Document:

exv10w25

Exhibit 10.25

AMENDMENT NO. 1 AND AGREEMENT

     This AMENDMENT NO. 1 AND AGREEMENT (the “Amendment”) dated as of March 19, 2009 (the
“Effective Date”) is among Callon Petroleum Company, a Delaware corporation
(“Borrower”), the Lenders (as defined below), and Union Bank of California, N.A., as
Administrative Agent and as Issuing Lender (as each such terms are defined below).

RECITALS

     A. The Borrower is party to that certain Second Amended and Restated Credit Agreement dated as
of September 25, 2008 (as amended, modified or supplemented from time to time, the “Credit
Agreement”) among the Borrower, the lenders party thereto from time to time (the
“Lenders”), and Union Bank of California, N.A., as administrative agent (in such capacity,
the “Administrative Agent”) and as issuing lender (in such capacity, the “Issuing
Lender”).

     B. The Borrower, the Lenders, the Issuing Lender and the Administrative Agent wish to, subject
to the terms and conditions of this Amendment, make certain amendments to the Credit Agreement as
provided herein.

     THEREFORE, the Borrower, the Lenders, the Administrative Agent and the Issuing Lender hereby
agree as follows:

     Section 1. Defined Terms. As used in this Amendment, each of the terms defined in the
opening paragraph and the Recitals above shall have the meanings assigned to such terms therein.
Each term defined in the Credit Agreement and used herein without definition shall have the meaning
assigned to such term in the Credit Agreement, unless expressly provided to the contrary.

     Section 2. Other Definitional Provisions. Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this Amendment, unless
otherwise specified. All references to instruments, documents, contracts, and agreements are
references to such instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise specified. The words
“hereof”, “herein”, and “hereunder” and words of similar import when used in this Amendment shall
refer to this Amendment as a whole and not to any particular provision of this Amendment. The term
“including” means “including, without limitation,”. Paragraph headings have been inserted in this
Amendment as a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Amendment and shall not be used in the interpretation of any
provision of this Amendment.

     Section 3. Amendments to Credit Agreement.

          (a) Section 1.01 (Defined Terms). Section 1.01 of the Credit Agreement is hereby
amended by adding the following new terms in alphabetical order:

     "Amendment No. 1 Effective Date” means March 19, 2009.

 

 

     "Monthly Borrowing Base Reduction Amount” has the meaning specified in Section
2.02(e).

          (b) Section 2.02 (Borrowing Base). Section 2.02 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:

     Section 2.02 Borrowing Bases.

     (a) Borrowing Bases. The Borrowing Base in effect as of the Amendment
No. 1 Effective Date has been set by the Administrative Agent and the Lenders and
acknowledged by the Borrower as $48,000,000; the Conforming Borrowing Base in effect
as of the date of the Amendment No. 1 Effective Date has been set by the
Administrative Agent and the Lenders and acknowledged by the Borrower as
$48,000,000; the Monthly Borrowing Base Reduction Amount in effect as of the
Amendment No. 1 Effective Date has been set by the Administrative Agent and the
Lenders and acknowledged by the Borrower as $4,330,000. Such Borrowing Base and
Conforming Borrowing Base shall remain in effect until each is reduced pursuant to
Section 2.02(e). The Borrowing Base, the Conforming Borrowing Base and the Monthly
Borrowing Base Reduction Amount shall each be determined in accordance with the
standards set forth in Section 2.02(d) and are subject to periodic redetermination
pursuant to Sections 2.02(b) and 2.02(c).

     (b) Calculation of the Borrowing Base, the Conforming
Borrowing Base and the Monthly Borrowing Base Reduction Amount.

     (i) The Borrower shall deliver to the Administrative Agent and each of
the Lenders on or before each March 31, beginning March 31, 2010, an
Independent Engineering Report dated effective as of the immediately
preceding January 1, and such other information as may be reasonably
requested by any Lender with respect to the Borrowing Base Properties
included or to be included in the Borrowing Base and the Conforming
Borrowing Base. Upon receipt of such information, the Administrative Agent
shall, in the normal course of business (but in any event within 30 days
after receipt of such information), propose to the Lenders a new (A)
Borrowing Base (for purposes of this subsection, the “Proposed Borrowing
Base”), (B) Conforming Borrowing Base (for purposes of this subsection, the
“Proposed Conforming Borrowing Base”) and (C) Monthly Borrowing Base
Reduction Amount (for purposes of this subsection, the “Proposed Monthly
Borrowing Base Reduction Amount”). After having received notice of such
proposal, the Lenders shall have 14 days to agree or disagree with the
Proposed Borrowing Base, the Proposed Conforming Borrowing Base and the
Proposed Monthly Borrowing Base Reduction Amount. If at the end of the 14
days, any Lender has not communicated its approval or disapproval to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base, the Proposed Conforming Borrowing Base and the
Proposed Monthly Borrowing Base Reduction Amount. If at the end of such 14
days, the Required Lenders (or all of the Lenders if (A) the

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Borrowing Base and/or the Conforming Borrowing Base is to be increased
or (B) the Proposed Monthly Borrowing Base Reduction Amount is to be
decreased) have approved or have been deemed to have approved the Proposed
Borrowing Base, the Proposed Conforming Borrowing Base and the Proposed
Monthly Borrowing Base Reduction Amount, then the Proposed Borrowing Base,
the Proposed Conforming Borrowing Base and the Proposed Monthly Borrowing
Base Reduction Amount shall become the new Borrowing Base, Conforming
Borrowing Base and Monthly Borrowing Base Reduction Amount, effective on the
date specified in Section 2.02(b)(iii). To the extent that within such 14
day period the Administrative Agent has not received the requisite number of
approvals from the Lenders, the requisite number of Lenders shall, within a
reasonable period of time, agree on a new Borrowing Base, Conforming
Borrowing Base and Monthly Borrowing Base Reduction Amount. Notwithstanding
anything herein to the contrary, if no Conforming Borrowing Base is
determined pursuant to this Section 2.02, the Borrowing Base as determined
pursuant to this Section 2.02 shall also be the Conforming Borrowing Base.

     (ii) The Borrower shall deliver to the Administrative Agent and each
Lender on or before (x) each June 30, beginning June 30, 2009, an Internal
Engineering Report dated effective as of the immediately preceding April 1,
(y) each September 30, beginning September 30, 2009, an Internal Engineering
Report dated effective as of the immediately preceding July 1, and (z) each
December 31, beginning December 31, 2009, an Internal Engineering Report
dated effective as of the immediately preceding October 1, and, in each
case, such other information as may be reasonably requested by the
Administrative Agent with respect to the Borrowing Base Properties included
or to be included in the Borrowing Base and the Conforming Borrowing Base.
Upon receipt of such information, the Administrative Agent shall, in the
normal course of business (but in any event within 30 days after receipt of
such information), propose to the Lenders a new (A) Borrowing Base (for
purposes of this subsection, the “Proposed Borrowing Base”), (B) Conforming
Borrowing Base (for purposes of this subsection, the “Proposed Conforming
Borrowing Base”), and (C) Monthly Borrowing Base Reduction Amount (for
purposes of this subsection, the “Proposed Monthly Borrowing Base Reduction
Amount”). After having received notice of such proposal, the Lenders shall
have 14 days to agree or disagree with the Proposed Borrowing Base, the
Proposed Conforming Borrowing Base and the Proposed Monthly Borrowing Base
Reduction Amount. If at the end of the 14 days, any Lender has not
communicated its approval or disapproval to the Administrative Agent, such
silence shall be deemed to be an approval of the Proposed Borrowing Base,
the Proposed Conforming Borrowing Base and the Proposed Monthly Borrowing
Base Reduction Amount. If at the end of such 14 days, the Required Lenders
(or all of the Lenders if (A) the Borrowing Base and/or the Conforming
Borrowing Base is to be increased or (B) the Proposed Monthly Borrowing

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Base Reduction Amount is to be decreased) have approved or have been
deemed to have approved the Proposed Borrowing Base, the Proposed Conforming
Borrowing Base and the Proposed Monthly Borrowing Base Reduction Amount,
then the Proposed Borrowing Base, the Proposed Conforming Borrowing Base and
the Proposed Monthly Borrowing Base Reduction Amount shall become the new
Borrowing Base, Conforming Borrowing Base and Monthly Borrowing Base
Reduction Amount, effective on the date specified in Section 2.02(b)(iii).
To the extent that within such 14 day period the Administrative Agent has
not received the requisite number of approvals from the Lenders, the
requisite number of Lenders shall, within a reasonable period of time, agree
on a new Borrowing Base, Conforming Borrowing Base and Monthly Borrowing
Base Reduction Amount. Notwithstanding anything herein to the contrary, if
no Conforming Borrowing Base is determined pursuant to this Section 2.02,
the Borrowing Base as determined pursuant to this Section 2.02 shall also be
the Conforming Borrowing Base.

     (iii) After a redetermined Borrowing Base, Conforming Borrowing Base
and Monthly Borrowing Base Reduction Amount is approved or deemed approved
by the Required Lenders or all of the Lenders, as applicable, the
Administrative Agent shall notify the Borrower of the amount of the
redetermined Borrowing Base, Conforming Borrowing Base and Monthly Borrowing
Base Reduction Amount, and such amounts shall become the Borrowing Base, the
Conforming Borrowing Base and the Monthly Borrowing Base Reduction Amount,
effective and applicable to the Borrower and, subject to the other
provisions of this Agreement, shall be the basis on which the Borrowing
Base, the Conforming Borrowing Base and the Monthly Borrowing Base Reduction
Amount shall thereafter be calculated until (a) with respect to the
Borrowing Base and the Conforming Borrowing Base, each is reduced pursuant
to Section 2.02(e) or redetermined in accordance with the other provisions
of this Section 2.02, and (b) with respect to the Monthly Borrowing Base
Reduction Amount, the effective date of the next redetermination of the
Monthly Borrowing Base Reduction Amount as set forth in this Section 2.02.

     (iv) In the event that the Borrower does not furnish to the
Administrative Agent and the Lenders the Independent Engineering Report,
Internal Engineering Report or other information specified in clauses (i)
and (ii) above by the date specified therein, the Administrative Agent and
the Lenders may nonetheless redetermine the Borrowing Base, the Conforming
Borrowing Base, and the Monthly Borrowing Base Reduction Amount and
redesignate the Borrowing Base, the Conforming Borrowing Base and the
Monthly Borrowing Base Reduction Amount from time-to-time thereafter in
their sole discretion until the Administrative Agent and the Lenders receive
the relevant Independent Engineering Report, Internal Engineering Report, or
other information, as applicable, whereupon the Administrative Agent and the
Lenders shall redetermine the Borrowing Base, the Conforming

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Borrowing Base and the Monthly Borrowing Base Reduction Amount as otherwise
specified in this Section 2.02.

