Document:

exv10w6

 

EXHIBIT
10.6

LEASE

between

Glenborough Fund IX LLC

“Landlord”

AND

Optelecom, Inc.

“Tenant”

Property Name: Cloverleaf Center II

Address: 12920 Cloverleaf Center Drive, Germantown, MD

Dated: September 17, 2002

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	1. LEASE OF PREMISES
	 	 	1	 
	 
	2. DEFINITIONS
	 	 	1	 
	 
	3. EXHIBITS AND ADDENDA
	 	 	3	 
	 
	4. DELIVERY OF POSSESSION
	 	 	3	 
	 
	5. INTENDED USE OF THE PREMISES
	 	 	3	 
	 
	6. RENT
	 	 	3	 
	6.1. Payment of Rent
	 	 	3	 
	6.2. Intentionally omitted
	 	 	3	 
	6.3. Additional Rent for Operating Expenses, Real Property Taxes and Insurance Costs
	 	 	3	 
	6.4. Definitions
	 	 	4	 
	6.5. Determination and Payment of Operating Expenses, Real Property Taxes
and Insurance Costs
	 	 	5	 
	6.6. Definition of Rent
	 	 	6	 
	6.7. Taxes on Tenant’s Use and Occupancy
	 	 	6	 
	6.8. Net Lease
	 	 	6	 
	 
	7. LATE CHARGES
	 	 	6	 
	 
	8. SECURITY DEPOSIT
	 	 	6	 
	 
	9.
TENANT’S USE OF THE PREMISES
	 	 	7	 
	9.1. Use
	 	 	7	 
	9.2. Observance of Law
	 	 	7	 
	9.3. Insurance
	 	 	7	 
	9.4. Nuisance and Waste
	 	 	7	 
	9.5. Load and Equipment Limits
	 	 	7	 
	9.6. Hazardous Material
	 	 	7	 
	9.7. Use of Common Area
	 	 	8	 
	 
	10. SERVICES AND UTILITIES
	 	 	9	 
	 
	11. REPAIRS AND MAINTENANCE
	 	 	9	 
	11.1. Landlord’s Obligations
	 	 	9	 
	11.2. Tenant’s Obligations
	 	 	9	 
	11.3. Compliance with Law
	 	 	10	 
	11.4. Notice of Defect
	 	 	10	 
	11.5. Landlord’s Liability
	 	 	10	 
	 
	12. CONSTRUCTION, ALTERATIONS AND ADDITIONS
	 	 	10	 
	12.1. Landlord’s Construction Obligations
	 	 	10	 
	12.2. Tenant’s Construction Obligations
	 	 	10	 
	12.3. Tenant’s Alterations and Additions
	 	 	10	 
	12.4. Payment
	 	 	10	 
	12.5. Property of Landlord
	 	 	10	 
	 
	13. LEASEHOLD IMPROVEMENTS; TENANT’S PROPERTY
	 	 	10	 
	13.1. Leasehold Improvements
	 	 	10	 
	13.2. Tenant’s Property
	 	 	11	 
	 
	14. INDEMNIFICATION
	 	 	11	 
	14.1. Tenant Indemnification
	 	 	11	 
	14.2. Landlord Not Liable
	 	 	11	 
	 
	15. TENANT’S INSURANCE
	 	 	11	 
	15.1. Insurance Requirement
	 	 	11	 
	15.2. Minimum Scope of Coverage
	 	 	12	 
	15.3. Minimum Limits of Insurance
	 	 	12	 
	15.4. Deductible and Self-Insured Retention
	 	 	12	 
	15.5. Increases in Insurance Policy Limits
	 	 	12	 
	15.6. Waiver of Subrogation
	 	 	12	 
	15.7. Landlord’s Right to Obtain Insurance for Tenant
	 	 	12	 
	 
	16 DAMAGE OR DESTRUCTION
	 	 	13	 
	16.1. Damage
	 	 	13	 
	16.2. Repair of Premises in Excess of One Hundred Eighty Days
	 	 	13	 
	16.3. Repair Outside Premises
	 	 	13	 
	16.4. Tenant Repair
	 	 	13	 
	16.5. Election Not to Perform Landlord’s Work
	 	 	13	 
	16.6. Express Agreement
	 	 	13	 
	 
	17 EMINENT DOMAIN
	 	 	13	 
	17.1. Whole Taking
	 	 	13	 
	17.2. PartialTaking
	 	 	14	 

i

 

	 	 	 	 	 
	17.3. Proceeds
	 	 	14	 
	17.4. Landlord’s Restoration
	 	 	14	 
	 
	18. ASSIGNMENT AND SUBLETTING
	 	 	14	 
	18.1. No Assignment or Subletting
	 	 	14	 
	18.2. Landlord’s Consent
	 	 	14	 
	18.3. Tenant Remains Responsible
	 	 	15	 
	18.4. Conversion to a Limited Liability Entity
	 	 	15	 
	18.5. Payment of Fees
	 	 	16	 
	 
	19. DEFAULT
	 	 	16	 
	19.1. Tenant’s Default
	 	 	16	 
	19.2. Landlord Remedies
	 	 	16	 
	19.3. Damages Recoverable 
	 	 	17	 
	19.4. Landlord’s Right to Cure Tenant’s Default
	 	 	17	 
	19.5. Landlord’s Default
	 	 	17	 
	19.6. Mortgagee Protection
	 	 	18	 
	19.7. Tenant’s Right to Cure Landlord’s Default
	 	 	18	 
	 
	20. WAIVER
	 	 	18	 
	 
	21. SUBORDINATION AND ATTORNMENT
	 	 	18	 
	 
	22. TENANT ESTOPPEL CERTIFICATES
	 	 	18	 
	22.1. Landlord Request for Estoppel Certificate
	 	 	18	 
	22.2. Failure to Execute
	 	 	19	 
	 
	23. NOTICE
	 	 	19	 
	 
	24. TRANSFER OF LANDLORD’S INTEREST
	 	 	19	 
	 
	25. SURRENDER OF PREMISES 
	 	 	19	 
	25.1. Clean and Same Condition
	 	 	19	 
	25.2. Failure to Deliver Possession
	 	 	19	 
	25.3. Property Abandoned
	 	 	19	 
	 
	26. HOLDING OVER
	 	 	19	 
	 
	27. RULES AND REGULATIONS
	 	 	19	 
	 
	28. CERTAIN RIGHTS RESERVED BY LANDLORD
	 	 	20	 
	28.1. Name
	 	 	20	 
	28.2. Signage
	 	 	20	 
	28.3. Access
	 	 	20	 
	28.4. Physical Changes
	 	 	20	 
	28.5. Inspection
	 	 	20	 
	28.6. Entry
	 	 	20	 
	28.7. Common Area Regulation
	 	 	20	 
	 
	29. ADVERTISEMENTS AND SIGNS
	 	 	20	 
	 
	30. RELOCATION OF PREMISES
	 	 	20	 
	 
	Intentionally omitted 
	 	 	20	 
	 
	31. GOVERNMENT ENERGY OR UTILITY CONTROLS
	 	 	20	 
	 
	32. FORCE MAJEURE
	 	 	20	 
	 
	33. BROKERAGE FEES
	 	 	21	 
	 
	34. QUIET ENJOYMENT
	 	 	21	 
	 
	35. INTENTIONALLY OMITTED
	 	 	21	 
	 
	MISCELLANEOUS
	 	 	21	 
	36.1. Accord and Satisfaction; Allocation of Payments
	 	 	21	 
	36.2. Addenda
	 	 	21	 
	36.3. Attorneys’ Fees
	 	 	21	 
	36.4. Captions and Section Numbers
	 	 	21	 
	36.5. Changes Requested by Lender
	 	 	21	 
	36.6. Choice of Law
	 	 	21	 
	36.7. Consent
	 	 	21	 
	36.8. Authority
	 	 	21	 
	36.9. Waiver of Right to Jury Trial
	 	 	21	 
	36.10. Counterparts
	 	 	22	 
	36.11. Execution of Lease; No Option
	 	 	22	 
	36.12. Furnishing of Financial Statements; Tenant’s Representations
	 	 	22	 
	36.13. Further Assurances
	 	 	22	 
	36.14. Prior Agreements; Amendments
	 	 	22	 
	36.15. Recording
	 	 	22	 
	36.16. Severability
	 	 	22	 
	36.17. Successors and Assigns
	 	 	22	 

ii

 

 

	 	 	 	 	 
	 
	 	 	 	 
	36.18. Time Is of the Essence
	 	 	22	 
	36.19. Multiple Parties
	 	 	22	 
	36.20. Consent to Press Release
	 	 	22	 

iii

 

LEASE

This lease between Glenborough Fund IX LLC, a Delaware limited liability company (herein
Landlord), and Optelecom, Inc., a Delaware corporation (herein Tenant), is dated for reference
purposes only as of this 17th day of September 2002.

1. LEASE OF PREMISES.

In consideration of the Rent (as defined in Section 6.) and the provisions of this Lease, Landlord
leases to Tenant and Tenant leases from Landlord the Premises shown by diagonal lines on the floor
plan attached hereto as Exhibit “A”, and further described in Section 2.13. The Premises consist of
the entirety of the Building as described in Section 2.13 hereinbelow and Project (as described in
Sections 2.13. and 2.14.). Tenant shall have the nonexclusive right (unless otherwise provided
herein) in common with Landlord, other tenants, subtenants and invitees, to use the Common Area (as
defined in Section 2.4.). This Lease confers no rights either to the subsurface of the land below
the ground level of the Building in which the Premises is located or to airspace, interior or
exterior, above the ceiling of the Building.

2. DEFINITIONS.

As used in this Lease the following terms shall have the following meanings:

	 	2.1.	 	Intentionally omitted.
	 
	 	2.2.	 	ANNUAL BASE RENT:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$454,500.00
	 	beginning	 	 	11/1/02	 	 	ending	 	 	1/31/04	 
	$468,135.00
	 	beginning	 	 	2/1/04	 	 	ending	 	 	1/31/05	 
	$482,179.05
	 	beginning	 	 	2/1/05	 	 	ending	 	 	1/31/06	 
	$496,644.42
	 	beginning	 	 	2/1/06	 	 	ending	 	 	1/31/07	 
	$511,543.75
	 	beginning	 	 	2/1/07	 	 	ending	 	 	1/31/08	 
	$526,890.07
	 	beginning	 	 	2/1/08	 	 	ending	 	 	1/31/09	 
	$542,696.77
	 	beginning	 	 	2/1/09	 	 	ending	 	 	1/31/10	 
	$558,977.67
	 	beginning	 	 	2/1/10	 	 	ending	 	 	1/31/11	 
	$575,747.00
	 	beginning	 	 	2/1/11	 	 	ending	 	 	1/31/12	 
	$593,019.41
	 	beginning	 	 	2/1/12	 	 	ending	 	 	1/31/13	 
	$610,809.99
	 	beginning	 	 	2/1/13	 	 	ending	 	 	8/31/13	 

	 	 	 	Notwithstanding anything herein to the contrary, Tenant’s Base Rent shall be abated for the period
commencing November 1, 2002 up to and including January 31, 2003. Notwithstanding the foregoing,
Tenant’s Base Rent shall be abated by $6,312.50 per month for the period beginning February 1, 2003
up to and including January 31, 2004. Nothing herein shall be construed to abate any Additional
Rent or other sums due under the Lease.
	 
	 	2.3.	 	COMMENCEMENT DATE: November 1, 2002. If the Commencement Date is other than the first day of a
month, then the Expiration Date of the Lease shall be extended to the last day of the month in
which the Lease expires.
	 
	 	2.4.	 	COMMON AREA: The building parking areas, landscaped areas and other generally understood
public or common area.
	 
	 	2.5.	 	EXPIRATION DATE: August 31, 2013, unless otherwise sooner terminated in accordance with the
provisions of this Lease.
	 
	 	2.6.	 	Intentionally omitted.
	 
	 	2.7.	 	LANDLORD’S ADDRESS FOR NOTICE:

c/o Glenborough Realty Trust Incorporated

400 South El Camino Real, Suite 1100

San Mateo, California 94402-1708

ATTN: Legal Department

RENT PAYMENT ADDRESS:

Glenborough
Fund IX, LLC

c/o Glenborough Realty Trust Incorporated

11400 Rockville Pike, Suite C-10

Rockville, MD 20852

TENANT’S MAILING ADDRESS:

Optelecom, Inc.

12920 Cloverleaf Center Drive

Germantown, Maryland 20876

Page 1

 

	 	2.8.	 	LISTING AND LEASING AGENT(S): CB Richard Ellis, Spaulding & Slye.
	 
	 	2.9.	 	MONTHLY INSTALLMENTS OF BASE RENT:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$37,875.00
	 	beginning	 	 	11/1/02	 	 	ending	 	 	1/31/04	 
	$39,011.25
	 	beginning	 	 	2/1/04	 	 	ending	 	 	1/31/05	 
	$40,181.59
	 	beginning	 	 	2/1/05	 	 	ending	 	 	1/31/06	 
	$41,387.04
	 	beginning	 	 	2/1/06	 	 	ending	 	 	1/31/07	 
	$42,628.65
	 	beginning	 	 	2/1/07	 	 	ending	 	 	1/31/08	 
	$43,907.51
	 	beginning	 	 	2/1/08	 	 	ending	 	 	1/31/09	 
	$45,224.73
	 	beginning	 	 	2/1/09	 	 	ending	 	 	1/31/10	 
	$46,581.47
	 	beginning	 	 	2/1/10	 	 	ending	 	 	1/31/11	 
	$47,978.92
	 	beginning	 	 	2/1/11	 	 	ending	 	 	1/31/12	 
	$49,418.28
	 	beginning	 	 	2/1/12	 	 	ending	 	 	1/31/13	 
	$50,900.83
	 	beginning	 	 	2/1/13	 	 	ending	 	 	8/31/13	 

	 	 	 	Notwithstanding anything herein to the contrary, Tenant’s Base Rent shall be abated for the period
commencing November 1, 2002 up to and including January 31, 2003. Notwithstanding the foregoing,
Tenant’s Base Rent shall be abated by $6,312.50 per month for the period beginning February 1, 2003
up to and including January 31, 2004. Nothing herein shall be construed to abate any Additional
Rent or other sums due under the Lease.
	 
	 	2.10.	 	NOTICE: Except as otherwise provided herein, Notice shall mean any notices, approvals
and demands permitted or required to be given under this Lease. Notice shall be given in the form
and manner set forth in Section 23.
	 
	 	2.11.	 	ESTIMATED OPERATING EXPENSES, REAL PROPERTY TAXES INSURANCE COSTS (Section 6.3.):
During the first calendar year of the Lease Term, Landlord’s estimate of Operating Expenses, Real
Property Taxes and Insurance Costs is $0.15 per square foot of Usable Area per month.
	 
	 	2.12.	 	PARKING: Tenant shall be entitled to the nonexclusive use of 3.6 parking spaces per 1,000
square feet leased located on the Property. The charge for parking shall be $0.00 per month per
parking space. Notwithstanding anything herein to the contrary, Tenant shall be entitled to the
exclusive use of up to fourteen (14) of the above referenced parking spaces which shall be reserved
for Tenant’s use, and shall be located in the lot closest to the Building at no charge. Landlord
shall have no obligation to police the reserved spaces, and Tenant hereby waives any claims, causes
of action, damages, etc. arising from any failure of Landlord to police such spaces. All signage
designating such spaces as reserved shall be of the Project standard and shall be at Tenant’s cost.
	 
	 	2.13.	 	PREMISES: That portion of the Building containing approximately 30,000 square feet of
Usable Area (consisting of 30,000 square feet of office space and 0 square feet of warehouse
space), shown by diagonal lines on Exhibit “A”, located at 12920 Cloverleaf Center Drive,
Germantown, MD. For purposes of this Lease, the Premises is deemed to contain approximately 30,000
square feet of Usable Area.
	 
