Incentive Earned = $1,440

      

 

 

	 	 	 	 
	 	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	 
	 	 	 
	 	 	 
	 
	 	 	 
	6
	 	 	 
	 
	 	 	 

BUSINESS UNIT PERFORMANCE

Business unit performance is based on fiscal year-end earnings results compared to goal. All
associates are assigned to a primary business unit. However, some will also be assigned to a
sub-business unit based on business conditions and American Greetings strategic priorities.

Business unit and sub-business unit performance measures will vary, but your primary business unit
measure will be one of the following:

	 	n	 	Business Unit Pro Forma Earnings Before Interest and Taxes (Business Unit Pro Forma
EBIT), or
	 
	 	n	 	Corporate Earnings Before Interest and Taxes (Corporate EBIT).

Earnings are charged/credited for any variation from plan in Net Capital Employed at the weighted
average cost of capital. Performance is based on fiscal year-end earnings compared to goal.

The incentive is earned when the performance threshold for the primary business unit (or
sub-business unit, where applicable) is achieved.

	n	 	The performance threshold for all primary and sub-business units, except for Carlton
Cards Retail, is 90% of goal.
	 
	n	 	The performance threshold for Carlton Cards Retail is 60% of goal.

A listing of each business unit’s and sub-business unit’s assigned earnings measure(s) and
performance multipliers are provided in the Appendix. An example of the calculation of this
incentive follows.

	CORPORATE PERFORMANCE

	+

	BUSINESS UNIT
PERFORMANCE

	+

	INDIVIDUAL PERFORMANCE

      

EXAMPLE

Joe is a KM1 with $60,000 in base earnings. Let’s assume his Business Unit has a
performance multiplier of 4 and that its performance at year-end is 96% of goal. Joe’s
business unit incentive award is calculated in three steps:

	 	1.	 	Determine the business unit performance adjustment
	 
	 	2.	 	Apply the business unit performance adjustment to Joe’s target incentive percentage for
the business unit component
	 
	 	3.	 	Multiply the result by Joe’s base earnings

	100% + ( 4 x — 4% ) = 84%

	Target Performance Business Unit Results Below Goal Business Unit
Performance Multiplier Performance Adjustment

	BUSINESS UNIT INCENTIVE Joe’s Target
Incentive 5%

	Performance Adjustment x 84% Joe’s Base Earnings x
$60,000 Joe’s Incentive Earned = $2,520

     

 

 

			
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

	 
	 
	 	7
	 
	 

INDIVIDUAL PERFORMANCE

At the end of the fiscal year, managers assess each participant’s performance compared to
other participants within the business unit. Managers determine the degree to which the
participants achieve the goals and job expectations defined at the beginning of the year.

Managers rank participants based on their relative performance and determine the actual
performance rating based on these rankings and the targeted percentage of participants for
each rating.

	§	 	Participants who receive an
“Exceeds Expectations” performance
rating receive the target incentive for
the individual performance measure
multiplied by 150%. In certain
circumstances, this target can be
increased to 200%1.
	 
	§	 	Participants who receive a “Meets
Expectations” rating will receive 100% of
their target individual incentive.
	 
	§	 	Participants who receive an
“Improvement Expected/ Performance Below
Peer Level” rating will not receive an
individual performance incentive and will
only receive 50% of any incentive
otherwise earned.

If corporate earnings performance is below the
performance threshold, only those associates with
a performance rating of “Exceeds Expectations”
may receive awards for the individual performance
measure.

	§	 	Participants who receive an
“Exceeds Expectations” performance
rating will receive 50% of the target
incentive payable for the individual
performance component.

	§	 	Participants who receive a “Meets
Expectations” or “Improvement Expected/Below
Peer Level” performance rating will not
receive any portion of the individual
performance incentive.

If you are a senior executive officer, please
refer to the fiscal year 2008 Addendum to the
Individual Performance Component, included with
your personalized Incentive Compensation
Statement, for a complete description of how
individual performance under the Key Management
Annual Incentive Plan applies to you.

The following schedule shows how individual amounts will be adjusted based on individual
performance.

 

		
	1 	Managers can, at their discretion, increase the Individual Payout Percentage to
200% for associates rated as “Exceeds Expectations” who demonstrate an extraordinary level of
performance. Accomplishments must be the result of extraordinary effort and initiative that go well
beyond the contributions of other associates rated as “Exceeds Expectations.” The number of persons
eligible to receive an Individual Payout Percentage of 200% may not exceed one-third of the total
number of associates rated as “Exceeds Expectations.”