     (v) Each delivery of an Engineering Report by the Borrower to the
Administrative Agent and the Lenders shall constitute a representation and
warranty by the Borrower to the Administrative Agent and the Lenders that,
except as expressly disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 5.06 or otherwise, (A) the Borrower and
the Guarantors, as applicable, own the Borrowing Base Properties specified
therein with at least 80% (by value) of the Proven Reserves covered therein
subject to an Acceptable Security Interest and free and clear of any Liens
(except Permitted Liens), and (B) on and as of the date of such Engineering
Report each Borrowing Base Property described as “proved developed” therein
was developed for oil and gas, and the wells pertaining to such Borrowing
Base Properties that are described therein as producing wells (“Wells”),
were each producing oil and gas in paying quantities, except for Wells that
were utilized as water or gas injection wells or as water disposal wells or
wells temporarily shut-in for workovers or other repairs in the ordinary
course of business.

     (c) Interim Redetermination. In addition to the Borrowing Base
redeterminations provided for in Section 2.02(b), the Administrative Agent and the
Lenders may (i) in their sole discretion make one additional redetermination of the
Borrowing Base, the Conforming Borrowing Base and the Monthly Borrowing Base
Reduction Amount during any six-calendar month period and (ii) at the request of the
Borrower make one additional redetermination of the Borrowing Base, the Conforming
Borrowing Base and the Monthly Borrowing Base Reduction Amount during any
six-calendar month period, and in any case, based on such information as the
Administrative Agent and the Lenders deem relevant (but in accordance with Section
2.02(d)). Additionally, the Administrative Agent and the Lenders may request an
additional redetermination in connection with any sale or proposed sale of Borrowing
Base Properties of the Borrower or any Guarantor having a market value of $5,000,000
or more to the extent any such sale is permitted by this Agreement. The party
requesting the redetermination shall give the other party at least 10 days’ prior
written notice that a redetermination of the Borrowing Base, the Conforming
Borrowing Base and the Monthly Borrowing Base Reduction Amount pursuant to this
paragraph (c) is to be performed. In connection with any redetermination of the
Borrowing Base, the Conforming Borrowing Base and the Monthly Borrowing Base
Reduction Amount under this Section 2.02(c), the Borrower shall provide the
Administrative Agent and the Lenders with such information regarding the Borrower
and the Guarantors’ business (including its Borrowing Base Properties, the Proven
Reserves attributable thereto, and production relating thereto) as the
Administrative Agent may request, including an updated Independent Engineering
Report. The Administrative Agent shall promptly notify the Borrower in writing of
each redetermination of the Borrowing Base, the Conforming Borrowing Base and the
Monthly Borrowing Base Reduction Amount pursuant to this Section

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2.02(c) and the amount of the Borrowing Base, the Conforming Borrowing Base and
the Monthly Borrowing Base Reduction Amount as so redetermined.

     (d) Standards for Redetermination. Each redetermination of the
Borrowing Base, the Conforming Borrowing Base and the Monthly Borrowing Base
Reduction Amount by the Administrative Agent and the Lenders pursuant to this
Section 2.02 shall be made (i) in the sole discretion of the Administrative Agent
and the Lenders (but in accordance with the other provisions of this Section
2.02(d)), (ii) in accordance with the Administrative Agent’s and the Lenders’
customary internal standards and practices for valuing and redetermining the value
of Oil and Gas Properties in connection with reserve based oil and gas loan
transactions, (iii) in conjunction with the most recent Independent Engineering
Report or Internal Engineering Report, as applicable, or other information received
by the Administrative Agent and the Lenders relating to the Proven Reserves of the
Borrower and the Guarantors, and (iv) based upon the estimated value of the Proven
Reserves owned by the Borrower and the Guarantors as determined by the
Administrative Agent and the Lenders. In valuing and redetermining the Borrowing
Base, the Conforming Borrowing Base and the Monthly Borrowing Base Reduction Amount,
the Administrative Agent and the Lenders may also consider the business, financial
condition, and Debt obligations of the Borrower and its Subsidiaries and such other
factors as the Administrative Agent and the Lenders customarily deem appropriate,
including without limitation, commodity price assumptions, projections of
production, operating expenses, general and administrative expenses, capital costs,
working capital requirements, liquidity evaluations, dividend payments,
environmental costs, and legal costs. In that regard, the Borrower acknowledges
that the determination of the Borrowing Base and the Conforming Borrowing Base each
contains an equity cushion (market value in excess of loan value), which is
essential for the adequate protection of the Administrative Agent and the Lenders.
No Proven Reserves shall be included or considered for inclusion in either the
Borrowing Base or the Conforming Borrowing Base unless the Administrative Agent and
the Lenders shall have received, at the Borrower’s expense, evidence of title
satisfactory in form and substance to the Administrative Agent and evidence
satisfactory to the Administrative Agent that the Administrative Agent has an
Acceptable Security Interest in the Borrowing Base Properties relating thereto
pursuant to the Security Instruments and subject to Section 5.10 of this Agreement.
At all times after the Administrative Agent has given the Borrower notification of a
redetermination of the Borrowing Base and the Conforming Borrowing Base under this
Section 2.02, the Borrowing Base and the Conforming Borrowing Base shall be equal to
the redetermined amount or such lesser amount designated by the Borrower and
disclosed in writing to the Administrative Agent and the Lenders until the Borrowing
Base and the Conforming Borrowing Base are reduced pursuant to Section 2.02(e).

     (e) Monthly Borrowing Base Reduction Amount. The Borrowing Base and the
Conforming Borrowing Base shall each be reduced as of the first day of each calendar month
by an amount determined by the Lenders pursuant to this Section 2.02 (the “Monthly

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Borrowing Base Reduction Amount”) as the Monthly Borrowing Base Reduction Amount;
provided that the first such reduction shall not occur until June 1, 2009.

          (c) Section 5.06 (Reporting Requirements). Section 5.06 of the Credit Agreement is
hereby amended by (1) deleting “and” at the end of clause (q), (2) changing clause (r) to clause
(u), and (3) inserting the following new clauses (r), (s) and (t) in appropriate order:

     (r) Monthly Budget. As soon as available and in any event not later than 25
days after the end of each calendar month, commencing April 1, 2009, a monthly budget for
the 12 months following such calendar month end setting forth the Borrower’s projections for
production volumes, revenues, expenses, taxes and budgeted capital expenditures during such
period;

     (s) Monthly Cash Flow Statements. As soon as available and in any event not
later than 25 days after the end of each calendar month, commencing April 1, 2009, the
Borrower’s cash flow statement for the preceding month and the calendar year to date,
showing a comparison of the actual results to the monthly budget delivered pursuant to
clause (r) for such period;

     (t) Entrada Report. As soon as available and in any event not later than 25
days after the end of each calendar month, a report, in form and substance satisfactory to
the Administrative Agent and certified by a Responsible Officer of the Borrower, detailing
any material changes occurring during the preceding month which affect any of the Entrada
Entities; and

          (d) Section 7.01(d) (Cross-Default). Section 7.01(d) of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:

(d) Cross-Defaults. (i) The Borrower, any Guarantor or any of their
respective Subsidiaries shall fail to pay any principal of or premium or interest on
its Debt (other than the CIECO Debt) which is outstanding in a principal amount of
at least $5,000,000 individually or when aggregated with all such Debt of the
Borrower, any Guarantor or any of their respective Subsidiaries so in default (but
excluding Debt evidenced by the Notes) when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Debt; (ii) any other
event shall occur or condition shall exist under any agreement or instrument
relating to Debt (including, without limitation, any event of default or termination
event under any Interest Rate Agreement or Hydrocarbon Hedge Agreement but excluding
any event of default under the CIECO Loan Documents) which is outstanding in a
principal amount (or termination payment amount or similar amount) of at least
$5,000,000 individually or when aggregated with all such Debt of the Borrower, such
Guarantor or such Subsidiary so in default, and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or (iii) any

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Debt (other than the CIECO Debt) shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof; provided that for purposes of this
paragraph (d), the “principal amount” of the obligations in respect of Hedging
Contracts at any time shall be the aggregate amount (giving effect to any netting
agreements) that would be required to be paid if such Hedging Contracts were
terminated at such time;

          (e) Section 7.01(e) (Insolvency). Section 7.01(e) of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:

(e) Insolvency.

     (i) The Borrower, any Guarantor or any of their respective Subsidiaries (other
than any Entrada Entity) shall admit in writing its inability to, or be generally
unable to, pay its debts as such debts become due;

     (ii) The Borrower, any Guarantor or any of their respective Subsidiaries (other
than any Entrada Entity) shall (A) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (B) make a general assignment for
the benefit of its creditors, (C) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (D) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up, liquidation or composition or readjustment of debts, (E) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Federal Bankruptcy Code,
or (F) take any corporate action for the purpose of effecting any of the foregoing;
or

     (iii) A proceeding or case shall be commenced, without the application or
consent of the Borrower, any Guarantor or any of their respective Subsidiaries
(other than any Entrada Entity), as applicable, in any court of competent
jurisdiction, seeking (A) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (B) the appointment of
a trustee, receiver, custodian, liquidator or the like of the Borrower, any
Guarantor or any of their respective Subsidiaries (other than any Entrada Entity) of
all or any substantial part of its respective assets, (C) similar relief in respect
of the Borrower, any Guarantor or any of their respective Subsidiaries (other than
any Entrada Entity) under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue unstayed
and in effect, for a period of 60 days, or (D) an order for relief against the
Borrower, any Guarantor or any of their respective Subsidiaries (other than any
Entrada Entity) shall be entered in an involuntary case under the Federal Bankruptcy
Code;

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          (f) Section 7.01(f) (Judgments). Section 7.01(f) of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:

     (f) Judgments. Any judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against (i) the Borrower, any Guarantor or any of their
respective Subsidiaries (other than any Entrada Entity) and either (A) enforcement
proceedings shall have been commenced by any creditor upon such judgment or order or
(B) there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect, or (ii) any Entrada Entity and such judgment or order allows
any party recourse to the Borrower, any Guarantor or any of their respective
Subsidiaries (other than the Entrada Entities) or their respective assets (other
than the Entrada Assets) in order to satisfy such judgment or to comply with such
order;

          (g) Section 9.01 (Amendments, Etc.). Clause (b) of Section 9.01(a) of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:

(b) (i) increase the Borrowing Base, the Conforming Borrowing Base or the
Commitments of the Lenders or (ii) decrease the Monthly Borrowing Base Reduction
Amount,

     Section 4. Representations and Warranties. Each of the Borrower and the Guarantor
represents and warrants that: (a) the representations and warranties contained in the Credit
Agreement and the representations and warranties contained in the other Loan Documents are true and
correct in all material respects on and as of the Effective Date as if made on as and as of such
date, except to the extent that any such representation or warranty expressly relates solely to an
earlier date, in which case such representation or warranty is true and correct in all material
respects as of such earlier date; (b) no Default has occurred and is continuing; (c) the execution,
delivery and performance of this Amendment are within the corporate power and authority of such
Person and have been duly authorized by appropriate corporate action and proceedings; (d) this
Amendment constitutes the legal, valid, and binding obligation of such Person enforceable in
accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally and general principles of
equity; (e) there are no governmental or other third party consents, licenses and approvals
required in connection with the execution, delivery, performance, validity and enforceability of
this Amendment; (f) the Liens under the Security Instruments are valid and subsisting and secure
Borrower’s obligations under the Loan Documents; (g) as to the Borrower, it has made Investments in
the Entrada Entities in an aggregate amount equal to $63,089,455 as of the Effective Date; and (h)
as to the Guarantor, it has no defenses to the enforcement of its Guaranty.