	 	2.14.	 	PROJECT: The building of which the Premises are a part (the
Building) and any
other buildings or improvements on the real property (the Property)
located at 12910, l2920 and 12930 Cloverleaf
Center Drive, Germantown, Maryland further described at Exhibit “B”.
	 
	 	2.15.	 	SECURITY DEPOSIT (Section 8.): $255,025.00. Such amount shall be reduced pursuant to
Section 41. herein. In no event will the Security Deposit be reduced below $50,900.83.
	 
	 	2.16.	 	STATE: The State of Maryland.
	 
	 	2.17.	 	Intentionally omitted.
	 
	 	2.18.	 	TENANT’S PROPORTIONATE SHARE: 37.4% Such share is a fraction, the numerator of which is
the Usable Area of the Premises, and the denominator of which is the Usable Area of the Project, as
determined by Landlord from time to time. The Project consists of one building(s), and, for
purposes of this Lease, the building(s) are deemed to contain approximately 80,200 square feet of Usable
Area.
	 
	 	2.19.	 	TENANT’S USE (Section 9.): Office and light manufacturing and assembly of fiber
optic systems and any related ancillary functions.
	 
	 	2.20.	 	TERM: The period commencing on the Commencement Date and expiring at midnight on the
Expiration Date.

Page 2

 

	 	2.21.	 	USABLE AREA: As to both the Premises and the Project, the respective measurements of floor
area as may from time to time be subject to lease by Tenant and all tenants of the Project,
respectively, as determined by Landlord and applied on a consistent basis throughout the Project.

3. EXHIBITS AND ADDENDA.

The exhibits and addenda listed below (unless lined out) are attached hereto and incorporated by
reference in this Lease:

	 	 	 
	 	3.1.

	Exhibit A — Floor Plan showing the Premises.
	 	3.2.

	Exhibit B — Site Plan of the Project.
	 	3.3.

	Exhibit C — Building Standard Tenant
Improvements.
	 	3.4.

	Exhibit D — Work Letter and Drawings.
	 	3.5.

	Exhibit E — Rules and Regulations.
	 	3.6.

	Exhibit F — Intentionally omitted.

	 	 	 	Addenda: Attached hereto and made a part of this Lease by reference
are Sections 37., 38., 39., 40 and 41.

4. DELIVERY OF POSSESSION.

If for any reason Landlord does not deliver possession of the Premises to Tenant on the
Commencement Date, and such failure is not caused by an act or omission of Tenant, the Expiration
Date shall be extended by the number of days the Commencement Date has been delayed and the
validity of this Lease shall not be impaired nor shall Landlord be subject to any liability for
such failure; but Rent shall be abated until delivery of possession. Provided, however, if the
Commencement Date has been delayed by an act or omission of Tenant then Rent shall not be abated
until delivery of possession and the Expiration Date shall not be extended. Delivery of possession
shall be deemed to occur on the later of the execution of the Lease or November 1, 2002 If Landlord
permits Tenant to enter into possession of the Premises before the Commencement Date, such
possession shall be subject to the provisions of this Lease, including, without limitation, the
payment of Rent (unless otherwise agreed in writing).

Within ten (10) days of delivery of possession Landlord shall deliver to Tenant and Tenant shall
execute an Acceptance of Premises in which Tenant shall certify, among other things, that (a)
Landlord has satisfactorily completed Landlord’s Work to the Premises pursuant to Exhibit “D”,
unless written exception is set forth thereon, and (b) that Tenant accepts the Premises. Tenant’s
failure to execute and deliver the Acceptance of Premises shall be conclusive evidence, as against
Tenant, that Landlord has satisfactorily completed Landlord’s Work to the Premises pursuant to
Exhibit “D”.

In the event Tenant fails to take possession of the Premises following execution of this Lease,
Tenant shall reimburse Landlord promptly upon demand for all costs incurred by Landlord in
connection with entering into this Lease including, but not limited to, broker fees and
commissions, sums paid for the preparation of a floor and/or space plan for the Premises, costs
incurred in performing Landlord’s Work pursuant to Exhibit “D”, loss of rental income, attorneys’
fees and costs, and any other damages for breach of this Lease established by Landlord.

5. INTENDED USE OF THE PREMISES.

The statement in this Lease of the nature of the business to be conducted by Tenant in the Premises
does not constitute a representation or guaranty by the Landlord as to the present or future
suitability of the Premises for the conduct of such business in the Premises, or that it is lawful
or permissible
under the Certificate of Occupancy issued for the Building, or is otherwise permitted by law.
Tenant’s taking possession of the Premises shall be conclusive evidence, as against Tenant, that,
at the time such possession was taken, the Premises were satisfactory for Tenant’s intended use.

6. RENT.

     6.1.
Payment of Rent. Tenant shall pay Rent for the Premises. Monthly Installments of Rent
shall be payable in advance on the first day of each calendar month of the Term. If the Term begins
(or ends) on other than the first (or last) day of a calendar month, Rent for the partial month
shall be prorated based on the number of days in that month. Rent shall be paid to Landlord at the
Rent Payment Address set forth in Section 2.7., or to such other person at such place as Landlord
may from time to time designate in writing, without any prior demand therefor and without deduction
or offset, in lawful money of the United States of America. Tenant shall pay Landlord the first
Monthly Installment of Base Rent upon execution of this Lease.

     6.2. Intentionally omitted.

     6.3.
Additional Rent for Operating Expenses, Real Property Taxes and
Insurance Costs. Tenant
shall pay Tenant’s Proportionate Share of Operating Expenses, Real Property Taxes and Insurance
Costs (hereinafter sometimes together referred to as Direct Costs) based on the percentages set
forth in Section 2.18. Tenant’s Proportionate Share of Direct Costs shall be deemed Additional
Rent.

Page 3

 

     6.4.
Definitions. As used in this Section 6.4., the following terms shall have the
following meanings:

     6.4.1.
Operating Expenses. The term Operating Expenses shall mean all costs and expenses of
every kind and nature, paid or incurred by Landlord, because of or in connection with the
management, operations, protection, replacement, repair, , maintenance or occupation of the
Building, Project and such additional facilities and personal property as Landlord may determine to
be necessary or beneficial; including, without limiting the generality of the foregoing: (a)
maintenance, repair, cleaning, painting and the cost of replacement of the structural parts of the
Building (including the roof, foundation, floor slab and load bearing walls) amortized over the
useful life of such replacement, and the exterior surfaces of the Building; (b) the amortized cost
of capital improvements constructed to comply with any law not in effect or applicable to the
Building or Project as of the Commencement Date; (c) the amortized cost to upgrade the efficiency
or capacity of Building telecommunication lines and systems if responsibility therefor is assumed
by Landlord as discussed in Section 35. hereof; (d) modification of existing or construction of
additional capital improvements or building service equipment which are designed to reduce the
consumption of utilities or services or the Operating Expenses of the Building or Project and
replacement of capital improvements or building service equipment existing as of the Commencement
Date when required because of normal wear and tear or obsolescence; (e) Common Area electric, gas
and water, plumbing and sewage, the parking area, the lighting fixtures, directional signs, the
irrigation systems and all landscaping of the Building or Project, snow and ice removal and fire
safety equipment service; (f) reasonable attorneys’ fees and/or consultant fees incurred by
Landlord in contracting with a company or companies to provide electricity (or any other utility)
to the Project, any fees for the installation, maintenance, repair or removal of related equipment,
and any exit fees or stranded cost charges mandated by the State, provided that such costs may be
passed through only to the extent applicable to Project utility costs (as opposed to such costs
imposed with respect to Tenant’s utility usage within the Building); (g) the cost of compliance
with all applicable laws and any covenants, conditions or restrictions (including payment of
charges assessed pursuant thereto) but not the cost of any penalties due to failure by Landlord to
comply; (h) reasonable auditing, accounting, legal and other outside services; (i) depreciation or
rental of maintenance and operating machinery and equipment; (j) that portion of all compensation
and payroll (including benefits and premiums for worker’s compensation and other insurance) paid to
or for the benefit of Landlord’s employees involved in the performance of work described in this
subsection which is allocable to the Building or Project; (k) supplies and materials consumed in
connection with the Building or Project; (l) a management fee; (m) maintenance, repair and
replacement of any intrabuilding cabling network (ICN), if any; and (n) any other cost or expense
which would be deductible business expense for Federal Income Tax purposes.

     Notwithstanding the foregoing, the following shall not be included within Operating Expenses: (i)
costs of capital improvements (except as otherwise set forth above and except any improvements that
might be deemed “capital improvements” related to the enhancement or upgrade of the ICN and related
equipment) and costs of curing design or construction defects; (ii) depreciation; (iii) interest
and principal payments on mortgages and other debt costs and ground lease payments, if any, and any
penalties assessed as a result of Landlord’s late payments of such amounts; (iv) real estate broker
leasing commissions or compensation; (v) any cost or expenditure (or portion thereof) for which
Landlord is reimbursed, whether by insurance proceeds or otherwise; (vi) attorneys’ fees, costs,
disbursements, advertising and marketing and other expenses incurred in connection with the
negotiation of leases with prospective tenants of the Building; (vii) rent for space which is not
actually used by Landlord in connection with the management and operation of the Building; (viii)
all costs or expenses (including fines, penalties and legal fees) incurred due to the violation by
Landlord, its employees, agents, contractors or assigns of the terms and conditions of the Lease,
or any valid, applicable building code, governmental rule, regulation or law; (ix) except for the
referenced
management compensation, any overhead or profit increments to any subsidiary or affiliate of
Landlord for services on or to the Building, to the extent that the costs of such services exceed
competitive costs for such services; (x) the cost of constructing tenant improvements for Tenant or
any other tenant of the Building or Project; (xi) Operating Expenses specially charged to and paid
by any other tenant of the Building or Project; and (xii) the cost of special services, goods or
materials provided to any other tenant of the Building or Project.

     6.4.2.
Real Property Taxes. As used herein, the term Real Property Taxes shall include every
form of tax (other than general net income or estate taxes of Landlord), charge, levy, assessment,
fee, license fee, service fee (including, without limitation, those based on commercial rentals,
energy or environmental grounds as well as any increase due to reassessment or escape assessment
whether caused by sale or lease of the Premises, Building or Project or otherwise), ordinary or
extraordinary, imposed by any authority having direct or indirect power to tax, including, without
limitation, any city, county, state or federal government or quasi-government entity or any
improvement utility, beautification or similar district against any legal or equitable interest of
Landlord in, or against Landlord’s right to rent, the Premises or the Building, and any such tax,
charge, levy, assessment or fee imposed, in addition to or in substitution for any tax previously
included within the definition of real property tax, partially or totally, whether or not
foreseeable or now within the contemplation of the parties provided that all separately
identifiable real property taxes attributable solely to Tenant’s business or Tenant’s improvements
which are valued at an amount in excess of the Building standard improvements, shall be paid
entirely by

Page 4

 

Tenant, and not prorated with other tenants of the Building or Project. Tenant’s obligation to pay
its share of the assessments, as provided in this Section 6.4.2., shall be calculated on the basis
of the amount due if Landlord allows the assessments to go to bond, and the assessment is to be
paid in installments, even if Landlord pays the assessment in full. Real Property Taxes for each
tax year shall be apportioned to determine the Real Property Taxes for the subject calendar years.

     Landlord, at Landlord’s sole discretion, may contest any taxes levied or assessed against the
Building or Project during the Term. If Landlord contests any taxes levied or assessed during the
Term, Tenant shall pay Landlord Tenant’s Proportionate Share of all costs reasonably incurred by
Landlord in connection with the contest.

     6.4.3.
Insurance Costs. The term Insurance Costs shall mean all costs and expenses paid or incurred
by Landlord to obtain and keep in force during the Term of this Lease policies of insurance
providing coverage for (a) Commercial General Liability; (b) loss of or damage to the Building or
Project in such amount or percentage of replacement value as Landlord or its insurance advisor
deems reasonable in relation to the age, location, type of construction and physical condition of
the Building or Project and the availability of such insurance at reasonable rates; and (c) loss of
rental income for a period of one year, which insurance shall also cover all Real Property Taxes
and Insurance Costs for the same period. Such policies shall provide protection against all perils
included with the classification of fire, extended coverage, vandalism, malicious mischief, special
perils (all risk), sprinkler leakage, and other perils which Landlord deems necessary.

     6.5. Determination and Payment of Operating Expenses, Real Property Taxes and Insurance
Costs. Tenant’s Proportionate Share of Operating Expenses, Real Property Taxes and Insurance
Costs shall be paid as follows:

     6.5.1.
Monthly Estimate. On or before the last day of each December during the Term of the
Lease or any extended period thereof, Landlord shall deliver to Tenant a written statement showing
in reasonable detail Landlord’s projected Direct Costs for the ensuing calendar year. During the
ensuing calendar year, Tenant shall pay Tenant’s Proportionate Share of estimated Direct Costs in
advance in equal monthly installments pursuant to the same provisions as Monthly Installments of
Base Rent. If during the course of any calendar year Landlord determines that actual Direct Costs
will vary from its estimate by more than five percent (5%), Landlord may deliver to Tenant a
written statement showing Landlord’s revised estimate of Direct Costs; whereupon payments of
Tenant’s Proportionate Share of estimated Direct Costs shall be adjusted and thereafter paid on the
basis of Landlord’s revised estimate. Neither Landlord’s failure to deliver nor late delivery of
such statement shall constitute a default by Landlord or a waiver of Landlord’s right to any Rent
adjustment provided for herein.

     6.5.2.
Annual Reconciliation. On or before the first day of each April during the Term of this
Lease or any extended period thereof, Landlord shall furnish to Tenant a written statement of
reconciliation (Reconciliation) showing in reasonable detail Landlord’s actual Direct Costs for the
preceding calendar year. In the event such Reconciliation shows that additional sums are due from
Tenant, Tenant shall pay such sums to Landlord within ten (10) business days of receipt of such
Reconciliation to the end that Landlord shall receive the entire amount of Tenant’s Proportionate
Share of Direct Costs for the preceding year and no more. In the event such Reconciliation shows
that a credit is due Tenant, such credit shall be credited against the next sums becoming due from
Tenant, unless this Lease has expired or been terminated pursuant to the terms hereof (and all sums
due Landlord have been paid), in which event such sums shall be refunded to Tenant within 45 days.
Neither Landlord’s failure to deliver nor late delivery of such Reconciliation to Tenant shall
constitute a default by Landlord or operate as a waiver of Landlord’s right to collect all
Additional Rent or sums due hereunder. Tenant agrees that no written request of such
Reconciliation shall be made until the Reconciliation for such period shall be due.

     6.5.3. Tenant’s Inspection of Reconciliation Accounting Records. So long as Tenant is not in
default under the terms of the Lease and provided Notice of Tenant’s request is given to Landlord
within forty-five days after Tenant’s receipt of the Reconciliation, Tenant may inspect Landlord’s
Reconciliation accounting records relating to Direct Costs at Landlord’s corporate office, during
normal business hours, for the purpose of verifying the charges contained in such statement. The
audit must be completed within sixty (60) days of Landlord’s receipt of Tenant’s Notice, unless
such period is extended by Landlord (in Landlord’s reasonable discretion). Before conducting any
audit however, Tenant must pay in full the amount of Direct Costs billed. Tenant may only review
those records that specifically relate to Direct Costs. Tenant may not review any other leases or
Landlord’s tax returns or financial statements. In conducting an audit, Tenant must utilize an
independent certified public accountant experienced in auditing records related to property
operations. The proposed accountant is subject to Landlord’s reasonable prior approval. The audit
shall be conducted in accordance with generally accepted rules of auditing practices. Tenant may
not conduct an audit more often than once each calendar year. Tenant may audit records relating
to a calendar year only one time. No audit shall cover a period of time other than the calendar
year from which Landlord’s Reconciliation was generated. Upon receipt thereof, Tenant shall
deliver to Landlord a copy of the audit report and all accompanying data. Tenant and Tenant’s
auditor shall keep confidential any agreements involving the rights provided in this section and
the results of any audit conducted hereunder. As a condition precedent to Tenant’s

	 	 	 
	 	Page 5	

 

     right to conduct an audit, Tenant’s auditor shall sign a confidentiality agreement in
a form reasonably acceptable to Landlord. However, Tenant shall be permitted to furnish
information to its attorneys, accountants and auditors to the extent necessary to perform
their respective services for Tenant.