 

 

			
	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

	8	 
	 
	 
	 

n SUMMARY—TOTAL AWARD CALCULATION

At the end of American Greetings fiscal year, corporate, business unit and individual
results are evaluated and your total incentive award is calculated.

	 	 	 	 	 
	EXAMPLE	 	 	 
	 
	The following example shows how Joe’s actual incentive award is calculated based on the assumptions that were used throughout this brochure:
	 
	 	JOE’S
ASSUMPTIONS	 	PERFORMANCE
ASSUMPTIONS
	 
	 	Base Earnings:	$60,000	Corporate:	105% of Goal
	 
	 	Individual Target Percentage: 	10%	Business Unit:	96% of Goal
	 
	 	Individual Target Incentive:	$6,000	Individual:	Exceeds Expectations

 

 

			
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

	 
	 
	 	9
	 
	 

n APPENDIX

The following section provides additional details about the plan, including details
about the business units, their performance measures and performance multipliers.

Please note that some plan participants will have their business unit incentive determined based
on performance in two areas. Details about the weightings and performance multipliers for these
measures are shown below and on your personalized Incentive Compensation Statement, as
appropriate.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	BUSINESS UNIT COMPONENTS
	 	BUSINESS UNIT/	 	 	PERFORMANCE	 	 	 	 	 	 	 	 	 	 	 	 	PERFORMANCE	 
	 	PARTICIPANTS	 	 	MEASURE	 	 	WEIGHT	 	 	MULTIPLIER	 
	 		 	 	Primary Unit	 	 	Sub Unit	 	 	Primary Unit	 	 	Sub Unit	 	 	Primary Unit	 	 	Sub Unit	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Corporate Consolidated
Chairman, CEO, President
and COO and Section 16
Executive Officers

	 	 	Corporate EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Business Intelligence, 

Canada, Carlton Mexico, 

Corporate Staff (Delta, 

Finance, HR, ISD, Legal), 

Creative, DesignWare &

Specialty SBU, Everyday

& Seasonal Cards, Field 

Sales, FSO, Gift Packaging 
& Holiday SBU, 

Global Sourcing, Invention 

Lab, Plants, all other 

North American Greeting 

Card Division units

	 	 	Total SEG(1)
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Inbound Licensing

	 	 	Total SEG(1)
	 	 	AG Interactive pro forma EBIT
	 	 	 	50	%	 	 	 	50	%	 	 	 	4	 	 	 	 	2	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AGI In Store

	 	 	Total SEG(1)
	 	 	AGI In Store pro forma EBIT
	 	 	 	50	%	 	 	 	50	%	 	 	 	4	 	 	 	 	2	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Carlton Cards Retail

	 	 	Total SEG(1)
	 	 	Carlton Cards Retail pro forma EBIT
	 	 	 	25	%	 	 	 	75	%	 	 	 	4	 	 	 	 	1	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AG Intellectual Properties

Group – Corporate Staff

	 	 	AG Interactive pro forma EBIT +

AG Properties pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AG Interactive

	 	 	AG Interactive pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AG Properties

	 	 	AG Properties pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	UK Greetings

	 	 	UK Greetings pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	John Sands Group

	 	 	John Sands Group pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	(1)	 	Total SEG = NAGCD pro forma EBIT (includes Carlton Mexico pro forma EBIT, Retail
Eliminations and Corporate Expense) + Carlton Cards Retail pro forma EBIT + AGI In Store pro forma
EBIT

 

 

			
	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

	10	 
	 
	 
	 

ADMINISTRATIVE DETAILS

If your employment status changes, your Plan
participation and any payouts may be affected as
described below.

	§	 	New Hires. If you are hired
during the Plan year —defined as the
American Greetings fiscal year ending
February 29, 2008 — and are eligible to
participate in the Key Management Annual
Incentive Plan, you will receive a
prorated incentive payout based on the
period of time you participated in the
Plan and your base earnings during that
time.
	 
	§	 	Promotions and Transfers. If you
are promoted or you move from one business
unit to another during the Plan year, your
individual target incentive, base earnings,
business unit goal and corresponding
performance multiplier may change. If any of
these do change, your incentive will be
calculated based on the targets, base
earnings, plan provisions and actual
performance for each business unit you
participated in on a prorated basis basis
and rounded to the nearest full month.
	 
	§	 	Termination. If you voluntarily
or involuntarily leave American Greetings
before the completion of the Plan year,
you will forfeit your Key Management
Annual Incentive Plan award for that
fiscal year.
	 
	§	 	Retirement, Leave of Absence,
Disability, Death. If your employment
ends during the Plan year because you
elect to retire after age 60, or if you
take a leave of absence, suffer a
permanent disability or die, your
incentive payout will be prorated to the
nearest full month based on the actual
period you participated in the Plan
during the year.
	 