     Section 5. Conditions to Effectiveness. This Amendment shall become effective on the
Effective Date and enforceable against the parties hereto upon the occurrence of the following
conditions precedent:

          (h) The Administrative Agent shall have received multiple original counterparts, as requested
by the Administrative Agent, of this Amendment duly and validly executed and

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delivered by duly authorized officers of the Borrower, the Administrative Agent, the Issuing
Lender and the Lenders.

          (i) No Default shall have occurred and be continuing as of the Effective Date.

          (j) The representations and warranties in this Amendment shall be true and correct in all
material respects.

          (k) The Borrower shall have paid all costs and expenses which have been invoiced and are
payable pursuant to Section 9.04 of the Credit Agreement.

     Section 6. Acknowledgments and Agreements.

          (l) The Borrower acknowledges that on the date hereof all Obligations are payable without
defense, offset, counterclaim or recoupment.

          (m) The Administrative Agent, the Issuing Lender and the Lenders hereby expressly reserve all
of their rights, remedies, and claims under the Loan Documents. Nothing in this Amendment shall
constitute a waiver or relinquishment of (i) any Default or Event of Default under any of the Loan
Documents, (ii) any of the agreements, terms or conditions contained in any of the Loan Documents,
(iii) any rights or remedies of the Administrative Agent, the Issuing Lender or any Lender with
respect to the Loan Documents, or (iv) the rights of the Administrative Agent, the Issuing Lender
or any Lender to collect the full amounts owing to them under the Loan Documents.

          (n) Each of the Borrower, the Administrative Agent, the Issuing Lender and the Lenders does
hereby adopt, ratify, and confirm the Credit Agreement, as amended hereby, and acknowledges and
agrees that the Credit Agreement, as amended hereby, is and remains in full force and effect, and
the Borrower acknowledges and agrees that its liabilities and obligations under the Credit
Agreement, as amended hereby, are not impaired in any respect by this Amendment.

          (o) From and after the Effective Date, all references to the Credit Agreement and the Loan
Documents shall mean such Credit Agreement and such Loan Documents as amended by this Amendment.

          (p) This Amendment is a Loan Document for the purposes of the provisions of the other Loan
Documents. Without limiting the foregoing, any breach of representations, warranties, and
covenants under this Amendment shall be a Default or Event of Default, as applicable, under the
Credit Agreement.

     Section 7. Reaffirmation of Guaranty. The Guarantor hereby ratifies, confirms,
acknowledges and agrees that its obligations under its Guaranty are in full force and effect and
that the Guarantor continues to unconditionally and irrevocably guarantee the full and punctual
payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of all of
the Guaranteed Obligations, as such Guaranteed Obligations may have been amended by this Amendment,
and its execution and delivery of this Amendment does not indicate or establish an approval or
consent

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requirement by the Guarantor in connection with the execution and delivery of amendments, consents
or waivers to the Credit Agreement or any of the other Loan Documents.

     Section 8. Counterparts. This Amendment may be signed in any number of counterparts,
each of which shall be an original and all of which, taken together, constitute a single
instrument. This Amendment may be executed by facsimile signature and all such signatures shall be
effective as originals.

     Section 9. Successors and Assigns. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns permitted pursuant to
the Credit Agreement.

     Section 10. Invalidity. In the event that any one or more of the provisions contained
in this Amendment shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other provision of this
Amendment.

     Section 11. Governing Law. This Amendment shall be deemed to be a contract made under
and shall be governed by and construed in accordance with the laws of the State of Texas.

     Section 12. RELEASE. THE BORROWER ACKNOWLEDGES THAT ON THE DATE HEREOF ALL
OBLIGATIONS ARE PAYABLE WITHOUT DEFENSE, OFFSET, COUNTERCLAIM OR RECOUPMENT. IN ADDITION, EACH OF
THE BORROWER, THE GUARANTOR AND EACH OF THEIR RESPECTIVE SUBSIDIARIES (FOR THEMSELVES AND THEIR
RESPECTIVE SUCCESSORS, AGENTS, ASSIGNS, TRANSFEREES, OFFICERS, DIRECTORS, EMPLOYEES, SHAREHOLDERS,
ATTORNEYS AND AGENTS) HEREBY RELEASES ANY AND ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES IT MAY
HAVE AGAINST THE ADMINISTRATIVE AGENT, ANY OF THE LENDERS, LEGAL COUNSEL TO THE ADMINISTRATIVE
AGENT OR ANY OF THE LENDERS, CONSULTANTS HIRED BY ANY OF THE FOREGOING, OR ANY OF THEIR RESPECTIVE
AFFILIATES, SUBSIDIARIES, SHAREHOLDERS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES,
SUCCESSORS OR ASSIGNS OF ANY KIND OR NATURE ARISING OUT OF, RELATED TO, OR IN ANY WAY CONNECTED
WITH, THE CREDIT AGREEMENT OR THE LOAN DOCUMENTS, IN EACH CASE WHICH MAY HAVE ARISEN ON OR BEFORE
THE DATE OF THIS AMENDMENT. EACH OF THE BORROWER, THE GUARANTOR AND THEIR RESPECTIVE SUBSIDIARIES
HEREBY ACKNOWLEDGES THAT IT HAS READ THIS AMENDMENT AND HAS CONFERRED WITH ITS COUNSEL AND ADVISORS
REGARDING ITS CONTENT, INCLUDING THIS SECTION 12, AND IS FREELY AND VOLUNTARILY ENTERING INTO THIS
AMENDMENT, AND HEREBY AGREES TO WAIVE ANY CLAIM THAT THE TERMS OF THIS AMENDMENT (INCLUDING,
WITHOUT LIMITATION, THE RELEASES CONTAINED HEREIN) ARE INVALID OR OTHERWISE UNENFORCEABLE.

     Section 13. Entire Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS
AMENDMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
PARTIES

11

 

HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR
ORAL, WITH RESPECT THERETO.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

12

 

     EXECUTED effective as of the date first above written.

	 	 	 	 	 
	BORROWER:                    	/s/ CALLON PETROLEUM COMPANY,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	GUARANTOR:                   	/s/ CALLON PETROLEUM OPERATING COMPANY, 

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Amendment No. 1 and Agreement

 

 

	 	 	 	 	 
	ADMINISTRATIVE AGENT/

ISSUING LENDER:	/s/ UNION BANK OF CALIFORNIA, N.A.,

as Administrative Agent and Issuing Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Amendment No. 1 and Agreement

 

 

	 	 	 	 	 
	LENDERS:	/s/ UNION BANK OF CALIFORNIA, N.A.,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Amendment No. 1 and Agreement

 

 

	 	 	 	 	 
	 	/s/ CAPITAL ONE, N.A., as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Amendment No. 1 and Agreement

 

 

	 	 	 	 	 
	 	/s/ REGIONS BANK, as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Amendment No. 1 and Agreementexv10wxby

EXHIBIT 10 (b)

			
	Re:	 	Parkway Centre I

2901 Dallas Parkway

Plano, Texas

SECOND AMENDMENT TO LEASE

	 	 	 	 	 
	THE STATE OF TEXAS

	 	§	 	 
	 

	 	§
	 	KNOW ALL MEN BY THESE PRESENTS:
	CITY OF PLANO

	 	§	 	 

     THIS SECOND AMENDMENT TO LEASE (this “Amendment”) has been executed as of (but not
necessarily on) the 31st day of December, 2008, by SUN LIFE ASSURANCE COMPANY OF CANADA,
a  Canadian corporation (“Landlord”), and INTERPHASE CORPORATION, a Texas corporation
(“Tenant”).

R E C I T A L S:

     A. Wedgewood Drive Partners, Ltd., a Texas limited partnership (“Original Landlord”)
and Tenant have heretofore executed that certain Office Lease Agreement (the “Original
Lease”) commencing as of October 1, 2002, as amended by Amendment to Office Lease Agreement
dated October 28, 2004 (the Original Lease, as so amended, is hereinafter referred to as the
“Lease”), pursuant to which Tenant leases approximately 22,228 rentable square feet in
Suite 200 (the “Premises”) of the above-referenced building, as more particularly described
in the Lease (the “Building”). Unless otherwise provided herein, capitalized words and
phrases shall have the meanings specified in the Lease.

     B. Landlord has acquired title to, among other property, the Building and all of Original
Landlord’s interest under the Lease.

     C. Landlord and Tenant desire to execute this Amendment in order to evidence their agreement
to (i) extend the Lease Term; and (ii) make certain other amendments to the Lease, all as more
particularly set forth in this Amendment.

     NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

SECOND AMENDMENT TO LEASE — Page 1 of 27

 

Article I

CERTAIN AMENDMENTS

     SECTION 1.01. Lease Term. The Lease Term is hereby extended through and including
February 28, 2014 (the “Expiration Date”), subject to adjustment and earlier termination as
provided in the Lease. Except as set forth on Exhibit C of this Amendment, Tenant shall have no
further renewal or extension rights or options and all of such rights or options, if any, are
hereby deleted.