     6.6.
Definition of Rent. All costs and expenses other than Base Rent, that Tenant assumes
or agrees or is obligated to pay to Landlord under this Lease shall be deemed Additional Rent
(which, together with the Base Rent, is sometimes referred to as Rent).

     6.7.
Taxes on Tenant’s Use and Occupancy. In addition to the Rent and any other charges to be
paid by Tenant hereunder, Tenant shall pay Landlord upon demand for any and all taxes payable by
Landlord (other than net income taxes) which are not otherwise reimbursable under this Lease,
whether or not now customary or within the contemplation of the parties, where such taxes are upon,
measured by or reasonably attributable to (a) the cost or value of Tenant’s equipment, furniture,
fixtures and other personal property located in the Premises, or the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, other than Building Standard Tenant
Improvements made by Landlord, regardless of whether title to such improvements is held by Tenant
or Landlord; (b) the gross or net Rent payable under this Lease, including, without limitation, any
rental or gross receipts tax levied by any taxing authority with respect to the receipt of the Rent
hereunder; (c) the possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion thereof; or (d) this transaction or any
document to which Tenant is a party creating or transferring an interest or an estate in the
Premises. If it becomes unlawful for Tenant to reimburse Landlord for any costs as required under
this Lease, the Base Rent shall be revised to net Landlord the same net Rent after imposition of
any tax or other charge upon Landlord as would have been payable to Landlord but for the
reimbursement being unlawful.

     6.8.
Net Lease. It is the intention of the parties hereto that this Lease shall be completely
net to Landlord and shall not be terminable for any reason by Tenant, and that Tenant shall not be
entitled to any abatement of or reduction in Rent or other amounts hereunder, except as herein
expressly provided regardless of disturbance, prevention, interruption or inconvenience in the use
and occupancy of the Premises from any cause whatsoever, whether within or beyond the present
contemplations of the parties. With respect to the foregoing, any present or future law to the
contrary is hereby waived by Tenant, and shall not alter this agreement of the parties.

7. LATE CHARGES.

If Tenant fails to pay when due any Rent or other amounts or charges which Tenant is obligated to
pay under the terms of this Lease, then Tenant shall pay Landlord a late charge equal to ten
percent (10%) of each such installment if any such installment is not received by Landlord within
five (5) business days from the date it is due. Tenant acknowledges that the late payment of any
Rent will cause Landlord to lose the use of that money and incur costs and expenses not
contemplated under this Lease including, without limitation, administrative costs and processing
and accounting expenses, the exact amount of which is extremely difficult to ascertain. Landlord
and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses
and is fair compensation to Landlord for the loss suffered as a result of such late payment by
Tenant. However, the late charge is not intended to cover Landlord’s attorneys’ fees and costs
relating to delinquent Rent. Acceptance of any late charge shall not constitute a waiver of
Tenant’s default with respect to such late payment by nor prevent Landlord from exercising any
other rights or remedies available to Landlord under this Lease. Late charges are deemed Additional
Rent.

In no event shall this provision for the imposition of a late charge be deemed to grant to Tenant
a grace period or an extension of time within which to pay any Rent due hereunder or prevent
Landlord from exercising any right or remedy available to Landlord upon Tenant’s failure to pay
such Rent when due.

8. SECURITY DEPOSIT.

Upon execution of this Lease, Tenant agrees to deposit with Landlord a Security Deposit in the
amount set forth in Section 2.15. as security for Tenant’s performance of its obligations under
this Lease. Landlord and Tenant agree that the Security Deposit may be commingled with funds of
Landlord and Landlord shall have no obligation or liability for payment of interest on such
deposit. Tenant shall not mortgage, assign, transfer or encumber the Security Deposit without the
prior written consent of Landlord and any attempt by Tenant to do so shall be void, without force
or effect and shall not be binding upon Landlord.

If Tenant fails to timely pay any Rent or other amount due under this Lease, or fails to perform
any of the terms hereof, Landlord may, at its option and without prejudice to any other remedy
which Landlord may have, appropriate and apply or use all or any portion of the Security Deposit
for Rent payments or any other amount then due and unpaid, for payment of any amount for which
Landlord has become obligated as a result of Tenant’s default or breach, and for any loss or
damage sustained by Landlord as a result of Tenant’s default or breach. If Landlord so uses any of
the Security Deposit, Tenant shall, within ten (10) days after written demand therefor, restore
the Security Deposit to the full amount originally deposited. Tenant’s failure to do so shall
constitute an act of default hereunder and Landlord shall have the right to exercise any remedy
provided for in Section 19. hereof.

If Tenant monetarily defaults under this Lease more than two (2) times during any calendar
year, irrespective of whether such default is cured, then, without limiting Landlord’s other
rights and remedies, Landlord may, in

	 	 	 
	 
	Page 6	

 

 

Landlord’s sole discretion, modify the amount of the required Security Deposit. Within ten (10)
days after Notice of such modification, Tenant shall submit to Landlord the required additional
sums. Tenant’s failure to do so shall constitute an act of default, and Landlord shall have the
right to exercise any remedy provided for in Section 19. hereof.

If Tenant complies with all of the terms and conditions of this Lease, and Tenant is not in
default on any of its obligations hereunder, then within the time period statutorily prescribed
after Tenant vacates the Premises, Landlord shall return to Tenant (or, at Landlord’s option, to
the last subtenant or assignee of Tenant’s interest hereunder) the Security Deposit less any
expenditures made by Landlord to repair damages to the Premises caused by Tenant and to clean the
Premises upon expiration or earlier termination of this Lease

9. TENANT’S USE OF THE PREMISES.

The provisions of this Section are for the benefit of the Landlord and are not nor shall they be
construed to be for the benefit of any tenant of the Building or Project.

     9.1.
Use. Tenant shall use the Premises solely for the purposes set forth in Section 2.19. No
change in the Use of the Premises shall be permitted, except as provided in this Section 9.

     9.1.1. If, at any time during the Term hereof, Tenant desires to change the Use of
the Premises, including any change in Use associated with a proposed assignment or sublet
of the Premises, Tenant shall provide Notice to Landlord of its request for approval of
such proposed change in Use. Tenant shall promptly supply Landlord with such information
concerning the proposed change in Use as Landlord may reasonably request. Landlord shall
have the right to approve such proposed change in Use, which approval shall not be
unreasonably withheld, conditioned or delayed. Landlord’s consent to any change in Use
shall not be construed as a consent to any subsequent change in Use.

     9.2.
Observance of Law. Tenant shall not use or knowingly or recklessly occupy the Premises
or permit anything to be done in or about the Premises in violation of any declarations, covenant,
condition or restriction, or law, statute, ordinance or governmental rules, regulations or
requirements now in force or which may hereafter be enacted or promulgated. Tenant shall, at its
sole cost and expense, upon Notice from Landlord, immediately discontinue any use of the Premises
which is declared by any governmental authority having jurisdiction to be a violation of law or of
the Certificate of Occupancy. Tenant shall promptly comply, at its sole cost and expense, with all
laws, statutes, ordinances and governmental rules, regulations or requirements now in force or
which may hereafter be imposed which shall by reason of Tenant’s Use or occupancy of the Premises,
impose any duty upon Tenant or Landlord with respect to Tenant’s Use or occupation. Further, Tenant
shall, at Tenant’s sole cost and expense, bring the Premises into compliance with all such laws,
including the Americans With Disabilities Act of 1990, as amended (ADA), whether or not the
necessity for compliance is triggered by Tenant’s Use, and Tenant shall make, at its sole cost and
expense, any changes to the Premises required to accommodate Tenant’s employees with disabilities
(any work performed pursuant to this Section shall be subject to the terms of Section 12. hereof).
The judgment of any court of competent jurisdiction or the admission by Tenant in any action or
proceeding against Tenant, whether Landlord is a party thereto or not, that Tenant has violated any
such law, statute, ordinance, or governmental regulation, rule or requirement in the use or
occupancy of the Premises, Building or Project shall be conclusive of that fact as between Landlord
and Tenant. As of the date of execution of this Lease, to the best of Landlord’s knowledge, the
Building is in substantial compliance with the applicable local building codes and the Americans
With Disabilities Act of 1990, as amended (ADA).

     9.3.
Insurance. Tenant shall not knowingly or recklessly permit to be done anything which will
contravene, invalidate or increase the cost of any insurance policy covering the Building or
Project and/or property located therein, and shall comply with all rules, orders,
regulations, requirements and recommendations of Landlord’s insurance carrier(s) or any board of
fire insurance underwriters or other similar body now or hereafter constituted, relating to or
affecting the condition, use or occupancy of the Premises, excluding structural changes not related
to or affected by Tenant’s improvements or acts. Tenant shall promptly upon demand reimburse
Landlord for any additional premium charged for violation of this Section.

     9.4.
Nuisance and Waste. Tenant shall not knowingly or recklessly permit anything to be done
in or about the Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or Project, or injure or annoy them, or use or allow the
Premises to be used for any improper, unlawful or objectionable purpose. Tenant shall not cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer to
be committed any waste in or upon the Premises.

     9.5.
Load and Equipment Limits. Tenant shall not place a load upon any floor of the Premises
which exceeds the load per square foot which such floor was designed to carry as determined by
Landlord or Landlord’s structural engineer. The cost of any such determination made by Landlord’s
structural engineer in connection with Tenant’s occupancy shall be paid by Tenant upon Landlord’s
demand. Tenant shall not install business machines or mechanical equipment which will in any manner
cause noise objectionable to or injure other tenants in the Project.

     9.6.
Hazardous Material.

	 	 	 
	 
	Page 7	

 

 

     9.6.1. Unless Tenant obtains the prior written consent of Landlord, Tenant shall not
create, generate, use, bring, allow, emit, dispose, or permit on the Premises, Building or
Project any toxic or hazardous gaseous, liquid or solid material or waste (Hazardous
Material), including without limitation, material or substance (a) having characteristics
of ignitability, corrosivity, reactivity, or extraction procedure toxicity, or (b) which is
listed on any applicable federal, state or local law, rule, regulation or ordinance, or (c)
which has been determined by any state, federal or local governmental or public authority
or agency to be capable of posing a risk of injury to health, safety or property.

     9.6.2. Tenant shall indemnify, defend and hold Landlord harmless from any claims,
liabilities, costs or expenses incurred or suffered by Landlord arising from such bringing,
allowing, using, permitting, generating, creating, emitting or disposing of Hazardous
Material whether or not consent to same has been granted by Landlord. Tenant’s
indemnification, duty to defend and hold harmless obligations include, without limitation
(a) claims, liability, costs or expenses resulting from or based upon administrative,
judicial (civil or criminal) or other action, legal or equitable, brought by any private or
public person under common law or any federal, state, county or municipal law, ordinance or
regulation, including, without limitation, any subsequent tenant or owner of the Premises
or adjacent property, (b) claims liabilities, costs or expenses pertaining to the cleanup
or containment of Hazardous Material, the identification of the pollutants in the Hazardous
Material, the identification of the scope of any environmental contamination, the removal
of pollutants from soils, riverbeds or aquifers, the provision of an alternative public
drinking water source, (c) all costs and fees incurred in defending such claims, and (d)
all costs or losses to Landlord arising from inability or delay in selling or leasing the
Premises after the expiration of the Lease, including, without limitation, reduction in the
market value of the Premises, Building or Project. Tenant shall comply at its sole cost,
with all laws pertaining to such Hazardous Material. Tenant’s hold indemnification, duty
to defend and hold harmless obligations hereunder shall survive the expiration or sooner
termination of this Lease.

     9.6.3. Tenant shall provide to Landlord a copy of any permit applications and/or
permits issued by any governmental agency concerning Tenant’s use or generation of
Hazardous Material on or about the Premises.

     9.6.4. In the event Landlord grants Tenant permission to so bring, allow, use, permit,
generate, create, emit or dispose Hazardous Material as set forth in Section 9.6.. above
(a) Tenant shall provide to Landlord on an annual basis a report from a person who is, to
Landlord’s reasonable satisfaction, appropriately qualified or licensed as an expert in the
field of hazardous materials laws compliance matters, certifying that Tenant is complying
with all applicable governmental statutes and regulations concerning Hazardous Material,
and that there have been no spills or contamination by Tenant at the Premises that have not
been fully corrected and cleaned up and, (b) prior to any such bringing, allowing, using
permitting, generating, creating, emitting or disposing of Hazardous Materials, Tenant
shall provide proof satisfactory to Landlord that tests prove there was existing
contamination by such Hazardous Material (which was not the result of acts or omissions of
Tenant) or if Tenant fails to provide such proof it shall be conclusively presumed between
the parties that any such contamination thereafter existing at, on or emitted from the
Premises was caused solely by Tenant.

     9.6.5. In the event of contamination by Hazardous Material at, from, of or around the
Premises, the Building or the Project, the cleanup of which is the responsibility of
Tenant, Tenant shall promptly take all actions necessary, at Tenant’s sole cost and
expense, to remediate the contamination and restore the Premises, Building or Project to
the condition that existed before introduction of such Hazardous Material. Tenant shall
first obtain Landlord’s approval of the proposed remedial action and shall keep Landlord
informed during the process of remediation. Landlord may require within fifteen (15) days
after written notification from Landlord, that Tenant post a bond or other adequate
security to the benefit of Landlord, in an amount equal to Landlord’s estimate of costs for
cleaning up the contamination. The posting of the bond does not relieve Tenant from
fulfilling its responsibility to clean up the contamination. After the contamination has
been cleaned up and certified, as set forth above, the bond or other adequate security
shall be returned to Tenant.

       9.7.
Use of Common Area. Tenant is hereby granted, for so long as it is not in default
hereunder, a non-exclusive license to use in common with other occupants of the Building or
Project, if any, such facilities within or without the Building which are designated from time to
time for the general use, benefit or convenience of Tenant and the other tenants or occupants of
the Building or Project or their employees, customers, authorized representatives or invitees.
Tenant shall use the Common Area in conformity with the reasonable rules and regulations and
changes thereto from time to time promulgated by Landlord governing the use, maintenance,
management, and operation of said Common Area. The manner and nature of the installation and
maintenance of the Common Area shall be subject to the sole discretion of Landlord but in no way
will the maintenance of the Common Area be of a quality or nature that is materially less than that
as of the date of this Lease. Landlord reserves the right from time to time to make changes in the
shape, size, location and extent of same provided that any such change shall be after Notice to
Tenant so long as the changes do not materially and adversely affect Tenant’s use of the Common
Areas, except as may be required by law or government agencies. Landlord further retains the right
to temporarily close the Common Area from time to time in order to prevent a dedication thereof or
for the making of repairs or performance of maintenance.

	 	 	 
	 
	Page 8	

 

 

10. SERVICES AND UTILITIES.

Tenant shall make all arrangements for and pay for all utilities and services furnished to or used
by it, including, without limitation, gas, electricity, heating, air conditioning and other
ventilation, janitorial, water, sewage, telephone service, trash collection, including any taxes
thereon, and for all connection charges, except for those utility and services Landlord is to
acquire for the account of the tenants to service the Common Area.