	 	 	An associate will be deemed to
suffer a permanent disability only in the
following circumstances: (A) where an
associate is absent from employment with
American Greetings due to his or her
inability to engage in any substantial
gainful activity by reason of any medically
determinable physical or mental impairment,
which either can be expected to result in
death, or can be expected to last for a
continuous period of not less than 12
months; or (B) where an associate is
scheduled

	 	 	to receive income replacement benefits for a
period of not less than 3 months under an
accident and health plan covering American
Greetings associate on account of a medically
determinable physical or mental impairment that
can be expected to result in death or last for
a continuous period of not less than 12 months.
	 
	§	 	Incentive Payout. Incentive
payouts earned in fiscal year 2008 will be
paid to participants within two and
one-half months following the end of fiscal
2008, typically within 60 days after the
end of the fiscal year. Incentive payouts
are subject to normal tax withholding at a
standardized rate and will be deposited to
a bank account of your choice.
	 
	§	 	It is the intent that incentive
payouts fall under the short-term deferral
rules of Section 409A of the Internal
Revenue Code to exempt the payment of such
Key Management Annual Incentive Plan
benefits from the requirements of Section
409A.
	 
	§	 	Calculating Payouts. For
computation purposes, financial goals
and actual performance results are
rounded to the nearest $1,000. The
percent of the financial goal achieved
and the percent of target bonus earned
is rounded to the nearest one-tenth of
one percent. The actual incentive payout
is rounded to the nearest dollar.
	 
	§	 	Omnibus Incentive Plan. The Key
Management Annual Incentive Plan is
governed by the American Greetings
Corporation 2007 Omnibus Incentive
Compensation Plan, as such plan may be
amended from time to time. In the event of
a conflict between the Key Management
Annual Incentive Plan and the Omnibus
Incentive Plan, the terms of the Omnibus
Incentive Plan will govern.
	 
	§	 	Questions. If you have questions
about the Key Management Annual Incentive
Plan and how it works, please contact your
manager. Your manager will work with you
to ensure you understand the Plan so you
can maximize your annual incentive.

 

 

			
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

	 
	 
	 	11
	 
	 

DEFINITION OF COMMON TERMS

The following provides definitions of some common
terms used throughout this brochure. Capitalized
terms used herein that are not defined will have
the meaning set forth in the Omnibus Incentive
Plan.

	§	 	Base Earnings. Your base earnings
are defined as your base salary earned
during the fiscal year. Base earnings
exclude health and welfare benefits, bonus,
commission, and incentive payments, overtime
and other indirect compensation. Base
earnings for Plan participants outside of
the U.S. may be defined differently and may
vary by country.
	 
	§	 	Business Unit EBIT. A business unit’s
earnings before interest and taxes.
	 
	§	 	Business Unit Pro Forma EBIT. A
business unit’s earnings before interest and
taxes, charged/credited for any variation
from plan in Net Capital Employed at the
weighted average cost of capital.
	§	 	Corporate Earnings Per Share (EPS).
Corporate earnings per share is measured at the
end of the fiscal year and is calculated as
corporate pre-tax income minus taxes divided by
the total number of planned shares outstanding
as calculated on a fully diluted basis.

	§	 	Corporate Earnings Before Interest and
Taxes (Corporate EBIT). Consolidated corporate
earnings before interest and taxes,
charged/credited for any variation from plan in
Net Capital Employed at the weighted average
cost of capital.
	 
	§	 	Fiscal Year. March 1 through
February 28 or 29 of the following
calendar year.
	 
	§	 	Net Capital Employed (NCE). Assets
(minus cash and LIFO reserve) minus liabilities
(not including interest-bearing debt,
inter-company payables and income taxes).

 

 

blank page

 

 

Nothing in this brochure or in any individual Incentive Compensation Statement should be construed
to create or imply any contract of employment between an associate and American Greetings and its
subsidiaries or to create any binding contractual right to payment of any specific amount under the
American Greetings Key Management Annual Incentive Plan. The provisions of this brochure describe
the general guidelines used by American Greetings in determining the benefits payable to Plan
participants; however, in every case, American Greetings reserves the right to reduce or eliminate
the amount that would otherwise be payable to a participant or participants under such guidelines
where it determines, in its discretion, that such a reduction is necessary or appropriate, in light
of the participant’s performance or other relevant business circumstances.