     SECTION 1.02. Base Rental. As of January 1, 2009 (the “Extension Effective
Date”), the Base Rental due and payable by Tenant to Landlord under the Lease shall be as
follows:

	 	 	 	 	 	 	 	 	 
	 	 	Annual	 	 
	 	 	Base Rental	 	Monthly
	Period:	 	Per R.S.F.	 	Base Rental:
	1/1/09 – 2/28/10
	 	$	18.50 + E	 	 	$	34,268.17 + E	 
	3/1/10 – 2/28/11
	 	$	18.90 + E	 	 	$	35,009.10 + E	 
	3/1/11 – 2/29/12
	 	$	19.30 + E	 	 	$	35,750.03 + E	 
	3/1/12 – 2/28/13
	 	$	19.70 + E	 	 	$	36,490.97 + E	 
	3/1/13 – 2/28/14
	 	$	20.10 + E	 	 	$	37,231.90 + E	 

Landlord hereby abates 1/2 of the first 8 full monthly installment(s) of Base Rental described
above (i.e., January – August, 2009). Tenant shall pay all other monetary obligations accruing
during such month(s). If an event of default occurs under the Lease beyond any applicable period
of notice and cure, any remaining Base Rent abatement shall cease from the date of such event of
default. The Base Rental under the Lease shall be due and payable in equal monthly installments,
each such monthly installment due and payable on the first day of each calendar month, in advance,
without demand and without setoff or deduction whatsoever.

     SECTION 1.03. Base Year. As of the Extension Effective Date, the Base Year shall be
the calendar year 2009.

     SECTION 1.04. Operating Expenses. The following is added after “at Landlord’s sole
cost and expense” in Section 10 of the Original Lease: “(but subject to inclusion in Operating
Expenses)”.

     SECTION 1.05. AS IS; Refurbishment Work. Except for maintenance and repair
obligations under Section 10 of the Original Lease and the Landlord’s Work (as hereinafter
defined), Landlord is leasing the Premises to Tenant “as is” “where is” without representation or
warranty, either express or implied, without any obligation to alter, remodel, improve, repair or
decorate any part of the Premises; provided, however, as of the date of this Amendment Landlord
shall provide Tenant with a refurbishment allowance (the “Refurbishment Allowance”) in an
amount equal to $10.00 per rentable square foot in the Premises (i.e., $222,280.00), to

SECOND AMENDMENT TO LEASE — Page 2 of 27

 

improve and refurbish the Premises with Building standard improvements (the “Refurbishment
Work”) pursuant to plans and specifications approved by Landlord and Tenant in writing (such
approval not to be unreasonably withheld or delayed). Within ten (10) days prior to Landlord’s
physical commencement of the Refurbishment Work, Tenant shall pay Landlord all costs of the
Refurbishment Work in excess of the Refurbishment Allowance. The Refurbishment Allowance shall be
made available for Tenant’s use within thirty (30) days of the execution of this Amendment. The
Refurbishment Work shall be performed only by contractors engaged by Landlord and reasonably
approved by Tenant. Tenant acknowledges that Landlord’s contractors may construct the
Refurbishment Work while Tenant occupies the Premises, that the construction of the Refurbishment
Work may prevent Tenant from using all or part of the Premises from time to time and that the
construction of the Refurbishment Work may create noise dust and debris that will interfere with
Tenant’s use of the Premises.  Tenant acknowledges and agrees that it shall have no right to any
abatement of rent or to recover any other damages from Landlord due to its inability to use the all
or portions of the Premises while the Refurbishment Work are being completed or due to interference
with its business operations caused by such construction.  Tenant shall cooperate with Landlord’s
contractors in completing the Refurbishment Work and Landlord’s contractors are hereby granted
authority to enter the Premises to complete the Refurbishment Work.  Landlord and Tenant shall
coordinate the completion of the Refurbishment Work in order to minimize disruptions to Tenant’s
business activities, but Landlord shall have no obligation to incur additional costs in order to
minimize such disruptions.  Tenant shall be responsible for moving its personal property (e.g.,
computers, telephone equipment, cabling, photocopy machines) from time to time, at Tenant’s sole
expense, unless provided for in the Refurbishment Allowance, to facilitate the completion of the
Refurbishment Work, and Landlord and its contractors shall have no obligation to move any of
Tenant’s personal property. However, Landlord shall also bid the Refurbishment Work with
contractors moving the furniture, fixtures, and other equipment as necessary and Landlord, in
conjunction with Tenant, shall determine which bid to utilize. Landlord or its agent shall
supervise the Refurbishment Work, make disbursements required to be made to the contractor, and act
as a liaison between the contractor and Tenant and coordinate the relationship between the
Refurbishment Work, the Building, and the Building’s systems. In consideration for Landlord’s
construction supervision services, Tenant shall pay to Landlord a construction supervision fee
equal to 3% of the total costs (including “hard” and “soft” costs as such terms are commonly
understood in the area of the Building in connection with tenant improvement construction) related
to the Refurbishment Work, which Landlord may deduct from the Refurbishment Allowance.
Notwithstanding the foregoing, upon written notice from Tenant to Landlord after the Refurbishment
Work has been substantially completed (and all costs related to the Refurbishment Work have been
paid and disbursed in full) but before December 31, 2009 (the “Refurbishment Allowance
Deadline”), Tenant may elect to use up to $6.00 per rentable square foot in the Premises of any
unspent Refurbishment Allowance (a) toward the cost of wiring, cabling, furniture, fixtures and
equipment, provided Tenant submits to Landlord paid invoices therefor prior to the Refurbishment
Allowance Deadline, and (b) as a credit against Tenant’s Rent obligations under the Lease next
coming due provided Tenant gives Landlord written notice thereof prior to the Refurbishment
Allowance Deadline; provided, however, if an event of default extending beyond any applicable
notice or cure period occurs Tenant shall have
no right to use any portion of the Refurbishment Allowance for such expenses or as a credit
against Rent and any credit against Rent previously given shall, at Landlord’s election, either be

SECOND AMENDMENT TO LEASE — Page 3 of 27

 

reversed or immediately paid to Landlord by Tenant. Any portion of the Refurbishment Allowance
which remains unspent as of the Refurbishment Allowance Deadline shall be retained by Landlord
without credit or reimbursement to Tenant.

     SECTION 1.06. Landlord’s Work. In addition to providing the Refurbishment Allowance,
Landlord shall perform the following improvements (the “Landlord’s Work”) using Building
standard materials and colors with input from Tenant: (a) replace 2nd floor common
corridor carpet, (b) resurface the existing travertine wall around elevator doors on the
2nd floor with a new hard surface (the new surface will correspond with Tenant’s choice
of finishes for the remodel of their entryway), (c) replace cracked sink in the women’s restroom,
and (d) repair continuing water incursion and leaks in and into the Premises. Landlord’s Work
shall be completed within the calendar year 2009.

     SECTION 1.07. Brokers. Landlord and Tenant represent to the other that it has not
dealt with any broker or agent in connection with the negotiation or execution of this Amendment
except Holt Lunsford Commercial representing Landlord and Daniel Rudd of CB Richard Ellis, Inc.
representing Tenant (collectively, “Brokers”). Landlord will be responsible to pay the
commission, if any, owed to Brokers pursuant to the terms of a separate written agreement.
Landlord and Tenant hereby indemnify each other from any claims, losses, damages (including
attorneys’ fees) resulting from a breach of the above representation.

     SECTION 1.08. Parking. Between the Extension Effective Date and the Expiration Date,
the parking charge for the 10 designated covered parking spaces shall be at the rate of $35.00
plus tax per space per month; provided, however, such parking charges shall be abated between the
Extension Effective Date and December 31, 2009. Following the Expiration Date, the parking charges
shall be at the then current market rate from time to time.

     SECTION 1.09. Holdover. The reference to “twice” in Section 35 of the Original Lease
is amended to be “150% of”. The following sentence is added to the end of Section 35 of the
Original Lease: “Notwithstanding the foregoing, during the first month of any holding over by
Tenant, Tenant shall pay rent equal to 125% the Base Rental and additional rent which would have
been applicable had the term of this Lease continues through the period of such holding over by
Tenant.”

     SECTION 1.10. Right of First Refusal. As of the date of this Amendment, Section 4 of
the First Amendment and the 4th and 5th paragraphs of Exhibit C of the
Original Lease are deleted and Tenant shall be provided a Right of First Refusal in accordance with
Exhibit A of this Amendment.

     SECTION 1.11. Termination Option. Tenant shall have a termination option in
accordance with Exhibit B of this Amendment.

     SECTION 1.12. Extension Option. Tenant shall have an extension option in accordance
with Exhibit C of this Amendment.

SECOND AMENDMENT TO LEASE — Page 4 of 27

 

     SECTION 1.13. Additional Consideration (Letter of Credit). Simultaneously with the
execution of this Amendment, Tenant shall deposit with Landlord a letter of credit in accordance
with Exhibit D of this Amendment.

     SECTION 1.14. Further Amendments. The Lease shall be and hereby is further amended
wherever necessary, even though not specifically referred to herein, in order to give effect to the
terms of this Amendment. The reference to “$1,000,000” in Section 21 of the Original Lease is
deleted and replaced with “$5,000,000.” The following is added after “or in the event of any
material uninsured loss to the Building” in Section 24 of the Original Lease: “or in the event
Landlord makes a good faith determination that restoring the Premises would be uneconomical”.
Exhibit F (Renewal Option) of the Original Lease is deleted.

Article II

MISCELLANEOUS

     SECTION 2.01. Ratification.  The Lease, as amended hereby, is hereby ratified,
confirmed and deemed in full force and effect in accordance with its terms. Each party represents
to the other that such party (a) is currently unaware of any default by the other party under the
Lease; and (b) has full power and authority to execute and deliver this Amendment and this
Amendment represents a valid and binding obligation of such party enforceable in accordance with
its terms. Tenant represents to Landlord that except as set forth in this Amendment (a) Landlord
has completed all improvements to the Premises in compliance with all requirements in the Lease;
and (b) all tenant finish costs or allowances payable by Landlord have been paid and no such costs
or allowances are payable hereafter under the Lease.

     SECTION 2.02. No Offer. The submission of this Amendment to Tenant shall not be
construed as an offer, nor shall Tenant have any rights under this Amendment unless Landlord
executes a copy of this Amendment and delivers it to Tenant.

     SECTION 2.03. Counterparts. This Amendment may be executed in multiple counterparts
each of which is deemed an original but together constitute one and the same instrument. This
Amendment may be executed by facsimile or “pdf” and each party has the right to rely upon a
facsimile or “pdf” counterpart of this Amendment signed by the other party to the same extent as if
such party had received an original counterpart.

     SECTION 2.04. Governing Document. In the event the terms of the Lease conflict or are
inconsistent with those of this Amendment, the terms of this Amendment shall govern.

     SECTION 2.05. Waiver of Right to Protest. Tenant hereby waives any and all rights
under Section 41.413 and 42.015 of the Texas Tax Code granting to tenant the right to contest
appraised values, or to receive
notice of reappraised values, on all or any portion of the Building irrespective of whether
Landlord has elected to contest same. To the extent such waiver is prohibited by applicable law,
Tenant hereby appoints Landlord as Tenant’s attorney in fact, coupled with an interest, to appear
and take all actions on behalf of Tenant which Tenant may have under said Section of the Code with
respect to the Building, but not with

SECOND AMENDMENT TO LEASE — Page 5 of 27

 

respect to Tenant’s personal property located within the
Premises. Landlord shall use commercially reasonable efforts to reduce and/or mitigate property
taxes, but shall have no liability for any failure to reduce property taxes.