Landlord may choose, in Landlord’s reasonable discretion, the company or companies that will
provide all electricity (or any other utility) to the Common Areas of the Building and Project],
and, in such event, Tenant shall pay for electric current (or such other utility) supplied to, or
used, in the Premises at the rate prevailing for Tenant’s class of use as established by such
company or companies. Electric current (or such other utility) shall be measured in the manner set
forth above and shall be billed by Landlord as Additional Rent and paid by Tenant on a monthly
basis. If permitted by law, Landlord shall have the right, in Landlord’s reasonable discretion, at
any time and from time to time during the Term, to switch providers of any such utility. Tenant
shall cooperate with Landlord and any such utility provider at all times, and, as reasonably
necessary, Tenant shall allow access to the electric (or other utility) lines, feeders, risers,
wiring and other machinery located within the Premises. Notwithstanding anything herein to the
contrary, the Premises / Building shall be separately metered, and Tenant shall contract for, and
pay directly for, such utilities.

Notwithstanding anything contained herein to the contrary, if Tenant is granted the right to
purchase electricity from a provider other than the company or companies used by Landlord, Tenant
shall indemnify, defend, and hold harmless Landlord from and against all losses, claims, demands,
expenses and judgments caused by, or directly or indirectly arising from, the acts or omissions of
Tenant’s electricity provider (including, but not limited to, expenses and/or fines incurred by
Landlord in the event Tenant’s electricity provider fails to provide sufficient power to the
Premises, as well as damages resulting from the improper or faulty installation or construction of
facilities or equipment in or on the Premises by Tenant or Tenant’s electricity provider.

Landlord shall not be in default hereunder or be liable for any damages directly or indirectly
resulting from, nor shall the Rent be abated by reason of, (a) the installation, use or
interruption of use of any equipment in connection with the furnishing of any of the foregoing
services, (b) failure to furnish or delay in furnishing any such services where such failure or
delay is caused by accident or any condition or event beyond the reasonable control of Landlord,
or by the making of necessary repairs or improvements to the Premises, Building or Project, (c)
any change, failure, interruption, disruption or defect in the quantity or character of the
electricity (or other utility) supplied to the Premises or Project, or (d) the limitation,
curtailment or rationing of, or restrictions on, use of water, electricity, gas or any other form
of energy serving the Premises, Building or Project. Landlord shall not be liable under any
circumstances for a loss of or injury to property or business, however occurring, through, in
connection with or incidental to the failure to furnish any such services.

11. REPAIRS AND MAINTENANCE.

      11.1.
Landlord’s Obligations. Landlord shall make structural repairs except as specified
herein and shall maintain in good order, condition and repair the Building and all other portions
of the Premises and Common Areas not the obligation of Tenant or of any other tenant in the
Project.

      11.2.
Tenant’s Obligations.

     11.2.1. Tenant shall, at Tenant’s sole expense and except for services furnished by
Landlord pursuant to Section 10. hereof, maintain the Premises in good order, condition and
repair. For the purposes of this Section 11.2.1., the term Premises shall be deemed to
include all items and equipment installed by or for the benefit of or at the expense of
Tenant, including without limitation the interior surfaces of the ceilings, walls and
floors; all doors; all interior and exterior windows; dedicated heating, ventilating and
air conditioning equipment (Tenant shall procure and maintain at Tenant’s expense a heating
and air conditioning system maintenance contract and shall promptly deliver a copy of such
contract to Landlord); all plumbing, pipes and fixtures; electrical switches and fixtures
in the Building; internal wiring as it connects to the ICN, if applicable; and Building
Standard Tenant Improvements, if any, normal wear and tear excepted.

     11.2.2. Tenant shall be responsible for all repairs and alterations in and to the
Premises / Building of a non-structural nature, including plumbing, mechanical and
electrical systems, unless negotiated by Landlord and Tenant in advance, and systems
thereof to the reasonable satisfaction of Landlord, the need for which arises out of (a)
Tenant’s use or occupancy of the Premises/ Building, (b) the installation, removal, use or
operation of Tenant’s Property (as defined in Section 13.) in the Premises, (c) the moving
of Tenant’s Property into or out of the Building, or (d) the act, omission, misuse or
negligence of Tenant, its agents, contractors, employees or invitees.

     11.2.3. If Tenant fails to maintain the Premises in good order, condition and repair,
Landlord shall give Notice to Tenant to do such acts as are reasonably required to so
maintain the Premises. If Tenant fails to promptly commence such work and diligently
prosecute it to completion, then Landlord shall have the right to do such acts and expend
such funds at the expense of Tenant as are reasonably required to perform such work.

	 	 	 
	 
	Page 9	

 

 

     11.3.
Compliance with Law. Landlord and Tenant shall each do all acts
necessary to comply with all applicable laws, statutes, ordinances, and rules of any public
authority relating to their respective maintenance obligations as set forth herein. The provisions
of Section 9.2. are deemed restated here.

     11.4. Notice of Defect. If it is Landlord’s obligation to repair, Tenant shall give
Landlord prompt Notice, regardless of the nature or cause, of any damage to or defective condition
in any part or appurtenance of the Building’s mechanical, electrical, plumbing, HVAC or other
systems serving, located in, or passing through the Premises and Landlord shall timely repair such
defect.

     11.5. Landlord’s Liability. Except as otherwise expressly provided in this Lease,
Landlord shall have no liability to Tenant nor shall Tenant’s obligations under this Lease be
reduced or abated in any manner by reason of any inconvenience, annoyance, interruption or injury
to business arising from Landlord’s making any repairs or changes which Landlord is required or
permitted by this Lease or by any other tenant’s lease or required by law to make in or to any
portion of the Project, Building or Premises. Landlord shall nevertheless use reasonable efforts to
minimize any interference with Tenant’s conduct of its business in the Premises.

12. CONSTRUCTION, ALTERATIONS AND ADDITIONS.

     12.1. Landlord’s Construction Obligations. Tenant accepts Premises in its As Is and
Where Is Condition and Landlord has no obligation to perform any Work to the Premises.

     12.2. Tenant’s Construction Obligations. Tenant shall perform Tenant’s Work to the
Premises as described in Exhibit “D” and shall comply with all of the provisions of this Section
12.

     12.3. Tenant’s Alterations and Additions. Except as provided in Section 12.2. above,
Tenant shall not make any other additions, alterations or improvements to the Premises or Building,
provided that Tenant may make interior non-structural additions, alterations or improvements
thereto up to a maximum of $25,000.00 per calendar year, provided that such items would not affect
the plumbing, mechanical or electrical systems of the Premises or Building, and would not be
visible outside of the Premises. Landlord’s consent may be conditioned, without limitation, on
Tenant removing any such additions, alterations or improvements upon the expiration of the Term and
restoring the Premises to the same condition as on the date Tenant took possession. All of Tenant’s
Work described in Exhibit “D”, as well as any addition, alteration or improvement, shall comply
with all applicable laws, ordinances, codes and rules of any public authority (including, but not
limited to the ADA) and shall be done in a good and professional manner by properly qualified and
licensed personnel approved by Landlord. All work shall be diligently prosecuted to completion.
Upon completion, Tenant shall furnish Landlord “as-built” plans. Prior to commencing any such work,
Tenant shall furnish Landlord with plans and specifications; names and addresses of contractors;
copies of all contracts; copies of all necessary permits; evidence of contractor’s and
subcontractor’s insurance coverage for Builder’s Risk at least as broad as Insurance Services
Office (ISO) special causes of loss form CP 10 30, Commercial General Liability at least as broad
as ISO CG 00 01, workers’ compensation, employer’s liability and auto liability, all in amounts
reasonably satisfactory to Landlord; and indemnification in a form reasonably satisfactory to
Landlord. The work shall be performed in a manner that will not interfere with the quiet enjoyment
of the other tenants in the Building in which the Premises is located.

     Landlord may require, in Landlord’s sole discretion and at Tenant’s sole cost and expense,
that Tenant provide Landlord with a lien and completion bond in an amount equal to at least one
and one-half (1-1/2) times the total estimated cost of any additions, alterations or improvements
to be made in or to the Premises. Nothing contained in this Section 12.3. shall relieve Tenant of
its obligation under Section 12.4. to keep the Premises, Building and Project free of all liens.

     12.4. Payment. Tenant shall pay the costs of any work done on the Premises pursuant to
Sections 12.2. and 12.3., and shall keep the Premises, Building and Project free and clear of liens
of any kind. Tenant hereby indemnifies, and agrees to defend against and keep Landlord free and
harmless from all liability, loss, damage, costs, attorneys’ fees and any other expense incurred on
account of claims by any person performing work or furnishing materials or supplies for Tenant or
any person claiming under Tenant.

     Tenant shall give Notice to Landlord at least ten (10) business days prior to the expected
date of commencement of any work relating to alterations, additions or improvements of a
non-structural nature to the Premises. Landlord retains the right to enter the Premises and post
such notices as Landlord deems proper at any reasonable time with prior telephonic notice to
Tenant when practicable.

     12.5. Property of Landlord. Except as otherwise set forth herein, all additions,
alterations and improvements made to the Premises shall become the property of Landlord and shall
be surrendered with the Premises upon the expiration of the Term unless their removal is required
by Landlord as provided in Section 12.3., provided, however, Tenant’s equipment, machinery and
trade fixtures shall remain the Property of Tenant and shall be removed, subject to the provisions
of Section 12.2.

13. LEASEHOLD IMPROVEMENTS; TENANT’S PROPERTY.

     13.1. Leasehold Improvements. All fixtures, equipment (including air-conditioning or
heating systems), improvements and appurtenances attached to or built into the Premises during the
Term of the Lease (Leasehold Improvements) of a non-structural nature, including plumbing,
mechanical and electrical systems, whether or not by or at the expense of Tenant, shall be and
remain a part of the Premises, shall be the property of Landlord and shall not be removed by
Tenant, except as expressly provided in Section 13.2.,

	 	 	 
	 
	Page 10	

 

 

unless Landlord, by Notice to Tenant not later than thirty (30) days prior to the expiration of
the Term, elects to have Tenant remove any Leasehold Improvements installed by Tenant exclusive of
initial buildout as set forth in Exhibit “D”. Notwithstanding anything herein to the contrary,
Tenant shall not be required to remove the Tenant Improvements set forth in Exhibit “D” (except as
noted) attached hereto. In such case, Tenant, at Tenant’s sole cost and expense and prior to the
expiration of the Term, shall remove the Leasehold Improvements and repair any damage caused by
such removal.

     13.2.
Tenant’s Property. All signs, notices, displays, movable partitions, business and trade
fixtures, machinery and equipment (excluding air-conditioning or heating systems, whether
installed by Tenant or not), personal telecommunications equipment and office equipment located in
the Premises and acquired by or for the account of Tenant, without expense to Landlord, which can
be removed without structural damage to the Building, and all furniture, furnishings and other
articles of movable personal property owned by Tenant and located in the Premises (collectively,
Tenant’s Property) shall be and shall remain the property of Tenant and may be removed by Tenant
at any time during the Term; provided that if any of Tenant’s Property is removed, Tenant shall
promptly repair any damage to the Premises or to the Building resulting from such removal,
including without limitation repairing the flooring and patching and painting the walls where
required by Landlord to Landlord’s reasonable satisfaction, all at Tenant’s sole cost and expense.

14. INDEMNIFICATION.

     14.1.
Tenant Indemnification. Tenant shall indemnify and hold Landlord harmless from and
against any and all liability and claims of any kind for loss or damage to any person or property
arising out of: (a) Tenant’s use and occupancy of the Premises, or the Building or Project, or any
work, activity or thing done, allowed or suffered by Tenant in, on or about the Premises, the
Building or the Project; (b) any breach or default by Tenant of any of Tenant’s obligations under
this Lease; or (c) any negligent or otherwise tortious act or omission of Tenant, its agents,
employees, subtenants, licensees, customers, guests, invitees or contractors (including agents or
contractors who perform work outside of the Premises for Tenant). At Landlord’s request, Tenant
shall, at Tenant’s expense, and by counsel satisfactory to Landlord, defend Landlord in any action
or proceeding arising from any such claim. Tenant shall indemnify Landlord against all costs,
attorneys’ fees, expert witness fees and any other expenses or liabilities incurred in such action
or proceeding. As a material part of the consideration for Landlord’s execution of this Lease,
Tenant hereby assumes all risk of damage or injury to any person or property in, on or about the
Premises from any cause and Tenant hereby waives all claims in respect thereof against Landlord,
except in connection with damage or injury resulting solely from the gross negligence or willful
misconduct of Landlord or its authorized agents.

     14.2.
Landlord Not Liable. Landlord shall not be liable for injury or damage which may be
sustained by the person or property or Tenant, its employees, invitees or customers, or any other
person in or about the Premises, caused by or resulting from fire, steam, electricity, gas, water
or rain which may leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning, lighting fixtures or mechanical or electrical systems, whether such damage or injury
results from conditions arising upon the Premises or upon other portions of the Building or Project
or from other sources, unless the condition was the sole result of Landlord’s, or it’s agents and
employees, gross negligence or willful misconduct. Landlord shall not be liable for any damages
arising from any act or omission of any other tenant of the Building or Project or for the acts of
persons in, on or about the Premises, Building or the Project who are not the authorized agents of
Landlord or for losses due to theft, vandalism or like causes.

Tenant acknowledges that Landlord’s election to provide mechanical surveillance or to post
security personnel in the Building or on the Project is solely within Landlord’s discretion.
Landlord shall have no liability in connection with the decision whether or not to provide such
services, and, to the extent permitted by law, Tenant hereby waives all claims based thereon.

15. TENANT’S INSURANCE.

     15.1.
Insurance Requirement. Tenant shall procure and maintain insurance coverage in
accordance with the terms hereof, either as specific policies or within blanket policies. Coverage
shall begin on the date Tenant is given access to the Premises for any purpose and shall continue
until expiration of the Term, except as otherwise set forth in the Lease. The cost of such
insurance shall be borne by Tenant.

Insurance shall be with insurers licensed to do business in the State, and acceptable to Landlord.
The insurers must have a current A.M. Best’s rating of not less than A: VII, or equivalent (as
reasonably determined by Landlord) if the Best’s rating system is discontinued.

Tenant shall furnish Landlord with original certificates and amendatory endorsements effecting
coverage required by this Section 15. before the date Tenant is first given access to the Premises.
All certificates and endorsements are to be received and approved by Landlord before any work
commences. Landlord reserves the right to inspect and/or copy any insurance policy required to be
maintained by Tenant hereunder, or to require complete, certified copies of all required insurance
policies, including endorsements effecting the coverage required herein at any time. Tenant shall
comply with such requirement within thirty (30) days of demand therefor by Landlord. Tenant shall
furnish Landlord with renewal certificates and amendments or a “binder” of any such policy at least
twenty (20) days prior to the expiration thereof. Each insurance policy required herein shall be
endorsed to state that coverage shall not be canceled, except after thirty (30) days prior written
notice to Landlord and Landlord’s lender (if such lender’s address is provided).

	 	 	 
	 
	Page 11	

 

 

The Commercial General Liability policy, as hereinafter required, shall contain, or be
endorsed to contain, the following provisions: (a) Landlord and any parties designated by Landlord
shall be covered as additional insureds as their respective interests may appear; and (b) Tenant’s
insurance coverage shall be primary insurance as to any insurance carried by the parties designated
as additional insureds. Any insurance or self-insurance maintained by Landlord shall be excess of
Tenant’s insurance and shall not contribute with it.

     15.2. Minimum Scope of Coverage. Coverage shall be at least as broad as set forth herein.
However, if, because of Tenant’s Use or occupancy of the Premises, Landlord determines, in
Landlord’s reasonable judgment, that additional insurance coverage or different types of insurance
are necessary, then Tenant shall obtain such insurance at Tenant’s expense in accordance with the
terms of this Section 15.