American Greetings reserves the right to terminate or make changes to the Plan, including
retroactively, at any time without prior notice to any of the Plan’s participants (provided, that
no amendment to the Plan adopted more than 90 days after the beginning of the applicable fiscal
year may have the effect of increasing the amount that is or could be payable under the guidelines
set forth herein for such fiscal year to any participant who is a “covered employee” of American
Greetings as defined in section 162(m)(3) of the Internal Revenue Code). In the case of our
executive officers, the Board of Directors (or committee thereof), and in the case of all other
participants, the Board of Directors (or committee thereof), the Chief Executive Officer and the
Chairman are the only persons who have the authority to alter or amend this Plan. Any such
alteration or amendment must be done in writing. No participant should rely on an alteration or
amendment to this Plan unless it is made in writing and signed by the Chief Executive Officer or
the Chairman.

 

 

 

 

SENIOR EXECUTIVE OFFICER

ADDENDUM TO INDIVIDUAL PERFORMANCE COMPONENT OF

FY2008 AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

Individual Performance

Notwithstanding the description of the Individual Performance component included in the brochure
(the “Plan Brochure”) outlining the Fiscal 2008 Key Management Annual Incentive Plan, the
Individual Performance component of American Greetings Key Management Annual Incentive Plan for all
Senior Executive Officers of American Greetings, including the Corporation’s Chairman, Chief
Executive Officer, President and Chief Operating Officer, Senior Vice Presidents and other Section
16 officers (collectively the “Senior Executive Officers”) is modified by this Addendum as
follows:

	 	§	 	A new performance rating of “Satisfactory” has been added to categorize the
achievement of goals and objectives at an overall performance level that is greater than
the “Improvement Expected / Performance Below Peer Level” performance rating, but less
than the “Meets Expectations” rating.
	 
	 	§	 	There is not a specified target for the percentage of officers to be rated
either as “Satisfactory” or “Meets Expectations”; however, on a combined basis, the
targeted percentage of Senior Executive Officers to be rated “Meets Expectations” or
“Satisfactory” is 60%.

Accordingly, as with all participants in the Key Management Annual Incentive

Plan, at the end of
the fiscal year, managers assess each participant’s performance compared to other participants
within the business unit. Managers determine the degree to which the participants achieve the goals
and job expectations defined at the beginning of the year.

Managers rank participants based on their relative performance and determine actual performance
ratings based on these rankings and the targeted percentage of participants for each rating.

	 	§	 	For Senior Executive Officers, the targeted percentage of participants for the
“Exceeds” Performance rating is 30%; the targeted percentage for the “Meets Expectations”
or “Satisfactory” performance ratings on a combined basis is 60%; and the targeted
percentage for the “Improvement Expected / Performance Below Peer Level” is 10%. (See
chart on the following page.)
	 
	 	§	 	As with other participants, Senior Executive Officers who receive an “Exceeds
Expectations” performance rating receive the target incentive for the individual
performance measure multiplied by 150%. In certain circumstances, this target can be
increased to 200%. (1) 
	 
	 	§	 	As with other participants, Senior Executive Officers who receive a

 

 

	 	 	 	“Meets Expectations” rating will receive 100% of their target individual incentive.
	 
	 	§	 	Senior Executive Officers who receive a “Satisfactory” rating
will receive 50% of their target individual incentive.
	 
	 	§	 	As with other participants, Senior Executive Officers who receive an
“Improvement Expected / Performance Below Peer Level” rating will not receive an
individual performance incentive and will only receive 50% of any incentive otherwise
earned.

As with other participants, if corporate earnings performance is below the performance threshold,
only those Senior Executive Officers with a performance rating of “Exceeds Expectations” may
receive awards for the individual performance measure.

	 	§	 	Participants, including Senior Executive Officers, who receive an “Exceeds
Expectations” performance rating, will receive 50% of the target incentive payable for the
individual performance component.
	 
	 	§	 	Senior Executives who receive a “Meets Expectations”, “Satisfactory”, or
“Improvement Expected / Below Peer Level” performance rating will not receive any portion
of the individual performance incentive.

The following schedule shows how individual amounts will be adjusted based on individual
performance.

(1) As with other participants, managers can, at their discretion, increase the
Individual Payout percentage to 200% for associates, including Senior Executive Officers, rated as
“Exceeds Expectations” who demonstrate an extraordinary level of performance. Accomplishments must
be the result of extraordinary effort and initiative that go well beyond the contribution of other
associates rated as “Exceeds Expectations”. The number of persons eligible to receive an
Individual Payout Percentage of 200% may not exceed one-third of the total number of Senior
Executives rated as “Exceeds Expectations”.

Except as set forth in this Addendum, the description of the Key Management Annual Incentive
Plan included in the Plan Brochure remains unchanged. In the event of a conflict between the terms
described in the Plan Brochure and this Addendum, the terms set forth in this Addendum will govern.

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