     SECTION 2.06. Waiver of Consumer Rights. Tenant hereby waives all its rights under
the Texas Deceptive Trade Practices — Consumer Protection Act, Section 17.41 et. seq. of the Texas
Business and Commerce Code, a law that gives consumers special rights and protections. After
consultation with an attorney of Tenant’s own selection, Tenant voluntarily consents to this
waiver.

     SECTION 2.07. Determination of Charges. Landlord and Tenant are knowledgeable and
experienced in commercial transactions and agree that the provisions set forth in the Lease for
determining rent and other charges and amounts payable by Tenant are commercially reasonable and
valid even though such methods may not state a precise mathematical formula for determining such
charges. Accordingly, Tenant hereby voluntarily and knowingly waives all rights and benefits of
Tenant under Section 93.012 of the Texas Property Code, as such section now exists or as
may be hereafter amended or succeeded.

     SECTION 2.08. Intentionally Deleted.

     SECTION 2.09. OFAC. Neither Tenant nor any of its affiliates, nor any of their
respective partners, members, shareholders or other equity owners, and none of their respective
employees, officers, directors, managers, representatives or agents, is a person or entity with
whom U.S. persons or entities are restricted from doing business under regulations of the Office of
Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on
OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order
(including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions
with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action.

     SECTION 2.10. Margin & Substitution Taxes. Notwithstanding anything in the Lease to
the contrary, the definition of “real property taxes” shall include the following regardless of
whether the following are expressly excluded by language elsewhere in the Lease (a) all taxes
allocated by Landlord to the Project attributable to taxable margin levied pursuant to Chapter 171
of the Texas Tax Code or any amendment, adjustment or replacement thereof, and (b) any taxes,
assessments, levies, impositions, tolls, excises, tariffs, charges or fees imposed, levied or
assessed in lieu of or in substitution, addition or supplementation of other real property taxes.

[SIGNATURES ON FOLLOWING PAGE]

SECOND AMENDMENT TO LEASE — Page 6 of 27

 

     IN WITNESS WHEREOF, this Amendment has been executed as of (but not necessarily on) the date
and year first above written.

	 	 	 	 	 	 	 
	 	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 
	 	 	SUN LIFE ASSURANCE COMPANY OF CANADA,	 	 
	 	 	a Canadian corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Deborah Tirone
 

Deborah K. Tirone
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 

	 	Date:
	 	December 31, 2008	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas V. Pedulla
 

	 	 
	 

	 	Name:
	 	Thomas V. Pedulla	 	 
	 

	 	Title:
	 	Senior Managing Director	 	 
	 

	 	Date:
	 	December 31, 2008	 	 
	 
	 	 	 	 	 	 
	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	 	 	INTERPHASE CORPORATION,	 	 
	 	 	a Texas corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas N. Tipton Jr.
 

	 	 
	 

	 	Name:
	 	Thomas N. Tipton Jr.	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 
	 

	 	Date:
	 	December 31, 2008	 	 

SECOND AMENDMENT TO LEASE — Page 7 of 27

 

EXHIBIT A

RIGHT OF FIRST REFUSAL

     Tenant shall have the right of first refusal (the “Right of First Refusal”) to lease
space as described and/or shown on Exhibit A-1 (the “First Refusal Space”), in
accordance with and subject to each of the following terms and conditions:

     1. Procedure for Offer. Between the date of this Amendment and February 28, 2014,
should Landlord receive an offer (an “Offer”) with respect to all or any portion of the
First Refusal Space from a bona fide third party prospect (the “Prospect”) which Landlord
is willing to accept, Landlord shall notify Tenant (a “First Refusal Notice”) provided that
no Superior Right Holder (hereinafter defined) wishes to lease such space. Pursuant to such First
Refusal Notice, Landlord shall offer to lease to Tenant the applicable First Refusal Space based on
the terms and conditions of the Offer; provided, however, if Landlord delivers a First Refusal
Notice within 12 months following the date of this Amendment, Landlord shall also offer to lease to
Tenant the applicable First Refusal Space based on the terms and conditions of this Amendment
except (a) there shall be no Base Rental abatement, (b) the Lease Term for the First Refusal Space
shall commence no later than 90 days following Landlord’s receipt of the First Refusal Acceptance
Notice, (c) all allowances, concessions and similar terms for the First Refusal Space shall be
proportionally adjusted based on the amount of Lease Term remaining; in addition, Tenant shall post
additional consideration in the form of a letter of credit in a proportional amount requested by
Landlord on the terms and conditions set forth in Exhibit D attached to this Amendment, and
(d) if the applicable First Refusal Space is “spec” space that has been built out by Landlord,
Tenant shall not be entitled to any “Refurbishment Allowance” or tenant improvement allowance with
respect to such “spec” space. The rentable square footage of the space so offered to Tenant shall
be determined by Landlord in accordance with Landlord’s standard method for measuring space in the
Building.

     2. Procedure for Acceptance. If Tenant wishes to exercise Tenant’s Right of First
Refusal with respect to the space described in a First Refusal Notice, then within 5 business days
of delivery of such First Refusal Notice to Tenant, Tenant shall deliver notice to Landlord (a
“First Refusal Acceptance Notice”) of Tenant’s exercise of the Right of First Refusal with
respect to the entire space described in such First Refusal Notice on the terms contained therein.
If Tenant does not deliver a First Refusal Acceptance Notice within the 5 business day period, then
Landlord shall be free to lease the space described in such First Refusal Notice to anyone to whom
Landlord desires on any terms Landlord desires; provided, however, if the transaction does not
consummate within 6 months from the date of Landlord’s First Refusal Notice, or if there is a
reduction in base rent of more than 10%, an increase in the allowance by more than 10% or an
extension or reduction of the term for more than one (1) year, Landlord shall be obliged to present
the revised Offer from that Prospect, or the next Offer from a new Prospect, to Tenant in a First
Refusal Notice, as the case may be. Notwithstanding anything to the contrary contained herein, (a)
Tenant must elect to exercise the Right of First Refusal, if at all, with respect to all of the
space offered by Landlord to Tenant at any particular time, and Tenant may not elect to lease only
a portion thereof, and (b) if the First Refusal Notice
includes space in excess of the First Refusal Space, Tenant must exercise its right hereunder,
if at all, as to all of

SECOND AMENDMENT TO LEASE — Page 8 of 27

 

the space contained in the First Refusal Notice, and Tenant may not elect
to lease only the First Refusal Space. If Tenant does not exercise the Right of First Refusal with
respect to the space described in a First Refusal Notice or if Tenant fails to respond to a First
Refusal Notice within 5 business days of delivery thereof, then Tenant’s Right of First Refusal as
set forth in this exhibit shall terminate as to the portion of the First Refusal Space so offered,
except as provided above.

     3. Construction in First Refusal Space. Tenant shall accept the First Refusal Space
in its then existing “as is” condition, and except as set forth in a First Refusal Notice, Landlord
shall not be required to perform any improvements or provide any allowance for improvements. The
construction of any improvements in the First Refusal Space shall comply with the terms of the
Lease.

     4. Landlord’s Right to Make Term Coterminous. If the Term with respect to the First
Refusal Space will expire after the Term with respect to the Premises, at Landlord’s and Tenant’s
mutual election, the Term with respect to the Premises will be extended to be coterminous with the
Term with respect to the First Refusal Space, and the Base Rental rate with respect to the Premises
during such extended period will be the Market Rate, determined in accordance with Exhibit C.

     5. Superior Right Holders. Notwithstanding the foregoing, the Right of First Refusal
and Landlord’s obligation to deliver a First Refusal Notice shall commence only following the
expiration or earlier termination of the existing leases (including renewals, regardless of whether
or not such renewals are pursuant to renewal options) of the First Refusal Space, and such Right of
First Refusal shall be subordinate to all tenants (and the rights of all tenants under leases of
the First Refusal Space) existing as of the date hereof, and all rights of other tenants of the
Building, which rights relate to the First Refusal Space and which rights are set forth in leases
of space in the Building existing as of the date hereof, each including any renewal, extension,
expansion, first offer, first negotiation and other similar rights, regardless of whether such
rights are executed strictly in accordance with their respective terms or pursuant to lease
amendments or new leases (all such tenants under existing leases of the First Refusal Space and
other tenants of the Building, collectively, the “Superior Right Holders”).

     6. Occupancy of Premises. The Right of First Refusal may only be exercised while
Tenant is occupying the entire Premises, and at Landlord’s election any delivery of a First Refusal
Acceptance Notice during any period of time in which Tenant is not occupying the entire Premises
shall be null and void and of no effect.

     7. Tenant’s Default. Notwithstanding the foregoing, (a) Tenant shall have no right to
exercise the Right of First Refusal at any time in which an event of default exists beyond any
applicable notice or cure period and any exercise during such period of time shall be null and void
and of no effect, (b) if an event of default occurs beyond any applicable notice or cure period
under the Lease prior to Tenant’s exercise of the Right of First Refusal (in accordance with
Section 2 hereof), the Right of First Refusal shall automatically become null and void, and (c) if
after Tenant’s exercise of the Right of First Refusal (in accordance with Section 2 hereof)
but before the commencement of the term with respect to the First Refusal Space an event of
default exists beyond any applicable notice or cure period, then Landlord may elect, but is not
obligated, by written notice given to Tenant to cancel and declare null and void Tenant’s

SECOND AMENDMENT TO LEASE — Page 9 of 27

 

exercise
of the Right of First Refusal. If Landlord does not cancel Tenant’s exercise of the Right of First
Refusal, Tenant shall cure the default within the period of time specified in the Lease.

     8. No Right of First Refusal After Transfer. The Right of First Refusal is personal
to the originally named Tenant in the Lease or Lease amendment to which this exhibit is attached
and its Related Entities. If an assignment, sublease or other transfer occurs, other than to a
Related Entity, the Right of First Refusal shall be deemed null and void and neither Tenant nor any
transferee (other than a Related Entity) shall have the right to exercise the Right of First
Refusal. This condition may be waived by Landlord at its sole discretion and may not be used by
Tenant as a means to negate the effectiveness of Tenant’s exercise of the Right of First Refusal.
As used herein, “Related Entity” shall mean an entity which (i) directly or indirectly
controls the subject party, (ii) is under the direct or indirect control of the subject party,
(iii) is under common direct or indirect control with the subject party, (iv) with which the
subject party is merged or consolidated, or (v) which acquires all or substantially all of the
subject party’s assets or stock. Control shall mean ownership of fifty-one percent (51%) or more
of the voting securities or rights of the controlled entity.