    15.2.1. Commercial General Liability (St Paul Fire and Marine Insurance Company Form #43600)
which shall cover liability arising from Tenant’s Use and occupancy of the Premises, its operations
therefrom, Tenant’s independent contractors, products-completed operations, personal injury and
advertising injury, and liability assumed under an insured contract.

    15.2.2. Workers’ Compensation insurance as required by law, and Employers Liability insurance.

    15.2.3. Commercial Property Insurance (St Paul Fire and Marine Insurance Company Form #F0068)
against all risk of direct physical loss or damage (including flood, if applicable), earthquake
excepted, for: (a) all leasehold improvements (including any alterations, additions or improvements
made by Tenant pursuant to the provisions of Section 12. hereof) in, on or about the Premises; and
(b) trade fixtures, merchandise and Tenant’s Property from time to time in, on or about the
Premises. The proceeds of such property insurance shall be used for the repair or replacement of
the property so insured. Upon termination of this Lease following a casualty as set forth herein,
the proceeds under (a) shall be paid to Landlord, and the proceeds under (b) above shall be paid to
Tenant.

    15.2.4. Business Auto Liability.

Landlord shall, during the Term hereof, maintain in effect similar insurance on the Building and
Common Area.

    15.2.5. Business Interruption and Extra Expense Insurance.

     15.3. Minimum Limits of Insurance. Tenant shall maintain limits not less than:

    15.3.1. Commercial General Liability: $1,000,000 per occurrence. If the insurance contains
a general aggregate limit, either the general aggregate limit shall apply separately to this
location or the general aggregate limit shall be at least twice the required occurrence limit.

    15.3.2. Employer’s Liability: $1,000,000 per accident for bodily injury or disease.

    15.3.3. Commercial Property Insurance: 100% replacement cost with no coinsurance penalty
provision.

    15.3.4. Business Auto Liability: $1,000,000 per accident.

    15.3.5. Business Interruption and Extra Expense Insurance: In a reasonable amount and comparable
to amounts carried by comparable tenants in comparable projects.

     15.4. Deductible and Self-Insured Retention. Any deductible or self-insured retention in
excess of $5,000 per occurrence must be declared to and approved by Landlord. At the option of
Landlord, either the insurer shall reduce or eliminate such deductible or self-insured retention or
Tenant shall provide separate insurance conforming to this requirement.

     15.5. Increases in Insurance Policy Limits. If the coverage limits set forth in this Section
15. are deemed inadequate by Landlord or Landlord’s lender, then Tenant shall increase the coverage
limits to the amounts reasonably recommended by either Landlord or Landlord’s lender. Landlord
agrees that any such required increases in coverage limits shall not occur more frequently than
once every three (3) years.

     15.6. Waiver of Subrogation. Landlord and Tenant each hereby waive all rights of recovery
against the other and against the officers, employees, agents and representatives, contractors and
invitees of the other, on account of loss by or damage to the waiving party or its property or the
property of others under its control, to the extent that such loss or damage is insured against
under any insurance policy which may have been in force at the time of such loss or damage.

     15.7. Landlord’s Right to Obtain Insurance for Tenant. If Tenant fails to obtain the
insurance coverage or fails to provide certificates and endorsements as required by this Lease,
Landlord may, at its option, obtain such insurance for Tenant. Tenant shall pay, as Additional
Rent, the reasonable cost thereof together with a twenty-five percent (25%) service charge.

Page 12

 

16. DAMAGE OR DESTRUCTION.

     16.1. Damage. If, during the Term of this Lease, the Premises or the portion of the Building
necessary for Tenant’s occupancy is damaged by fire or other casualty covered by fire and extended
coverage insurance carried by Landlord, Landlord shall promptly repair the damage provided (a) such
repairs can, in Landlord’s opinion, be completed, under applicable laws and regulations, within one
hundred eighty (180) days of the date a permit for such construction is issued by the governing
authority, (b) insurance proceeds are available to pay eighty percent (80%) or more of the cost of
restoration, and (c) Tenant performs its obligations pursuant to Section 16.4. hereof. In such
event, this Lease shall continue in full force and effect, except that if such damage is not the
result of the negligence or willful misconduct of Tenant, its agents or employees, Tenant shall be
entitled to a proportionate reduction of Rent to the extent Tenant’s use of the Premises is
impaired, commencing with the date of damage and continuing until completion of the repairs
required of Landlord under Section 16.4. If the damage is due to the fault or neglect of Tenant,
its agents or employees and loss of rental income insurance is denied as a result, there shall be
no abatement of Rent.

     Notwithstanding anything in Section 16. to the contrary, Landlord hereby agrees that, with respect
to any damage or destruction in the Premises or Building, it shall exercise good faith in timely
applying for building permits in the event that it is required, or elects, to repair or rebuild the
damaged area.

     Notwithstanding anything contained in the Lease to the contrary, in the event of partial or total
damage or destruction of the Premises during the last twelve (12) months of the Term, either party
shall have the option to terminate this Lease upon thirty (30) days prior Notice to the other party
provided such Notice is served within thirty (30) days after the damage or destruction. For
purposes of this Section 16.1., “partial damage or destruction” shall mean the damage or
destruction of at least thirty-three and one-third percent (33 and 1/3%) of the Premises, as
determined by Landlord in Landlord’s reasonable discretion.

     16.2. Repair of Premises in Excess of One Hundred Eighty Days. If in Landlord’s opinion,
such repairs to the Premises or portion of the Building necessary tor Tenant’s occupancy cannot be
completed under applicable laws and regulations within one hundred eighty (180) days of the date a
permit for such construction is issued by the governing authority, Landlord may elect, upon Notice
to Tenant given within thirty (30) days after the date of such fire or other casualty, to repair
such damage, in which event this Lease shall continue in full force and effect, but Rent shall be
partially abated as provided in this Section 1. If Landlord does not so elect to make such
repairs, this Lease shall terminate as of the date of such fire or other casualty.

     16.3. Repair Outside Premises. If any other portion of the Building or Project is totally
destroyed or damaged to the extent that in Landlord’s opinion repair thereof cannot be completed
under applicable laws and regulations within one hundred eighty (180) days of the date a permit for
such construction is issued by the governing authority, Landlord may elect upon Notice to Tenant
given within thirty (30) days after the date of such fire or other casualty, to repair such damage,
in which event this Lease shall continue in full force and effect, but Rent shall be partially
abated as provided in this Section 16. If Landlord does not elect to make such repairs, this Lease
shall terminate as of the date of such fire or other casualty.

     16.4. Tenant Repair. If the Premises are to be repaired under this Section 16., Landlord
shall repair at its cost any injury or damage to the Building and Building Standard Tenant
Improvements, if any. Notwithstanding anything contained herein to the contrary, Landlord shall not
be obligated to perform work other than Landlord’s Work performed previously pursuant to Section
12.1. hereof. Tenant shall be responsible at its sole cost and expense for the repair,
restoration and replacement of any other Leasehold Improvements and Tenant’s Property (as well as
reconstructing and reconnecting Tenant’s internal telecommunications wiring and related equipment).
Landlord shall not be liable for any loss of business, inconvenience or annoyance arising from
any repair or restoration of any portion of the Premises, Building or Project as a result of any
damage from fire or other casualty.

     16.5. Election Not to Perform Landlord’s Work. Notwithstanding anything to the contrary
contained herein, Landlord shall provide Notice to Tenant of its intent to repair or replace the
Premises (if Landlord elects to perform such work), and, within twenty (20) days of its receipt of
such Notice, Tenant shall provide Notice to Landlord of its intent to reoccupy the Premises.
Should Tenant fail to provide such Notice to Landlord, then such failure shall be deemed an
election by Tenant not to re-occupy the Premises and Landlord may elect not to perform the repair
or replacement of the Premises. Such election shall not result in a termination of this Lease and
all obligations of Tenant
hereunder shall remain in full force and effect, including the obligation to pay Rent.

     16.6. Express Agreement. This Lease shall be considered an express agreement governing any
case of damage to or destruction of the Premises, Building or Project by fire or other casualty,
and any present or future law which purports to govern the rights of Landlord and Tenant in such
circumstances in the absence of an express agreement shall have no application.

17. EMINENT DOMAIN.

     17.1. Whole Taking. If the whole of the Building or Premises is lawfully taken by condemnation or
in any other manner for any public or quasi-public purpose, this Lease shall terminate as of the
date of such taking, and Rent shall be prorated to such date.

Page 13

 

     17.2. Partial Taking. If less than the whole of the Building or Premises is so taken,
this Lease shall be unaffected by such taking, provided that (a) Tenant shall have the right to
terminate this Lease by Notice to Landlord given within ninety (90) days after the date of such
taking if twenty percent (20%) or more of the Premises is taken and the remaining area of the
Premises is not reasonably sufficient for Tenant to continue operation of its business, and (b)
Landlord shall have the right to terminate this Lease by Notice to Tenant given within ninety (90)
days after the date of such taking. If either Landlord or Tenant so elects to terminate this Lease,
the Lease shall terminate on the thirtieth (30th) calendar day after either such Notice. Rent shall
be prorated to the date of termination. If this Lease continues in force upon such partial taking,
Base Rent and Tenant’s Proportionate Share shall be equitably adjusted.

     17.3. Proceeds. In the event of any taking, partial or whole, all of the proceeds of any
award, judgment or settlement payable by the condemning authority shall be the exclusive property
of Landlord, and Tenant hereby assigns to Landlord all of its right, title and interest in any
award, judgment or settlement from the condemning authority; however, Tenant shall have the right,
to the extent that Landlord’s award is not reduced or prejudiced, to claim from the condemning
authority (but not from Landlord) such compensation as may be recoverable by Tenant in its own
right for relocation expenses and damage to Tenant’s Property and damage to Leasehold Improvements
installed at the sole expense of Tenant.

     17.4. Landlord’s Restoration. In the event of a partial taking of the Premises which does
not result in a termination of this Lease, Landlord shall restore the remaining portion of the
Premises as nearly as practicable to its condition prior to the condemnation or taking; provided
however, Landlord shall not be obligated to perform work other than Landlord’s Work performed
previously pursuant to Section 12.1. hereof. Tenant shall be responsible at its sole cost and
expense for the repair, restoration and replacement of Tenant’s Property and any other Leasehold
Improvements.

18. ASSIGNMENT AND SUBLETTING.

No assignment of this Lease or sublease of all or any part of the Premises shall be permitted,
except as provided in this Section 18.

     18.1. No Assignment or Subletting. Tenant shall not, without the prior written consent of
Landlord, assign or hypothecate this Lease or any interest herein or sublet the Premises or any
part thereof, or permit the use of the Premises or any part thereof by any party other than Tenant.
Any of the foregoing acts without such consent shall be voidable and shall, at the option of
Landlord, constitute a default hereunder. This Lease shall not, nor shall any interest of Tenant
herein, be assignable by operation of law without the prior written consent of Landlord.

    18.1.1. For purposes of this Section 18., the following shall be deemed an assignment:

      18.1.1.1. If Tenant is a partnership, any withdrawal or substitution (whether
voluntary, involuntary, or by operation of law, and whether occurring at one time or over a period
of time) of any partner(s) owning twenty-five (25%) or more (cumulatively) of any interest in the
capital or profits of the partnership, or the dissolution of the partnership;

      18.1.1.2. If Tenant is a corporation, any dissolution, merger,
consolidation, or other reorganization of Tenant, any sale or transfer (or cumulative sales or
transfers) of the capital stock of Tenant in excess of twenty-five percent (25%), or any sale (or
cumulative sales) or transfer of fifty-one (51%) or more of the value of the assets of Tenant
provided, however, the foregoing shall not apply to corporations the capital stock of which is
publicly traded.

     18.2. Landlord’s Consent. If, at any time or from time to time during the Term hereof, Tenant
desires to assign this Lease or sublet all or any part of the Premises, and if Tenant is not then
in default under the terms of the Lease, Tenant shall submit to Landlord a written request for
approval setting forth the terms and provisions of the proposed assignment or sublease, the
identity of the proposed assignee or subtenant,
and a copy of the proposed form of assignment or sublease. Tenant’s request for consent shall be
submitted to Landlord at least thirty (30) days prior to the intended date of such transfer.
Tenant shall promptly supply Landlord with such information concerning the business background and
financial condition of such proposed assignee or subtenant as Landlord may reasonably request.
Landlord shall have the right to approve such proposed assignee or subtenant, which approval shall
not be unreasonably withheld. In no event however, shall Landlord be required to consent to any
assignment or sublease (a) to an existing tenant in the Project or (b) that may violate any
restrictions contained in any mortgage, lease or agreement affecting the Project. Landlord’s
consent to any assignment shall not be construed as a consent to any subsequent assignment,
subletting, transfer of partnership interest or stock, occupancy or use. Landlord agrees that it
will respond within 45 days from the receipt of a complete request and information package.

    18.2.1. Landlord’s approval shall be conditioned, among other things, on Landlord’s receiving
adequate assurances of future performance under this Lease and any sublease or assignment. In
determining the adequacy of such assurances, Landlord may base its decision on such factors as it
deems appropriate, including but not limited to:

Page 14

 

      18.2.1.1. that the source of rent and other consideration due under this Lease, and,
in the case of assignment, that the financial condition and operating performance and business
experience of the proposed assignee and its guarantors, if any, shall be equal to or greater than
the financial condition and operating performance and experience of Tenant and its guarantors, if
any, as of the time Tenant became the lessee under this Lease;

      18.2.1.2. that any assumption or assignment of this Lease will not result in
increased cost or expense, wear and tear, greater traffic or demand for services and utilities
provided by Landlord pursuant to Section 10. hereof and will not disturb or be detrimental to other
tenants of Landlord;

      18.2.1.3. whether the proposed assignee’s use of the Premises will include the use of
Hazardous Material, or will in any way increase any risk to Landlord relating to Hazardous
Material; and

      18.2.1.4. that assumption or assignment of such lease will not disrupt any tenant mix
or balance in the project.

    18.2.2. The assignment or sublease shall be on the same terms and conditions set forth in the
written request for approval given to Landlord, or, if different, upon terms and conditions
consented to by Landlord;

    18.2.3. No assignment or sublease shall be valid and no assignee or sublessee shall take
possession of the Premises or any part thereof until an executed counterpart of such assignment or
sublease has been delivered to Landlord;

    18.2.4. No assignee or sublessee shall have a further right to assign or sublet except on the
terms herein contained;

    18.2.5. Any sums or other economic considerations received by Tenant as a result of such
assignment or subletting, however denominated under the assignment or sublease, which exceed, in
the aggregate (a) the total sums which Tenant is obligated to pay Landlord under this Lease
(prorated to reflect obligations allocable to any portion of the Premises subleased), minus (b) any
real estate brokerage commissions or fees payable to third parties in connection with such
assignment or subletting, shall be shared equally by Tenant and Landlord as Additional Rent under
this Lease without effecting or reducing any other obligations of Tenant hereunder.

If Landlord consents to the proposed transfer, Tenant shall deliver to Landlord three (3) fully
executed original documents (in the form previously approved by Landlord) and Landlord shall attach
its consent thereto. Landlord shall retain one (1) fully executed original document. No transfer of
Tenant’s interest in this Lease shall be deemed effective until the terms and conditions of this
Section 18. have been fulfilled.

     18.3. Tenant Remains Responsible. No subletting or assignment shall release Tenant of
Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay the Rent and
to perform all other obligations to be performed by Tenant hereunder. The acceptance of Rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision
hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting. In the event of default by an assignee or subtenant of Tenant or any
successor of Tenant in the performance of any of the terms hereof, Landlord may proceed directly
against Tenant without the necessity of exhausting remedies against such assignee, subtenant or
successor. Landlord may consent to subsequent assignments or sublets of the Lease or amendments or
modifications to the Lease with assignees of Tenant, without
notifying Tenant, or any successor of
Tenant, and without obtaining its or their consent thereto and any such actions shall not relieve
Tenant of liability under this Lease.