     9. No Right of First Refusal After Exercise of Certain Options. Notwithstanding
anything in the Lease to the contrary, (a) if Tenant exercises any option contained in the Lease,
if any, to terminate the Lease or reduce the size of the Premises, the Right of First Refusal shall
automatically become null and void upon such exercise, and (b) if Tenant exercises the Right of
First Refusal, the Termination Option shall not apply to the Right of First Refusal Space or any
additional space leased or occupied by Tenant in the Building.

     10. Intentionally Deleted.

     11. Other Terms of Lease Apply. Except for the specific terms applicable to the First
Refusal Space, all other terms and conditions of the Lease shall apply to the First Refusal Space.

     12. Amendment to Lease. Promptly after Tenant’s exercise of the Right of First
Refusal, Landlord shall deliver to Tenant an amendment to the Lease to reflect the addition of the
applicable First Refusal Space. Within 10 business days thereafter, Tenant shall execute and return
the amendment if acceptable or return a redlined amendment, but in any case the Amendment must be
fully executed by Tenant within 30 days following the date of Tenant’s acceptance. If Tenant fails
to return the amendment within the periods required in this Section 12, at Landlord’s written
election, Tenant’s rights under this Exhibit shall be deemed terminated and Tenant shall have no
further right to the First Refusal Space.

     13. Tenant’s Financial Condition. Notwithstanding the foregoing, (a) Tenant shall
have no right to exercise the Right of First Refusal and Landlord shall no obligation to give
Tenant a First Refusal Notice if Tenant’s Net Worth is not equal to or better than the condition
existing on the date of this Amendment on the date of and/or after Tenant’s exercise of the Right
of First Refusal (in accordance with Section 2 hereof). In such event, Landlord may elect, but is
not obligated, by written notice given to Tenant to cancel and declare null and void Tenant’s
exercise of the Right of First Refusal. As used herein, “Net Worth” of Tenant as described in this
Amendment shall mean the unencumbered assets (e.g., not encumbered by any pledge, claim, lien,

SECOND AMENDMENT TO LEASE — Page 10 of 27

 

judgment, mortgage or other encumbrance and excluding good will) of said entity less all
liabilities of said entity

SECOND AMENDMENT TO LEASE — Page 11 of 27

 

EXHIBIT A-1

FIRST REFUSAL SPACE

     All rentable square footage in the Building, excluding common areas.

SECOND AMENDMENT TO LEASE — Page 12 of 27

 

EXHIBIT B

TERMINATION OPTION

     Notwithstanding anything to the contrary contained herein, Tenant shall have a one-time option
to terminate the Lease (the “Termination Option”) in accordance with and subject to each of
the following terms and conditions:

     1. Termination Notice. In the event a Tenant Acquisition Event (as hereinafter
defined) occurs, subject to the terms and conditions set forth in this Exhibit B, and if
Tenant desires to exercise the Termination Option following (but not before) such Tenant
Acquisition Event, Tenant may give Landlord irrevocable written notice (the “Termination
Notice”) of Tenant’s exercise of the Termination Option, which shall be delivered by U.S.
certified mail, return receipt requested. The Termination Date shall be no earlier than the
fortieth (40th) full calendar month following the Extension Effective Date. Time is of the essence
with the respect to Landlord’s receipt of the Termination Notice and all other deadlines in this
exhibit. As used herein, a “Tenant Acquisition Event” is a transaction in which Tenant sells all
or substantially all of its assets or merges with a third party resulting in a 51% change of
control.

     2. Termination Date. Notwithstanding anything contained in this Exhibit B to
the contrary, if Landlord timely receives the Termination Notice and Tenant complies with all the
provisions in this exhibit, the Lease shall terminate at 11:59 p.m. on (the “Termination
Date”) the last day of the 9th full calendar month following the date Landlord receives the
Termination Notice, but not earlier than after the 40th full calendar month following the Extension
Effective Date.

     3. Termination Fee Must Accompany Termination Notice. In order for the Termination
Notice to be effective, it must be accompanied by the entire termination fee (the “Termination
Fee”) in cash or certified funds in the amount of the total aggregate amount of the brokerage
commission payable in connection with the Lease or the Amendment to which this Exhibit is attached,
the amount of the Refurbishment Allowance which would be unamortized as of the Termination Date,
assuming that such total aggregate amount were to be fully amortized over the period between the
Extension Effective Date and the Expiration Date using an interest rate of 7% per annum.

     4. Tenant’s Obligations Survive Termination. Tenant’s obligations to pay Rent and any
other costs or charges under the Lease, and to perform all other Lease obligations for the period
up to and including the Termination Date, shall survive the termination of the Lease.

     5. Tenant’s Default. Notwithstanding the foregoing, (a) Tenant shall have no right to
exercise the Termination Option or deliver a Termination Notice at any time in which an event
exists which, with notice or lapse of time or both, would constitute an event of default beyond any
applicable notice or cure period under the Lease, and any delivery of a Termination Notice during
such period of time shall be null and void and of no effect, (b) if an event of default beyond any
applicable notice or cure period occurs under the Lease prior to Tenant’s exercise of
the Termination Option (in accordance with Section 1 hereof), upon Landlord’s written election

SECOND AMENDMENT TO LEASE — Page 13 of 27

 

given to Tenant within 30 days of the event of default beyond any applicable notice or cure
period, the Termination Option shall become null and void, and (c) if an uncured event of default
occurs under the Lease after Tenant’s exercise of the Termination Option (in accordance with
Section 1 hereof), then Landlord may elect, but is not obligated, by written notice given to Tenant
to cancel and declare null and void Tenant’s exercise of the Termination Option, and the Lease
shall continue in full force and effect for the full Term hereof unaffected by Tenant’s exercise of
the Termination Option and Landlord shall either (i) apply the Termination Fee to existing or
future Rent obligations under the Lease, and/or (ii) refund the Termination Fee to Tenant. If
Landlord does not cancel Tenant’s exercise of the Termination Option after an event of default,
Tenant shall cure the default within the period of time specified in the Lease and this obligation
shall survive the Termination Date.

     6. Tenant Shall Surrender Space by Termination Date. If Tenant exercises the
Termination Option, Tenant covenants to surrender full and complete possession of the Premises to
Landlord on or before the Termination Date vacant, broom-clean, devoid of Tenant’s or any third
party’s personal property, and in good order and condition, in accordance with the provisions of
the Lease, and thereafter the Premises shall be free and clear of all leases, tenancies, and rights
of occupancy of any entity claiming by or through Tenant.

     7. Failure to Surrender Constitutes a Holdover. If Tenant shall fail to deliver
possession of the Premises on or before the Termination Date in accordance with the terms hereof,
Tenant shall be deemed to be a holdover tenant from and after the Termination Date.

     8. Lease Ceases After Termination. If Tenant properly and timely exercises the
Termination Option and Landlord has not negated the effectiveness of Tenant’s exercise of the
Termination Option as allowed under this Exhibit, the Lease shall cease and expire on the
Termination Date with the same force and effect as if the Termination Date were the date originally
provided in the Lease as the expiration date of the Term hereof.

     9. Intentionally Deleted.

     10. No Termination Option After Transfer. The Termination Option is personal to the
named Tenant and its Related Entities. This condition may be waived by Landlord at its sole
discretion and may not be used by Tenant as a means to negate the effectiveness of Tenant’s
exercise of the Termination Option. As used herein, “Related Entity” shall mean an entity which
(i) directly or indirectly controls the subject party, (ii) is under the direct or indirect control
of the subject party, (iii) is under common direct or indirect control with the subject party, (iv)
with which the subject party is merged or consolidated, or (v) which acquires all or substantially
all of the subject party’s assets or stock. Control shall mean ownership of fifty-one percent
(51%) or more of the voting securities or rights of the controlled entity.

     11. No Termination Option After Exercise of Certain Options. Notwithstanding anything
in the Lease to the contrary, if Tenant exercises any extension option contained in the
Lease or extends the Term past February 28, 2014, the Termination Option shall automatically become
null and void.

SECOND AMENDMENT TO LEASE — Page 14 of 27

 

     12. Termination Option Only Applies to Original Premises. Notwithstanding anything in
this Exhibit to the contrary, the Termination Option applies only to the original Premises (the
“Original Premises”) described in this Amendment (i.e., 22,228 rentable square feet) and
not to any additional premises (“Additional Premises”) previously or hereafter leased by
Tenant, including, without limitation, any Additional Premises leased pursuant to any option to
increase the size of the Premises (e.g., a right of first offer). Notwithstanding anything in the
Lease to the contrary the Termination Option shall not apply to any Additional Premises.

SECOND AMENDMENT TO LEASE — Page 15 of 27

 

EXHIBIT C

EXTENSION OPTION

     Notwithstanding anything to the contrary contained herein, Landlord hereby grants to Tenant
the option to extend the Lease Term (“Extension Option”) for 1 period of 5 years
(“Extension Term”) commencing when the Lease Term expires in accordance with and subject to
each of the following terms and conditions:

     1. Extension Notice. If Tenant desires to exercise an Extension Option, Tenant shall
give Landlord written notice (the “Extension Notice”) of Tenant’s exercise of an Extension
Option, which shall be delivered by U.S. certified mail, return receipt requested. The Extension
Notice must be received by Landlord no later than the date that is 9 full months prior to the date
that the Extension Term would start and no earlier than the date that is 15 full months prior to
the date that the Extension Term would start. Time is of the essence with respect to Landlord’s
receipt of the Extension Notice and all other deadlines in this exhibit.

     2. Terms of Extension Term. During any Extension Term, all of the terms and
conditions of the Lease (excluding any terms, conditions and options specifically applicable to
only the initial or any prior Term) except where specifically modified by this exhibit shall apply.
Tenant shall have no additional extension option.

     3. Rent for Extension Term. The Rent payable during an Extension Term shall be the
Market Rate on the date the Extension Term commences.

     4. Definition of Market Rate. The term “Market Rate” shall mean the amount
that a willing, comparable renewal tenant would pay and a willing, comparable landlord of a similar
building in the same submarket would accept at arm’s length for similar space, giving appropriate
consideration to all relevant factors, including, without limitation, the following matters: (i)
annual rental rates per rentable square foot; (ii) the type of escalation clauses (including, but
without limitation, operating expenses, base year, real estate taxes, electrical costs and CPI) and
the extent of liability under the escalation clauses (i.e., whether determined on a “net lease”
basis or by increases over a particular base year or base dollar amount); (iii) rent abatement
provisions reflecting free rent and/or no rent during the lease term; (iv) length of lease term;
(v) quality, size, utility and location of premises being leased; (vi) whether other renewal
tenants are receiving tenant improvements or refurbishment allowances; (vii) size and credit
standing of Tenant; (viii) the cost of the Reduction Premises Work described under Section 13
below, (ix) other generally applicable terms and conditions of tenancy for similar space. In no
event shall Landlord be obligated to provide Tenant with a tenant improvement or refurbishment
allowance, unless Landlord at the time is offering an allowance to renewing tenants (as opposed to
new tenants). The Market Rate may also designate periodic rental increases and similar economic
adjustments. The Market Rate shall be the Market Rate in effect as of the beginning of the
Extension Term, even though the determination may be made in advance of that date, and the parties
may use recent trends in rental rates in determining the proper Market Rate as of the
beginning of the Extension Term. The Market Rate will be an effective rate, not specifically
including, but accounting for, the appropriate economic considerations described above.

SECOND AMENDMENT TO LEASE — Page 16 of 27

 

     5. Determination of Market Rate. If Tenant exercises an Extension Option (in
accordance with Section 1 hereof), Landlord shall determine the Market Rate by using its good faith
judgment. Landlord shall provide Tenant with written notice (“Landlord’s Notice”) of such
amount within 20 days after Tenant exercises such Extension Option. Tenant shall have 20 days
following delivery of Landlord’s Notice to notify Landlord in writing (“Tenant’s Renewal
Notice”) of (i) Tenant’s exercise of its right to renew the Lease at the Market Rate proposed
by Landlord, or (ii) Tenant’s counter offer to Landlord, or (iii) Tenant’s election not to exercise
its right to renew the Lease. Tenant’s failure to timely deliver Tenant’s Renewal Notice shall be
deemed rejection by Tenant of the Market Rate proposed by Landlord and the Lease shall expire on
the scheduled expiration date of February 28, 2014. If Tenant delivers a counter offer to
Landlord, then Tenant and Landlord shall have 45 days from delivery of Tenant’s Renewal Notice to
agree on terms for such Extension Option and if the parties fail to agree on the terms for any
reason or no reason within such 45 day period, this Extension Option shall be null and void and the
Lease shall terminate February 28, 2014.

     6. Tenant’s Default. Notwithstanding the foregoing, (a) Tenant shall have no right to
exercise an Extension Option or deliver an Extension Notice at any time in which an event exists
which, with notice or lapse of time or both, would constitute an event of default beyond any
applicable notice or cure period under the Lease, and any delivery of an Extension Notice during
such period of time shall be null and void and of no effect, (b) if an event of default occurs
beyond any applicable notice or cure period under the Lease prior to Tenant’s exercise of an
Extension Option (in accordance with Section 1 hereof), the Extension Option shall automatically
become null and void, and (c) if after Tenant’s exercise of an Extension Option (in accordance with
Section 1 hereof) but before the commencement of an Extension Term an event exists which, with
notice or lapse of time or both, would constitute an uncured Event of Default under the Lease, then
Landlord may elect, but is not obligated, by written notice given to Tenant to cancel and declare
null and void Tenant’s exercise of the Extension Option, and the Lease shall continue in full force
and effect for the full Term hereof unaffected by Tenant’s exercise of the Extension Option. If
Landlord does not cancel Tenant’s exercise of the Extension Option, Tenant shall cure the default
within the period of time specified in the Lease.

     7. No Extension Option After Transfer. The Extension Option is personal to the
originally named Tenant in the Lease or Lease amendment and its Related Entity. If an assignment,
sublease (of more than 25% of the Premises) or other transfer occurs to a party other than a
Related Entity, the Extension Option shall be deemed null and void and neither Tenant nor any
assignee, subtenant or other transferee (other than a Related Entity) shall have the right to
exercise such option. This condition may be waived in writing by Landlord at its sole and absolute
discretion and may not be used by Tenant as a means to negate the effectiveness of Tenant’s
exercise of an Extension Option.

     8. Occupancy of Premises. The Extension Option may only be exercised while Tenant is
occupying seventy-five percent (75%) of the entire Premises (subject to Section 13
below), and at Landlord’s election any delivery of an Extension Notice during any period of time in
which Tenant is not occupying 75% of the entire Premises (subject to Section 13 below) shall be
null and void and of no effect.

SECOND AMENDMENT TO LEASE — Page 17 of 27

 

     9. No Extension Option After Exercise of Certain Options. Notwithstanding anything in
the Lease to the contrary, (a) if Tenant exercises any option contained in the Lease, if any, to
terminate the Lease or reduce the size of the Premises (except as permitted in Section 13 below),
the Extension Option shall automatically become null and void upon such exercise, and (b) if Tenant
exercises an Extension Option or extends the Term past February 28, 2014, any rights of Tenant
under the Lease to terminate the Lease or reduce the size of the Premises, if any, shall
automatically become null and void upon such exercise.

     10. Intentionally Deleted.

     11. Amendment to Lease. Promptly after the determination of the Market Rate, Landlord
shall deliver to Tenant an amendment to the Lease to reflect the Extension Term. Within 10
business days thereafter, Tenant shall execute and return the amendment. If Tenant fails to return
the amendment within such 10 business day period, at Landlord’s written election, Tenant’s rights
under this Exhibit shall be deemed terminated.

     12. Tenant’s Financial Condition. Notwithstanding the foregoing, (a) Tenant shall
have no right to exercise the Extension Option and Landlord shall have no obligation to give Tenant
a Landlord’s Notice if Tenant’s Net Worth is not equal to or better than the condition existing on
the date of this Amendment, on the date of and/or after Tenant’s exercise of the Extension Option
(in accordance with Section 2 hereof). In such event, Landlord may elect, but is not obligated, by
written notice given to Tenant to cancel and declare null and void Tenant’s exercise of the
Extension Option. As used herein, “Net Worth” of Tenant as described in this Amendment shall mean
the unencumbered assets (e.g., not encumbered by any pledge, claim, lien, judgment, mortgage or
other encumbrance and excluding good will) of said entity less all liabilities of said entity.

     13. Option to Extend as to Less Than All the Premises. Notwithstanding anything in
this Exhibit to the contrary, Tenant may elect (the “Reduction Election”), by giving
Landlord written notice in the Extension Notice, to exercise an Extension Option as to less than
100% (but at least 75%) of the rentable square footage of the Premises, provided the Extension
Notice specifies the approximate amount of the rentable square footage Tenant desires to give back
to Landlord (the “Reduction Premises”) and the Reduction Premises is a space Landlord deems
leasable, in Landlord’s reasonable discretion. If Tenant timely makes a Reduction Election,
Landlord shall specify the location of the Reduction Premises in Landlord’s Notice, which shall be
in a location acceptable to Landlord, in Landlord’s reasonable discretion. The cost of the
Reduction Premises Work shall be taken into consideration in determining the market rate. The
“Reduction Premises Work” shall consist of (i) all improvements specified by Landlord that
are needed in order to demise the Reduction Premises from the balance of the Premises, including,
without limitation, the separation of all utilities and services, such that both the Reduction
Premises and the balance of the Premises are separately demised spaces that each have their own
independently functioning utilities and services required for normal office usage, and (b) if
required by Landlord, the cost of all improvements specified by Landlord that are needed in order
to create a Building standard multi-tenant corridor, plus a reasonable construction

SECOND AMENDMENT TO LEASE — Page 18 of 27

 

management fee.
The Reduction Premises Work shall be performed by a contractor(s) engaged by Landlord.

SECOND AMENDMENT TO LEASE — Page 19 of 27

 

EXHIBIT D

ADDITIONAL CONSIDERATION (LETTER OF CREDIT)

     1. General. As additional consideration for Landlord’s agreement to enter into this
Amendment, concurrently with Tenant’s execution and delivery of this Amendment, and as a condition
to Landlord’s obligations under the Lease, Tenant covenants and agrees to deliver to Landlord, as
additional consideration, an irrevocable letter of credit (the “L/C”) in the form of, and
upon all of the terms and conditions contained in, Exhibit D-1 attached hereto and
incorporated herein by reference. The L/C shall be issued by an institutional lender of good
financial standing (which lender shall, in any event, have assets equal to or exceeding $4 billion
dollars as of the date of issuance of the L/C), having a place of business where the L/C can be
presented for payment in Dallas, Texas. The lender shall be subject to Landlord’s prior written
approval, which approval shall not be unreasonably withheld or delayed. The L/C shall provide for
1 or more draws by Landlord or its transferee up to the aggregate amount of US $350,000.00 (the
“L/C Amount”) on the terms and conditions of Exhibit D-1. Landlord and Tenant (1)
acknowledge and agree that in no event or circumstance shall the L/C or any renewal thereof or
substitute therefor or any proceeds thereof be deemed to be or treated as a “security deposit”
under any Law applicable to security deposits in the commercial context (“Security Deposit
Laws”), and (2) acknowledge and agree that the L/C (including any renewal thereof or substitute
therefor or any proceeds thereof) is independent consideration separate and apart from the Security
Deposit and is not intended to serve as a security deposit, and the Security Deposit Laws shall
have no applicability or relevancy thereto.

     2. Renewal of L/C. Tenant shall maintain the L/C in effect from the date of Tenant’s
execution of this Amendment until the date which is 30 days after Tenant shall have performed all
of its obligations under the Lease (said period is hereinafter referred to as the “L/C
Term”). If the expiration date of the L/C (or any renewal or replacement L/C provided pursuant
to this section) occurs prior to the end of the L/C Term, then Tenant shall deliver to Landlord a
renewal of the L/C or a replacement L/C meeting all of the terms and conditions of this section,
not later than 60 days prior to the then-applicable expiration date. Each L/C provided pursuant to
this section shall have an expiration date which is at least one (1) year from such L/C’s date of
issue except where the then-applicable expiration date of the L/C is less than one (1) year from
the end of the L/C Term, in which case the renewal or replacement L/C shall be for such lesser
period. The issuing bank’s agreement to place an automatic renewal provision in the L/C, as
required pursuant to said Exhibit D-1, shall not relieve or release Tenant from its
obligation to provide a renewal or replacement L/C on the terms hereinabove stated, it being
understood that any such automatic renewal is an independent obligation of the issuing bank which
is intended for Landlord’s sole benefit. If Tenant fails to provide the renewal or replacement L/C
not later than 30 days prior to the then-applicable, stated expiration date (excluding automatic
renewal provisions), such failure shall be a default by Tenant, and Landlord shall have the right,
without notice or demand, on one or more occasions, to draw upon all or any part of the remaining
proceeds of the L/C.