     18.4. Conversion to a Limited Liability Entity. Notwithstanding anything contained herein to
the contrary, if Tenant is a limited or general partnership (or is comprised of two (2) or more
persons, individually or as co-partners, or entities), the change or conversion of Tenant to (a) a
limited liability company, (b) a limited liability partnership, or (c) any other entity which
possesses the characteristics of limited liability (any such limited liability entity is
collectively referred to herein as a “Successor Entity”) shall be prohibited unless the prior
written consent of Landlord is obtained, which consent may not be unreasonably, withheld,
conditioned or delayed.

    18.4.1. Notwithstanding the preceding paragraph, Landlord agrees not to unreasonably withhold or
delay such consent provided that:

      18.4.1.1. The Successor Entity succeeds to all or substantially all of Tenant’s
business and assets;

      18.4.1.2. The Successor Entity shall have a tangible net worth (Tangible Net Worth),
determined in accordance with generally accepted accounting principles, consistently applied, of
not less than the greater of the Tangible Net Worth of Tenant on (a) the date of execution of the
Lease, or (b) the day immediately preceding the proposed effective date of such conversion; and

Page 15

 

18.4.1.3. Tenant is not in default of any of the terms, covenants, or
conditions of this Lease on the propose effective date of such conversion.

     18.5. Payment of Fees. If Tenant assigns the Lease or sublets the Premises or requests the consent
of Landlord to any assignment, subletting or conversion to a limited liability entity, then Tenant
shall, upon demand, pay Landlord, whether or not consent is ultimately given, an administrative fee
of Three Hundred and 00/100 Dollars ($300.00) plus costs and other reasonable expenses incurred by
Landlord in connection with each such act or request, if any.

Notwithstanding the provisions of this Section 18., so long as Tenant’s Use does not change, Tenant
shall have the right to assign the Lease without Landlord’s consent to: I) Tenant’s wholly-owned
subsidiary; ii) Tenant’s parent corporation; or iii) the surviving entity if Tenant merges or
consolidates, provided that the surviving entity has a net worth at least equal to that of Tenant
prior to such merger or consolidation. In the event of such an assignment, Tenant shall provide
Landlord prior written notice of the assignment and the forwarding address of the assignor, if
applicable. Nothing contained herein shall releive Tenant (or the assignor, as the case may be) of
its obligations under the lease.

19. DEFAULT.

     19.1. Tenant’s Default. The occurrence of any one or more of the following events shall
constitute a default and breach of this Lease by Tenant.

    19.1.1. If Tenant abandons the Premises.

    19.1.2. If Tenant fails to pay any Rent or Additional Rent or any other charges required to be
paid by Tenant under this Lease and such failure continues for three (3) days after receipt of
Notice thereof from Landlord to Tenant.

    19.1.3. If Tenant fails to promptly and fully perform any other covenant, condition or agreement
contained in this Lease and such failure continues for thirty (30) days after Notice thereof from
Landlord to Tenant, or, if such default cannot reasonably be cured within thirty (30) days, if
Tenant fails to commence to cure within that thirty (30) day period and diligently prosecute to
completion.

    19.1.4. Intentionally omitted.

    19.1.5. Tenant’s failure to provide any document, instrument or assurance as required by
Sections 12., 15., 18. and/or 35. if the failure continues for five (5) business days after receipt
of Notice from Landlord to Tenant.

    19.1.6. To the extent provided by law:

      19.1.6.1. If a writ of attachment or execution is levied on this Lease or on
substantially all of Tenant’s Property; or

      19.1.6.2. If Tenant or Tenant’s Guarantor makes a general assignment for the benefit
of creditors; or

      19.1.6.3. If Tenant files a voluntary petition for relief or if a petition against
Tenant in a proceeding under the federal bankruptcy laws or other insolvency laws is filed and not
withdrawn or dismissed within sixty (60) days thereafter, or if under the provisions of any law
providing for reorganization or winding up of corporations, any court of competent jurisdiction
assumes jurisdiction, custody or control of Tenant or any substantial part of its property and such
jurisdiction, custody or control remains in force unrelinquished, unstayed or unterminated for a
period of sixty (60) days; or

      19.1.6.4. If in any proceeding or action in which Tenant is a party, a trustee,
receiver, agent or
custodian is appointed to take charge of the Premises or Tenant’s Property (or has the authority to
do so); or

      19.1.6.5. If Tenant is a partnership or consists of more than one (1) person or
entity, if any partner of the partnership or other person or entity is involved in any of the acts
or events described in Sections 19.1.6.1. through above.

     19.2. Landlord Remedies. In the event of Tenant’s default hereunder, and after any and all
cure periods expressly set forth herein then, in addition to any other rights or remedies Landlord
may have under any law or at equity, Landlord shall have the right to collect interest on all past
due sums (at the maximum rate permitted by law to be charged by an individual), and, at Landlord’s
option and without further notice or demand of any kind, to do the following:

    19.2.1. Terminate this Lease and Tenant’s right to possession of the Premises and reenter the
Premises and take possession thereof, and Tenant shall have no further claim to the Premises or
under this Lease; or

Page 16

 

     19.2.2. Continue this Lease in effect, reenter and occupy the Premises for the
account of Tenant, and collect any unpaid Rent or other charges which have or thereafter become
due and payable; or

     19.2.3. Reenter the Premises under the provisions of Section 19.2.2., and thereafter
elect to terminate this Lease and Tenant’s right to possession of the Premises.

If Landlord reenters the Premises under the provisions of Sections 19.2.2. or 19.2.3. above,
Landlord shall not be deemed to have terminated this Lease or the obligation of Tenant to pay any
Rent or other charges thereafter accruing unless Landlord notifies Tenant in writing of Landlord’s
election to terminate this Lease. Acts of maintenance, efforts to relet the Premises or the
appointment of a receiver on Landlord’s initiative to protect Landlord’s interest under this Lease
shall not constitute a termination of Tenant’s obligations under the Lease. In the event of any
reentry or retaking of possession by Landlord, Landlord shall have the right, but not the
obligation, to remove all or any part of Tenant’s Property in the Premises and to place such
property in storage at a public warehouse at the expense and risk of Tenant. If Landlord elects to
relet the Premises for the account of Tenant, the rent received by Landlord from such reletting
shall be applied as follows: first, to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord; second, to the payment of any costs of such reletting; third,
to the payment of the cost of any alterations or repairs to the Premises; fourth to the payment of
Rent due and unpaid hereunder; and the balance, if any, shall be held by Landlord and applied in
payment of future Rent as it becomes due. If that portion of Rent received from the reletting
which is applied against the Rent due hereunder is less than the amount of the Rent due, Tenant
shall pay the deficiency to Landlord promptly upon demand by Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord, as soon as determined, any costs
and expenses incurred by Landlord in connection with such reletting or in making alterations and
repairs to the Premises which are not covered by the rent received from the reletting.

     19.3. Damages Recoverable. Should Landlord elect to terminate this Lease under the provisions
of Section 19.2., Landlord may recover as damages from Tenant the following:

     19.3.1. Past Rent. The worth at the time of the award of any unpaid Rent that had been
earned at the time of termination including the value of any Rent that was abated
during the Term of the Lease (except Rent that was abated as a result of damage or destruction or
condemnation); plus

     19.3.2.
Rent Prior to Award. The worth at the time of the award of the amount by
which the unpaid Rent that would have been earned between the time of the termination
and the time of the award exceeds the amount of unpaid Rent that Tenant proves could
reasonably have been avoided; plus

     19.3.3. Rent After Award. The worth at the time of the award of the amount by which
the unpaid Rent tor the balance of the Term after the time of award exceeds the amount
of the unpaid Rent that Tenant proves could be reasonably avoided; plus

     19.3.4. Proximately Caused Damages. Any other amount necessary to compensate
Landlord for all detriment proximately caused by Tenant’s failure to perform its
obligations under
this Lease or which in the ordinary course of things would be likely to result
therefrom, including,
but not limited to, any costs or expenses (including attorneys’ fees), incurred by
Landlord in (a)
retaking possession of the Premises, (b) maintaining the Premises after Tenant’s
default, (c)
preparing the Premises for reletting to a new tenant, including any repairs or
alterations, and (d)
reletting the Premises, including brokers’ commissions.

“The worth at the time of the award” as used in Sections 19.3.1. and 19.3.2. above, is to be
computed by allowing interest at the maximum rate permitted by law to be charged by an individual.
“The worth at the time of the award” as used in Section 19.3.3. above, is to be computed by
discounting the amount at the discount rate of the Federal Reserve Bank situated nearest to the
Premises at the time of the award plus one percent (1%).

     19.4. Landlord’s Right to Cure Tenant’s Default. If Tenant defaults in the performance of any of
its obligations under this Lease and Tenant has not timely cured the default after Notice,
Landlord may (but
shall not be obligated to), without waiving such default, perform the same for the account and
at the expense
of Tenant. Tenant shall pay Landlord all costs of such performance immediately upon written
demand
therefor, and if paid at a later date these costs shall bear interest at the maximum rate
permitted by law to be
charged by an individual.

     19.5. Landlord’s Default. If Landlord fails to perform any covenant, condition or agreement
contained in this Lease within thirty (30) days after receipt of Notice from Tenant specifying
such default, or,
if such default cannot reasonably be cured within thirty (30) days if Landlord fails to
commence to cure within
that thirty (30) day period and diligently prosecute to completion, then Landlord shall be
liable to Tenant for
any damages sustained by Tenant as a result of Landlord’s breach; provided, however, it is
expressly
understood and agreed that if Tenant obtains a money judgment against Landlord resulting from
any default or
other claim arising under this Lease, that judgment shall be satisfied only out of the rents,
issues, profits, and
other income actually received on account of Landlord’s right, title and interest in the
Premises, Building or
Project, and no other real, personal or mixed property of Landlord (or of any of the partners
which comprise
Landlord, if any), wherever situated, shall be subject to levy to satisfy such judgment.

Page 17

 

     19.6. Mortgagee Protection. Tenant agrees to send by certified or registered mail to
any first
mortgagee or first deed of trust beneficiary of Landlord whose address has been furnished to
Tenant, a copy of
any notice of default served by Tenant on Landlord. If Landlord fails to cure such default
within the time
provided for in this Lease, then such mortgagee or beneficiary shall have such additional time
to cure the
default as is reasonably necessary under the circumstances.

     19.7. Tenant’s Right to Cure Landlord’s Default. If, after Notice to Landlord of default,
Landlord (or any first mortgagee or first deed of trust beneficiary of Landlord) fails to cure
the default as
provided herein, then Tenant shall have the right to cure that default at Landlord’s expense.
Tenant shall not
have the right to terminate this Lease or to withhold, reduce or offset any amount against any
payments of
Rent or any other charges due and payable under this Lease except as otherwise specifically
provided herein.
Tenant expressly waives the benefits of any statute now or hereafter in effect which would
otherwise afford
Tenant the right to make repairs at Landlord’s expense or to terminate this Lease because of
Landlord’s failure
to keep the Premises in good order, condition and repair.

	20.	 	WAIVER.

No delay or omission in the exercise of any right or remedy of Landlord upon any default by Tenant
shall impair such right or remedy or be construed as a waiver of such default. The receipt and
acceptance by Landlord of delinquent Rent shall not constitute a waiver of any other default: it
shall constitute only a waiver of timely payment for the particular Rent payment involved
(excluding the collection of a late charge or interest).

No act or conduct of Landlord, including, without limitation, the acceptance of keys to the
Premises, shall constitute an acceptance of the surrender of the Premises by Tenant before the
expiration of the Term. Only written acknowledgement from Landlord to Tenant shall constitute
acceptance of the surrender of the Premises and accomplish a termination of this Lease.

Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or approval
shall not be deemed to waive or render unnecessary Landlord’s consent to or approval of any
subsequent act by Tenant.

Any waiver by Landlord of any default must be in writing and shall not be a waiver of any other
default concerning the same or any other provision of this Lease.

	21.	 	SUBORDINATION AND ATTORNMENT.

This Lease is and shall be subject and subordinate to all ground or underlying leases (including
renewals, extensions, modifications, consolidations and replacements thereof) which now exist or
may hereafter be executed affecting the Building or the land upon which the Building is situated,
or both, and to the lien of any mortgages or deeds of trust in any amount or amounts whatsoever
(including renewals, extensions, modifications, consolidations and replacements thereof) now or
hereafter placed on or against the Building or on or against Landlord’s interest or estate
therein, or on or against any ground or underlying lease, without the necessity of the execution
and delivery of any further instruments on the part of Tenant to effectuate such subordination.
Nevertheless, Tenant covenants and agrees to execute and deliver upon demand, without charge
therefor, such further instruments evidencing such subordination of this Lease to such ground or
underlying leases, and to the lien of any such mortgages or deeds of trust as may be required by
Landlord.

Notwithstanding anything contained herein to the contrary, if any mortgagee, trustee or ground
lessor shall elect that this Lease is senior to the lien of its mortgage, deed of trust or ground
lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease is dated prior or subsequent to the
date of said mortgage, deed of trust, or ground lease, or the date of the recording thereof.

In the event of any foreclosure sale, transfer in lieu of foreclosure or termination of the lease
in which Landlord is lessee, Tenant shall attorn to the purchaser, transferee or lessor as the
case may be, and recognize that party as Landlord under this Lease, provided such party acquires
and accepts the Premises subject to this lease.

Notwithstanding anything herein to the contrary, Landlord hereby agrees to use reasonable efforts,
at no cost to Landlord, to assist Tenant in obtaining a commercially reasonable subordination,
nondisturbance and attornment agreement (“SNDA”) from any present or future lender on the
Building.

	22.	 	TENANT ESTOPPEL CERTIFICATES.

     22.1. Landlord Request for Estoppel Certificate. Within ten (10) business days after written
request from Landlord, Tenant shall execute and deliver to Landlord or Landlord’s designee, in the
form requested by Landlord, a written statement certifying, among other things, (a) that this Lease
is unmodified and in full force and effect, or that it is in full force and effect as modified and
stating the modifications; (b) the amount of Base Rent and the date to which Base Rent and
Additional Rent have been paid in advance; (c) the amount of any security deposited with Landlord;
and (d) that Landlord is not in default hereunder or, if Landlord is claimed to be in default,
stating the nature of any claimed default. Any such statement may be conclusively relied upon by a
prospective purchaser, assignee or encumbrancer of the Premises.

Page 18

 

     22.2. Failure to Execute. Tenant’s failure to execute and deliver such statement within the
time required shall at Landlord’s election be a default under this Lease and shall also be
conclusive upon Tenant that: (a) this Lease is in full force and effect and has not been modified
except as represented by Landlord; (b) there are no uncured defaults in Landlord’s performance and
that Tenant has no right of offset, counter-claim or deduction against Rent and (c) not more than
one month’s Rent has been paid in advance.

	23.	 	NOTICE.

Notice shall be in writing and shall be deemed duly served or given if personally delivered, sent
by certified or registered U.S. Mail, postage prepaid with a return receipt requested, or sent by
overnight courier service, fee prepaid with a return receipt requested, as follows: (a) if to
Landlord, to Landlord’s Address for Notice with a copy to the Building manager, and (b) if to
Tenant, to Tenant’s Mailing Address; provided, however, Notices to Tenant shall be deemed duly
served or given if delivered or sent to Tenant at the Premises. Landlord and Tenant may from time
to time by Notice to the other designate another place for receipt of future Notice.
Notwithstanding anything contained herein to the contrary, when an applicable State statute
requires service of Notice in a particular manner, service of that Notice in accordance with those
particular requirements shall replace rather than supplement any Notice requirement set forth in
the Lease.