     3. Draw on L/C. Landlord may elect from time to time, in Landlord’s sole discretion,
with notice to Tenant (for informational purposes only), to draw upon all or any part of the

SECOND AMENDMENT TO LEASE — Page 20 of 27

 

remaining proceeds of the L/C upon the occurrence of one or more of the following events: (i)
Tenant fails to pay Base Rental, and such failure constitutes an event of default beyond any
applicable notice or cure period by Tenant as defined in the Lease, or Tenant fails to perform any
of its monetary obligations under this section or (ii) Tenant makes any assignment for the benefit
of creditors, Tenant declares bankruptcy or is the subject of an involuntary bankruptcy proceeding,
a trustee or receiver is appointed to take possession of some or all of Tenant’s assets or Tenant
declares it is insolvent. In addition, Landlord may elect from time to time, in Landlord’s sole
discretion, with five (5) days prior written notice to Tenant to draw upon all or any part of the
remaining proceeds of the L/C upon the occurrence of the following event: Tenant fails to perform
any of its other monetary obligations under the Lease (e.g., operating expenses, electricity,
parking, etc.), and such failure constitutes an event of default beyond any applicable notice or
cure period by Tenant as defined in the Lease.

     4. Application of L/C Proceeds. Landlord may elect, from time to time, upon written
notice to Tenant (for informational purposes only), in Landlord’s sole discretion, to apply the
proceeds it receives from a draw on the L/C in one or more of the following manners without
prejudice to any other remedies: (i) as payment for some or all of the rent or other amounts owed
by Tenant under the Lease but unpaid on the date of such draw, (ii) as payment for some or all of
the future amounts of rent or other amounts that Landlord estimates will be due and payable under
the Lease after the date of the draw, (iii) as payment for some or all of the damage Landlord may
suffer as a result of Tenant’s failure to perform its obligations under the Lease, and/or (iv) in
any other manner permitted by the Lease or applicable law, provided such application directly
mitigates the monetary liabilities owed to Landlord arising under the Lease. Landlord may make one
or more partial draws under the L/C and shall have the right, upon written notice to Tenant, to
treat each draw or a portion thereof in one or more of the ways described in the previous sentence.
Tenant hereby waives any other law or regulation that may be inconsistent with the terms and
conditions of this section.

     5. Enforcement. Tenant’s obligation to furnish the L/C shall not be released,
modified or affected by any failure or delay on the part of Landlord to enforce or assert any of
its rights or remedies under the Lease or this section, whether pursuant to the terms thereof or at
law or in equity. Landlord’s right to draw upon the L/C shall be without prejudice or limitation
to Landlord’s right to draw upon any security deposit provided by Tenant to Landlord or to avail
itself of any other rights or remedies available to Landlord under the Lease or at law or equity.

     6. Event of Default. Tenant’s failure to perform its obligations under this section
(time being of the essence) shall constitute an event of default under the Lease, and shall entitle
Landlord to immediately exercise all of its rights and remedies under the Lease (including, but not
limited to rights and remedies under this section) or at law or in equity without notice or demand
to Tenant.

     7. Conflict. If there is any conflict between the terms and conditions of this
section and the terms and conditions of the Lease, the terms of this Exhibit shall control

     8. Reduction in Amount of L/C. So long as (a) an event of default beyond any
applicable notice or cure period has not occurred and Tenant is obligated for the initial Premises,

SECOND AMENDMENT TO LEASE — Page 21 of 27

 

consisting of 22,228 rentable square feet, and (b) Landlord has not drawn upon the Letter of
Credit, on the 1st, 2nd, 3rd and 4th anniversaries of
the Extension Effective Date, Tenant shall have the right to reduce the L/C Amount by $70,000. For
example, if the Extension Effective Date occurs on January 1, 2009, then on January 1, 2010 Tenant
would have the right to reduce the L/C Amount to $280,000.00, on January 1, 2011 Tenant would have
the right to reduce the L/C Amount to $210,000.00, on January 1, 2012 Tenant would have the right
to reduce the L/C Amount to $140,000.00, and on January 1, 2013 Tenant would have the right to
reduce the L/C Amount to $70,000.00. In no event shall the L/C Amount be decreased below
$70,000.00. The documents evidencing the reduction of the L/C Amount shall be satisfactory to
Landlord, in Landlord’s reasonable discretion.

SECOND AMENDMENT TO LEASE — Page 22 of 27

 

EXHIBIT D-1

LETTER OF CREDIT

[DATE]

Sun Life Assurance Company of Canada

c/o Sun Life Financial SC 1307

One Sun Life Executive Park, SC-1307

Wellesley Hills, Massachusetts 02481

Attn: Deborah Tirone

Ladies and Gentlemen:

     At the request and on the instructions of our customer,                     
(the “Applicant”), we hereby establish this Irrevocable Letter of Credit
No.                      (the “Letter of Credit”) in the amount of $                    
in your favor. This Letter of Credit is effective immediately and shall have a minimum term of one
(1) year from the date hereof (the “Initial Term”). This Letter of Credit shall
automatically renew for successive one-year periods (each, a “Successive Term”) unless we
notify you in writing at least sixty (60) days prior to the expiration of the applicable Successive
Term that the Letter of Credit will not be renewed by us.

     This Letter of Credit is issued with respect to that certain lease, by and between you, as
Landlord, and the Applicant, as Tenant. Said lease, and any amendments or modifications thereof,
is hereinafter referred to as the “Lease.” Our obligations under this Letter of Credit are
solely as set forth herein and are completely independent of the obligations of the Applicant under
the Lease. We do not undertake any obligation under the Lease, nor do we undertake any
responsibility to ascertain any facts, or to take any other action, with respect to the Lease, and
we acknowledge that our obligations under this Letter of Credit shall not be affected by any
circumstance, claim or defense of any party as to the enforceability of the Lease. The references
to the Lease in this Letter of Credit are solely to state our agreement that this Letter of Credit
is an independent obligation and shall not be affected by the Lease.

     Funds under this Letter of Credit will be made available to you against receipt by us of a
Sight Draft in the form of Annex A attached hereto, in each case appropriately completed
and purportedly signed by one of your authorized officers.

     Presentation of any such Sight Draft shall be made at our office located at [PRESENTATION
OFFICE ADDRESS), Attention:                      , telecopy
number (                    )                      , during our banking hours of                      a.m., Central Time,

SECOND AMENDMENT TO LEASE — Page 23 of 27

 

to                      p.m.,
Central Time. Presentation hereunder may also be made in the form of facsimile transmission of the
appropriate Sight Draft to the preceding address and telecopy number.

     If a sight draft is presented hereunder by sight or by facsimile transmission as permitted
hereunder, by 10:00 a.m., Central Time, and provided that such sight draft conforms to the terms
and conditions of this Letter of Credit, payment shall be made to you, or to your designee, of the
amount specified, in immediately available funds, not later than 2:00 p.m., Central Time, on the
same day. If a sight draft is presented by you hereunder after the time specified above, and
provided that such sight draft conforms to the terms and conditions of this Letter of Credit,
payment shall be made to you, or to your designee, of the amount specified, in immediately
available funds, not later than 2:00 p.m., Central Time, on the next business day. If a demand for
payment made by you hereunder does not, in any instance, conform to the terms and conditions of
this Letter of Credit, we shall give you notice within one business day that the demand for payment
was not effected in accordance with the terms and conditions of this Letter of Credit, stating the
reasons therefor and that we will upon your instructions hold any documents at your disposal or
return the same to you. Upon being notified that the demand for payment was not effected in
conformity with this Letter of Credit, you may attempt to correct any such non-conforming demand
for payment to the extent that you are entitled to do so and within the validity of this Letter of
Credit.

     Partial drawings are allowed under this Letter of Credit. Any drawing under this Letter of
Credit will be paid from our general funds and not directly or indirectly from funds or collateral
deposited with or for our account by the Applicant, or pledged with or for our account by the
Applicant.

     This Letter of Credit is transferable and notwithstanding Article 48 of the Uniform Customs
(as defined below), this Letter of Credit may be successively transferred. Transfer of this Letter
of Credit to a transferee shall be effected only upon the presentation to us of the original of
this Letter of Credit accompanied by a certificate in the form of Annex B. Upon such
presentation we shall transfer the same to your transferee or, if so requested by your transferee,
issue a letter of credit to your transferee with provisions consistent with, and substantially the
same as, this Letter of Credit.

     This Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500 (the “Uniform
Customs”), which is incorporated into the text of this Letter of Credit by this reference.
This Letter of Credit shall be deemed to be issued under the laws of the State of Texas and shall
be governed by and construed in accordance with the law of the State of Texas with respect to
matters not governed by the Uniform Customs and matters on which the Uniform Customs and the laws
of the State of Texas are inconsistent.

SECOND AMENDMENT TO LEASE — Page 24 of 27

 

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	[ISSUING BANK]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

SECOND AMENDMENT TO LEASE — Page 25 of 27

 

ANNEX A

DATE:

	 	 	 	 	 	 	 	 	 	 	 
	TO:

	 	 	 	 	 	RE:
	 	LETTER OF CREDIT NO.	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	ISSUED BY 	 	 
	 	 	 	 	 	 	 	 
	 

	 	ATTN:	 	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 

GENTLEMEN:

THE UNDERSIGNED BENEFICIARY HEREBY DEMANDS PAYMENT OF $                     TO BE PAID IN IMMEDIATELY
AVAILABLE FUNDS IN ACCORDANCE WITH THE ABOVE-REFERENCED LETTER OF CREDIT.

SINCERELY,

	 	 	 
	 

BENEFICIARY’S NAME

	 	 
	 
	 	 
	 

AUTHORIZED SIGNATURE OF BENEFICIARY

	 	 
	 
	 	 
	 

NAME AND TITLE OF AUTHORIZED SIGNATORY

	 	 

SECOND AMENDMENT TO LEASE — Page 26 of 27

 

ANNEX B

DATE:

	 	 	 	 	 	 	 	 	 	 	 
	TO:

	 	 	 	 	 	RE:
	 	LETTER OF CREDIT NO. 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	ISSUED BY	 	 
	 	 	 	 	 	 	 	 
	 

	 	ATTN:	 	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 

GENTLEMEN:

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:

(NAME OF TRANSFEREE)

(ADDRESS)

ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT ARE TRANSFERRED
TO THE TRANSFEREE. TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE
RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER
NOW EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE TRANSFEREE WITHOUT
NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.

THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO ENDORSE THE TRANSFER
ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF
TRANSFER.

SINCERELY,

	 	 	 
	 

(BENEFICIARY’S NAME)

	 	 
	 
	 	 
	 

SIGNATURE OF BENEFICIARY

	 	 
	 
	 	 
	 

SIGNATURE AUTHENTICATED

	 	 
	 
	 	 
	 

(NAME OF BANK)

	 	 
	 
	 	 
	 

AUTHORIZED SIGNATURE

	 	 

SECOND AMENDMENT TO LEASE — Page 27 of 27

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