	24.	 	TRANSFER OF LANDLORD’S INTEREST.

In the event of any sale or transfer by Landlord of the Premises, Building or Project, and
assignment of this Lease by Landlord, Landlord shall be and is hereby entirely freed and relieved
of any and all liability and obligations contained in or derived from this Lease arising out of
any act, occurrence or omission relating to the Premises, Building, Project or Lease occurring
after the consummation of such sale or transfer, provided the purchaser shall expressly assume all
of the covenants and obligations of Landlord under this Lease. This Lease shall not be affected by
any such sale and Tenant agrees to attorn to the purchaser or assignee provided all of Landlord’s
obligations hereunder are assumed by such transferee. If any security deposit or prepaid Rent has
been paid by Tenant, Landlord shall transfer the security deposit or prepaid Rent to Landlord’s
successor and upon such transfer, Landlord shall be relieved of any and all further liability with
respect thereto.

	25.	 	SURRENDER OF PREMISES.

     25.1. Clean and Same Condition. Upon the Expiration Date or earlier termination of this Lease,
Tenant shall peaceably surrender the Premises to Landlord clean and in the same condition as
when received,
except for (a) reasonable wear and tear, (b) loss by fire or other casualty, and (c) loss by
condemnation.
Tenant shall remove Tenant’s Property no later than the Expiration Date. If Tenant is required
by Landlord to
remove any additions, alterations, or improvements under Section 12.3., Tenant shall complete
such removal
no later than the Expiration Date. Any damage to the Premises, including any structural
damage, resulting
from removal of any addition, alteration, or improvement made pursuant to Section 12.3. and/or
from Tenant’s
use or from the removal of Tenant’s Property pursuant to Section 13.2. shall be repaired (in
accordance with
Landlord’s reasonable direction) no later than the Expiration Date by Tenant at Tenant’s sole
cost and
expense. On the Expiration Date, Tenant shall surrender all keys to the Premises.

     25.2. Failure to Deliver Possession. If Tenants fails to vacate and deliver possession of
the Premises to Landlord on the expiration or sooner termination of this Lease as required by
Section 12.3.,
Tenant shall indemnify, defend and hold Landlord harmless from all claims, liabilities and
damages resulting
from Tenant’s failure to vacate and deliver possession of the Premises, including, without
limitation, claims
made by a succeeding tenant resulting from Tenant’s failure to vacate and deliver possession
of the Premises
and rental loss which Landlord suffers.

     25.3. Property Abandoned. If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any of Tenant’s Property left on the Premises shall be deemed to
be abandoned,
and, at Landlord’s option, title shall pass to Landlord under this Lease as by a bill of sale.
If Landlord elects to
remove all or any part of such Tenant’s Property, the cost of removal, including repairing any
damage to the
Premises or Building caused by such removal, shall be paid by Tenant.

	26.	 	HOLDING OVER.

Tenant shall not occupy the Premises after the Expiration Date without Landlord’s consent. If after
expiration of the Term, Tenant remains in possession of the Premises with Landlord’s permission
(express or implied), Tenant shall become a tenant from month to month only upon all the provisions
of this Lease (except as to the term and Base Rent). Monthly Installments of Base Rent payable by
Tenant during this period shall be increased to the greater of one hundred fifty percent (150%) of
the fair market rental value of the Premises (as reasonably determined by Landlord) or two hundred
percent (200%) of the Monthly Installments of Base Rent payable by Tenant in the final month of the
Term. The tenancy may be terminated by either party by delivering a thirty (30) day Notice to the
other party. Nothing contained in this Section 26. shall be construed to limit or constitute a
waiver of any other rights or remedies available to Landlord pursuant to this Lease or at law.

	27.	 	RULES AND REGULATIONS.

Page 19

 

Tenant agrees to comply with (and cause its agents, contractors, employees and invitees to comply
with) the rules and regulations attached hereto as Exhibit “E” and with such reasonable
modifications thereof and additions thereto as Landlord may from time to time make. Landlord
agrees to enforce the rules and regulations uniformly against all tenants of the Project. Landlord
shall not be liable, however, for any violation of said rules and regulations by other tenants or
occupants of the Building or Project.

	28.	 	CERTAIN RIGHTS RESERVED BY LANDLORD.

Landlord reserves the following rights, exercisable without (a) liability to Tenant for damage or
injury to property, person or business; (b) being found to have caused an actual or constructive
eviction from the Premises; or (c) being found to have disturbed Tenant’s use or possession of the
Premises.

     28.1. Name. To name the Building and Project and to change the name or street address of the
Building or Project.

     28.2. Signage. To install and maintain all signs on the exterior and interior of the Building
and Project. Notwithstanding anything herein to the contrary, the foregoing Section 18.2 shall not
be construed
as limiting Tenant’s right to install its signage as set forth in Section 38.

     28.3. Access. To have pass keys to the Premises and all doors within the Premises, excluding
Tenant’s files, vaults and safes.

     28.4. Physical Changes. To stripe or re-stripe, re-surface, enlarge, change the grade or
drainage of and control access to the parking lot; to assign and reassign spaces for the
exclusive or
nonexclusive use of tenants (including Tenant); and to locate or relocate parking spaces
assigned to Tenant.

     28.5. Inspection. At any time during the Term, and on prior telephonic notice to Tenant, to
inspect the Premises, and to show the Premises to any person having an existing or prospective
interest in
the Project or Landlord, and during the last six months of the Term, to show the Premises to
prospective
tenants thereof.

     28.6. Entry. To enter the Premises for the purpose of making reasonable and necessary
inspections, repairs, alterations, additions or improvements to the Premises or the Building
(including,
without limitation, checking, calibrating, adjusting or balancing controls and other parts of
the HVAC
system), and to take all steps as may be necessary or desirable for the safety, protection,
maintenance or
preservation of the Premises or the Building or Landlord’s interest therein, or as may be
necessary or
desirable for the operation or improvement of the Building or in order to comply with laws,
orders or
requirements of governmental or other authority. Landlord agrees to use its best efforts
(except in an
emergency) to minimize interference with Tenant’s business in the Premises in the course of
any such entry.

     28.7. Common Area Regulation. To exclusively regulate and control use of the Common
Area.

	29.	 	ADVERTISEMENTS AND SIGNS.

     Tenant shall not affix, paint, erect or inscribe any sign, projection, awning, signal or
advertisement of any kind to any part of the Premises, Building or Project, including without
limitation the inside or outside of windows or doors, without the prior written consent of
Landlord. Landlord shall have the right to remove any signs or other matter installed without
Landlord’s permission, without being liable to Tenant by reason of such removal, and to charge the
cost of removal to Tenant as Additional Rent hereunder, payable within ten (10) days of written
demand by Landlord. Notwithstanding anything herein to the contrary, the foregoing Section 28.2
shall not be construed as limiting Tenant’s right to install its signage as set forth in Section
38.

	30.	 	RELOCATION OF PREMISES.

Intentionally omitted.

	31.	 	GOVERNMENT ENERGY OR UTILITY CONTROLS.

In the event of imposition of federal, state or local government controls, rules, regulations, or
restrictions on the use or consumption of energy or other utilities (including telecommunications)
during the Term, both Landlord and Tenant shall be bound thereby. In the event of a difference in
interpretation by Landlord and Tenant of any such controls, the interpretation of Landlord shall
prevail and Landlord shall have the right to enforce compliance therewith, including the right of
entry into the Premises to effect compliance.

	32.	 	FORCE MAJEURE.

Any prevention, delay or stoppage of work to be performed by Landlord or Tenant which is due to
strikes, labor disputes, inability to obtain labor, materials, equipment or reasonable substitutes
therefor, acts of God, governmental restrictions or regulations or controls, judicial orders, enemy
or hostile government actions, civil commotion, fire or other casualty, or other causes beyond the
reasonable control of the party obligated to perform hereunder, shall excuse performance of the
work by that party for a period equal to the

Page 20

 

duration of that prevention, delay or stoppage. Nothing in this Section 32. shall excuse or delay
Tenant’s obligation to pay Rent or other charges under this Lease unless Tenant is prevented or
delayed from taking occupancy of the Premises as specified in this Lease.

	33.	 	BROKERAGE FEES.

Tenant warrants and represents that it has not dealt with any real estate broker or agent in
connection with this Lease or its negotiation except the Listing and Leasing Agent(s) set forth in
Section 2.8. of this Lease. Tenant shall indemnify, defend and hold Landlord harmless from any
cost, expense or liability (including costs of suit and reasonable attorneys’ fees) for any
compensation, commission or fees claimed by any other real estate broker or agent in connection
with this Lease or its negotiation by reason of any act of Tenant.

	34.	 	QUIET ENJOYMENT.

Tenant, upon payment of Rent and performance of all of its obligations under this Lease, shall
peaceably, quietly and exclusively enjoy possession of the Premises without unwarranted
interference by Landlord or anyone acting or claiming through Landlord, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease may be subordinate.

	35.	 	INTENTIONALLY OMITTED.
	 
	36.	 	MISCELLANEOUS.

     36.1. Accord and Satisfaction; Allocation of Payments. No payment by Tenant or receipt by
Landlord of a lesser amount than the Rent provided for in this Lease shall be deemed to be
other than on
account of the earliest due Rent, nor shall any endorsement or statement on any check or
letter accompanying
any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept
such check or
payment without prejudice to Landlord’s right to recover the balance of the Rent or pursue any
other remedy
provided for in this Lease. In connection with the foregoing, Landlord shall have the absolute
right in its sole
discretion to apply any payment received from Tenant to any account or other payment of Tenant
then not
current and due or delinquent.

     36.2. Addenda. If any provision contained in an addendum to this Lease is inconsistent with
any other provision herein, the provision contained in the addendum shall control, unless
otherwise provided in the addendum.

     36.3. Attorneys’ Fees. If any action or proceeding is brought by either party against the
other pertaining to or arising out of this Lease, the finally prevailing party (i.e., the party that
recovers the greater
relief as a result of the action or proceeding) shall be entitled to recover all costs and
expenses, including
reasonable attorneys’ fees, incurred on account of such action or proceeding. If Tenant is
obligated to pay such
fees and costs, they shall be deemed Additional Rent.

     36.4. Captions and Section Numbers. The captions appearing in the body of this Lease have
been inserted as a matter of convenience and for reference only and in no way define, limit or
enlarge the
scope or meaning of this Lease. All references to Section numbers refer to Sections in this
Lease.

     36.5. Changes Requested by Lender. Neither Landlord nor Tenant shall unreasonably withhold
its consent to changes or amendments to this Lease requested by the lender on Landlord’s
interest, so long as
such changes do not alter the basic business terms of this Lease or otherwise materially
diminish any rights or materially increase any obligations of the party from whom consent to such change or amendment
is requested.

     36.6. Choice of Law. This Lease shall be construed and enforced in accordance with the Laws of
the State.

     36.7. Consent. Notwithstanding anything contained in this Lease to the contrary, Tenant shall
have no claim, and hereby waives the right to any claim against Landlord for money damages, by
reason of
any refusal, withholding or delaying by Landlord of any consent, approval or statement of
satisfaction, and, in
such event, Tenant’s only remedies therefor shall be an action for specific performance,
injunction or
declaratory judgment to enforce any right to such consent, approval or statement of
satisfaction.

     36.8. Authority. If Tenant is not an individual signing on his or her own behalf, then each
individual signing this Lease on behalf of the business entity mat constitutes Tenant
represents and warrants
that the individual is duly authorized to execute and deliver this Lease on behalf of the
business entity, and
that this Lease is binding on Tenant in accordance with its terms. Tenant shall, at Landlord’s
request, deliver a
certified copy of a resolution of its board of directors, if Tenant is a corporation, or other
memorandum of
resolution if Tenant is a limited partnership, general partnership or limited liability
entity, authorizing such
execution.

     36.9. Waiver of Right to Jury Trial. Landlord and Tenant hereby waive their respective rights
to a trial by jury of any claim, action, proceeding or counterclaim by either party against the
other on any matters
arising out of or in any way connected with this Lease, the relationship of Landlord and
Tenant, and/or

Page 21

 

Tenant’s Use or occupancy of the Premises, Building or Project (including any claim of injury
or damage or the enforcement of any remedy under any current or future laws, statutes,
regulations, codes or ordinances).

     36.10. Counterparts. This Lease may be executed in multiple counterparts, all of which shall
constitute one and the same Lease.

     36.11. Execution of Lease; No Option. The submission of this Lease to Tenant shall be for
examination purposes only and does not and shall not constitute a reservation of or option for
Tenant to Lease, or otherwise create any interest of Tenant in the Premises or any other premises within the
Building or Project. Execution of this Lease by Tenant and its return to Landlord shall not be binding on
Landlord, notwithstanding any time interval, until Landlord has in fact signed and delivered this Lease
to Tenant.

     36.12. Furnishing of Financial Statements; Tenant’s Representations. In order to induce
Landlord to enter into this Lease, Tenant agrees that it shall promptly furnish Landlord, from
time to time, upon Landlord’s written request, financial statements reflecting Tenant’s current financial
condition but not more than once per calendar year unless Tenant is in Default or Landlord is refinancing the
Building or Project or offering the same for sale. Tenant represents and warrants that all financial
statements, records and information furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.

     36.13.
Further Assurances. The parties agree to promptly sign all documents reasonably
requested to give effect to the provisions of this Lease.

     36.14. Prior Agreements; Amendments. This Lease and the schedules and addenda attached, if
any, form a part of this Lease together with the rules and regulations set forth on Exhibit
“E” attached hereto, and set forth all the covenants, promises, assurances, agreements, representations,
conditions, warranties, statements, and understandings (Representations) between Landlord and Tenant concerning the
Premises and the Building and Project, and there are no Representations, either oral or written, between
them other than those in this Lease.

This Lease supersedes and revokes all previous negotiations, arrangements, letters of intent,
offers to lease, lease proposals, brochures, representations, and information conveyed, whether
oral or in writing, between the parties hereto or their respective representatives or any other
person purporting to represent Landlord or Tenant. Tenant
acknowledges that it has not been induced
to enter into this Lease by any Representations not set forth in this Lease, and that it has not
relied on any such Representations. Tenant further acknowledges that no such Representations shall
be used in the interpretation or construction of this Lease, and that Landlord shall have no
liability for any consequences arising as a result of any such Representations.

Except as otherwise provided herein, no subsequent alteration, amendment, change, or addition to
this Lease shall be binding upon Landlord or Tenant unless it is in writing and signed by each
party.

     36.15. Recording. Tenant shall not record this Lease without the prior written consent of
Landlord. Tenant, upon the request of Landlord, shall execute and acknowledge a short form
memorandum of this Lease for recording purposes.

     36.16. Severability. A final determination by a court of competent jurisdiction that any
provision of this Lease is invalid shall not affect the validity of any other provision, and any
provision so determined to be invalid shall, to the extent possible, be construed to accomplish its intended effect.

     36.17.
Successors and Assigns. This Lease shall apply to and bind the heirs, personal
representatives, and successors and assigns of the parties.

     36.18.
Time Is of the Essence. Time is of the essence of this Lease.

     36.19. Multiple Parties. Except as otherwise expressly provided herein, if more than one
person or entity is named herein as either Landlord or Tenant, the obligations of such Multiple
Parties shall be the joint and several responsibility of all persons or entities named herein as such Landlord or
Tenant.

     36.20. Consent to Press Release. Landlord and Tenant may, after the Lease is fully executed,
issue a press release limited to only the following information: (i) Tenant’s name and the
nature of Tenant’s business; (ii) the Term; (iii) the square footage leased and the Building name and
location; (iv) the name of the brokers who represented Landlord and Tenant; and (v) such other general
information as may be customarily included in similar press releases. Tenant hereby consents to such a press
release.

Page 22

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first set
forth on Page 1.

LANDLORD:

GLENBOROUGH
FUND IX LLC 
a
Delaware limited liability company

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	By:	 	GRT IX, Inc.,	 	 
	 	 	a Delaware corporation	 	 
	 	 	Its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Sandra L. Boyle	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:
	 	Exec. Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	TENANT:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	OPTELECOM, INC.	 	 	 	 	 
	a Delaware corporation	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Edmund Ludwig	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Its: President & CEO	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 Page 23

 

 

ADDENDUM TO LEASE BETWEEN

Glenborough Fund IX LLC (Landlord)

and Optelecom, Inc. (Tenant)

Dated
September 17, 2002

	37.	 	TENANT IMPROVEMENTS

Section 37. adds to and amends the Lease as follows:

Tenant shall construct tenant improvements in the Premises in accordance with the Work Letter, as
approved by Landlord and Tenant, attached to, or to be attached to, the Lease as Exhibit D.
Construction of tenant improvements shall be subject to the following terms and conditions.

	 	a.	 	Tenant shall obtain, at Tenant’s sole cost and expense (except as otherwise set
forth in subsection (i.), all space plans, if any, for the Premises as well as all
necessary permits for construction of tenant improvements from municipal
authorities and provide Landlord with satisfactory evidence of such permits.
	 
	 	b.	 	Prior to commencement of construction, Tenant shall submit to Landlord a copy
of all contracts entered into relating to the performance of the tenant improvement
work. Tenant shall also provide Landlord with evidence that Tenant’s general
contractor is licensed and qualified to do business in the State of Maryland.
	 
	 	c.	 	Tenant’s general contractor shall provide Landlord with a Certificate of
Insurance:
i) naming Landlord, and any parties designated by Landlord, as additional
insureds, as their respective interests may appear; ii) evidencing general
liability,
owners and contractors protective (“OCP”) liability, and property damage
insurance with respect to construction of improvements in the Premises of not less
than Two Million Dollars ($2,000,000.00) combined single limit for bodily injury,
death and property damage liability; and iii) evidencing Workers’ Compensation
insurance in compliance with Maryland law.
	 
	 	d.	 	Landlord reserves the right to enter the Premises to post such notices as
Landlord
deems necessary.
	 
	 	e.	 	During construction, Landlord shall have the right of reasonable inspection.
The
Work Letter may not be changed or altered without Landlord’s prior written
consent if such change would result in changes to the structural aspects of the
construction.
	 
	 	f.	 	Tenant shall take all reasonable steps necessary to ensure that the work shall
be
performed in a manner that will not interfere with the quiet enjoyment of the other
tenants in the Project. Tenant shall ensure that the work area is kept clean and
that construction material does not block any corridor, hallway, driveway, parking
area or other passageway commonly used by other tenants. Tenant shall bring
construction material to the Project and Premises in the manner, and during the
time periods, reasonably imposed by Landlord. Tenant shall be responsible for all
clean-up of the work area and surrounding exterior areas, if necessary. All refuse
shall be removed from the Project and shall be disposed of in an approved
sanitation site. Project trash containers may not be used for construction related
activities or disposal.

1

 

	 	g.	 	Tenant shall diligently commence and pursue construction of the tenant
improvements to completion. Upon completion, Tenant shall obtain, and provide
Landlord with the Certificate of Occupancy, other final approvals from appropriate
municipal authorities, if applicable, and lien releases.
	 
	 	h.	 	Landlord shall contribute a maximum of $510,000.00 (the “Allowance”)
toward the cost of construction of the tenant improvements in the Premises. Landlord
shall distribute the Allowance to Tenant approximately thirty (30) days after
Landlord’s receipt of invoices and final lien releases for such work based upon a
percentage of completion method using AIA payment request documents and monthly draw
requests. Draw requests can be made no earlier than December 1, 2002 and no more
frequently than monthly and shall be accompanied by appropriate lien releases from
contractors, sub-contractors and materialmen. Up to $150,000.00 of the Allowance may be
used to pay (i) for voice and data cabling installed in the Premises, and (ii) to move
Tenant’s furniture and equipment and install it in the Premises.
	 
	 	i.	 	In addition to the Allowance, Landlord shall contribute an amount not
to exceed $6,000.00 toward the cost of architectural space planning and “test fit”
services for Tenant.

	38.	 	EXTERIOR SIGN

Section 38. adds to and amends the Lease as follows:

So long as Tenant occupies a minimum of 15,000 square feet in the Building, Landlord grants Tenant
the non-exclusive right to place one (1) lighted sign of Tenant’s name and/or logo near the top of
the Building at a location to be mutually agreed upon by Landlord and Tenant. The location,
appearance, specifications and method of installation of any such sign are subject to Landlord’s
approval, as well as all applicable governmental codes, permits and other requirements. (Tenant may
not install any sign by a method that would require the drilling of holes in any Building glass.)

Tenant’s exterior sign shall be designed, maintained, repaired and removed at Tenant’s sole cost
and expense, in accordance with the terms and conditions of this Lease, by a licensed sign
contractor. Tenant hereby assumes and acknowledges all responsibility for the sign, and Tenant
shall obtain insurance for the sign pursuant to the terms of the Lease.

At the expiration or termination of the Term or of Tenant’s rights under this Section 38., Tenant
shall promptly remove its sign and repair, to Landlord’s reasonable satisfaction, any damage caused
by the sign or its removal.

	39.	 	ROOFTOP ANTENNA

Section 39. adds to and amends the Lease as follows:

Tenant may install, operate and maintain an antenna and related ancillary equipment
(collectively, the “Antenna”) on the roof of the building subject to the following terms and
conditions.

	 	a.	 	The location, configuration and amount of space for the Antenna shall be
subject to Landlord’s prior written consent, as shall be the method and timing of
installation. Tenant accepts the roof area in its “as is” condition. Tenant shall not
puncture the roof without Landlord’s prior written consent. Tenant shall install pavers
to allow access to the Antenna without damage to the roof.

2

 

	 	b.	 	Tenant shall either pay directly to the provider or reimburse Landlord all charges
for electricity or other utilities used in connection with
Tenant’s operation of the Antenna.
	 
	 	c.	 	Tenant shall, at its expense, obtain any municipal, state or federal permits
and/or
licenses required for its operation of the Antenna and provide a current copy
thereof to Landlord.
	 
	 	d.	 	Tenant shall obtain appropriate insurance for and assume full responsibility
for
the installation, operation, engineering and maintenance of all the equipment it
installs. Tenant shall indemnify, defend and hold harmless Landlord from and
against any and all costs (including reasonable attorneys fees), claims, damages,
expenses and liability of any kind (including statutory liability, liability under
Workers Compensation laws and mechanic’s liens) arising from, relating to or in
connection with the installation, operation and management of the Antenna, any
injury or death of any person or property damage due to any acts, omissions or
negligence of Tenant, Tenant’s agents, employees, customers, contractors, and
subcontractors in connection with the Antenna.
	 
	 	e.	 	All costs related to such installation, including, but not limited to, the cost
of
electrical equipment, antennas, mounting fixtures and engineering studies, will be
at Tenant’s sole expense. All equipment or other property attached to or otherwise
brought into or onto the Building shall be at all times the personal property of
Tenant except that approved permanent modifications to Landlord’s property shall
become the property of Landlord upon the expiration or termination of the Lease.
	 
	 	f.	 	Landlord retains the right to use or allow others to use space on the roof of
the
Building for the purpose of installing, operating and maintaining an antenna or
satellite dish and related ancillary equipment. Tenant’s Antenna shall be installed
so as not to interfere with the use or operation of communications equipment
previously installed on the Building. When new equipment is subsequently
installed on the Building, Landlord shall use reasonable efforts to insure that such
installations do not interfere with the use or operation of Tenant’s Antenna.
	 
	 	g.	 	Tenant and/or its contractors, agents and subcontractors, may access the
Antenna
only at times approved by Landlord and with Landlord’s representative. In the
event of an emergency, Tenant shall have the right to access the Antenna twenty-
four (24) hours perday, seven (7) days per week and will reimburse Landlord for
costs incurred providing emergency access to the Antenna.
	 
	 	h.	 	During the term of the Lease, Tenant shall keep the Antenna in good condition
and repair. Upon termination or expiration of the Lease, Tenant shall remove the
Antenna and all related equipment (except permanent modifications covered by section
(e) above). Additionally, Tenant shall weather seal any and all holes left by the
removal of said equipment and reimburse Landlord for the cost of repairing any other
damage caused by removal of the equipment.

	40.	 	OPTIONS TO EXTEND TERM

Section 40. adds to and amends the Lease as follows:

	 	a.	 	Tenant shall have the option to extend the Term of this Lease beyond the
Expiration Date on all of the provisions contained in this Lease, except Base Rent,
for a five (5) year period (the “First Extended Term”) by giving Notice of its
exercise at least twelve (12) months prior to the Expiration Date. Provided that, if
an event of default has occurred and has not been cured by Tenant within

3

 

	 	 	 	applicable time periods set forth in the Lease, then this Option to
Extend Term shall, at Landlord’s option, terminate.

	 	b.	 	Specifically contingent upon Tenant exercising its first option to extend the
Term
of this Lease as set forth above, and then performing under the terms of the Lease
accordingly, Tenant shall have a second option to extend the Term of this Lease
beyond the expiration date of the First Extended Term on all of the provisions
contained in this Lease, except Base Rent, for an additional five (5) year period
(the “Second Extended Term”) by giving Notice of its exercise at least twelve (12)
months prior to the expiration date of the First Extended Term. Provided that, if
an event of default has occurred and has not been cured by Tenant within
applicable time periods set forth in the Lease, then this Option to Extend Term
shall, at Landlord’s option, terminate.
	 
	 	c.	 	Base Rent for each Extended Term shall be the then-prevailing market rate for
lease renewals for comparable space in the local market. In no event, however,
shall Base Rent be less than the Base Rent existing on the Expiration Date of the
Term, or Extended Term, as the case may be.
	 
	 	d.	 	The parties shall have sixty (60) days after Landlord receives each option
notice
in which to agree on Base Rent for the Extended Term. If the parties agree on the
Base Rent for such Extended Term during that period, they shall immediately
execute an amendment to this Lease stating the Base Rent and other pertinent
terms and conditions.
	 
	 	 	 	If the parties are unable to agree on Base Rent for such Extended Term within that
period, the option notice shall be of no effect and this Lease shall expire at the
end of the Term, or Extended Term, as the case may be. Neither party to this Lease
shall have the right to have a court or other third party set Base Rent.
	 
	 	e.	 	These Options to Extend Term are granted by Landlord to Optelecom, Inc. and
are personal as to it and shall not be exercised or assigned, voluntarily or
involuntarily, by or to any other person or entity. Any assignment of these
Options to Extend Term without Landlord’s prior written consent are voidable, in
Landlord’s sole discretion, and, at Landlord’s election, may constitute a default
under the Lease.

	41.	 	LETTER OF CREDIT

Section 41. adds to and amends the Lease as follows:

At any time within twelve (12) months of the Commencement Date, Tenant may elect to replace the
cash Security Deposit set forth in Section 2.15. of the Lease and Section 42. of this Addendum with
a Letter of Credit, subject to the following terms and conditions.

     (a) Tenant, at its sole cost and expense, shall provide and maintain a clean,
irrevocable letter of credit in the amount of Two Hundred Fifty Five Thousand and Twenty Five
Dollars ($255,025.00) from a bank satisfactory to Landlord. Such letter of credit shall name
Landlord as the beneficiary, shall be for the entire initial Lease Term, and shall be in all
respects
satisfactory to Landlord.

     (b) If Tenant defaults in any of its obligations under the Lease, Landlord shall be
entitled to draw upon the letter of credit to the extent necessary to cure such default or to
cover
any damages to Landlord or the Building or Premises caused thereby and use the proceeds
thereof in any manner determined by Landlord to effect a cure of such default or compensate
Landlord for such damage. Except to the extent any damages to Landlord shall have been

4

 

mitigated by proceeds from the letter of credit, the right of Landlord to so draw upon
the letter of credit under this paragraph shall not in any way diminish or alter the remedies
otherwise available to Landlord under the Lease or at law or in equity.

     (c) If Landlord draws upon the letter of credit pursuant to subparagraph (b) of this
Section 41., Tenant shall immediately replenish the letter of credit to increase the amount
thereof
to the original amount of the Letter of Credit as set forth hereinabove. Tenant’s failure to
so
replenish the letter of credit shall constitute a default under the Lease.

     (d) If the issuing bank’s credit quality drops below an investment grade credit rating,
Landlord reserves the right to require Tenant to replace the original letter of credit with a
substitute letter of credit from another bank acceptable to Landlord in its sole and absolute
discretion, which letter of credit shall be clean and irrevocable and otherwise be subject to
the
same terms and conditions as the original letter of credit.

     (e) Landlord
agrees to review Tenant’s financial condition as of December 31, 2004,
and again as of December 31st of each succeeding calendar year. At the time of each
such
review, if Tenant proves to Landlord that (i) it’s net worth according to generally accepted
accounting principles (GAAP) has exceeded $3.5 million for each of the three (3) consecutive
preceding quarters; and (ii) it’s quarterly gross revenues have exceeded $3.75 million for
each of
the three (3) consecutive preceding quarters; and (iii) it’s net income exceeds $250,000.00
for
each of the three (3) preceding consecutive quarters, then Tenant may reduce the principal
amount of the Letter of Credit by twenty percent (20%) of the then existing principal amount.
Notwithstanding anything herein to the contrary, in no event may Tenant reduce the principal
amount of it’s Letter of Credit below $50,900.83.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Addendum to Lease as of the date first
above written.

LANDLORD:

GLENBOROUGH FUND IX LLC,

 a Delaware limited liability company

	 	 	 	 	 	 	 
	By:	 	GRT IX, Inc.,	 	 
	 	 	a Delaware corporation	 	 
	 	 	Its Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Sandra L. Boyle
 

Its: Exec. Vice President
	 	 

TENANT:

OPTELECOM, INC., 

a Delaware corporation

	 	 	 	 	 
	By:

	 	/s/ Edmund Luding
 

Its: President & CEO
	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Its:

 

	 	 

5

 

 EXHIBIT A 

FLOOR PLAN

 

 

EXHIBIT B 

SITE PLAN

 

 

EXHIBIT “C”

Germantown Business Park

12920 Cloverleaf Dr.

BUILDING STANDARD MATERIALS / IMPROVEMENTS

	1.	 	PLUMBING

	 	—	 	Under slab 4” sewer connected to 6” sewer main.

	2.	 	FIRE PROTECTION

	 	—	 	8” Fire Main Line with double U.L. Check Valve and two OSY stop valves to 6”
sprinkler main feeding sprinkler lateral lines to heads distributed to cover Shell
building and turned up in accordance with NFPA 13 and 14.

	3.	 	MECHANICAL

	 	 	 	None

	4.	 	ELECTRICAL

—       480 volt, 3 phase 1200 ampere service. Service trough with 1200 ampere cables for
tap to tenant meter and distribution. Utility company provided meter and 100 ampere
disconnect connected to 100 ampere main lug 277/480 volt 3 phase 4 wire panel for high
voltage Common Area electrical equipment inclusive of 15 KVA transformer feeding
120/208 volt 3 phase 4 wire panel for low voltage Common Area electrical equipment.

	5.	 	GAS

	 	—	 	3” Main service, stop valve, and utility company provided meter into utility
room.

	6.	 	LIFE SAFETY

	 	—	 	None.

	7.	 	WATER

—       8” domestic water main into utility room with utility company provided meter
and two stop valves connected to 2” domestic water service in Premises overhead.

 

EXHIBIT D

WORK LETTER AND DRAWINGS

Landlord retains final approving authority for any and all current or future construction and
design documents produced for improvements or modifications made to the Tenant’s premises as well
as any contractors or vendors contracted by Tenant to complete improvements to the premises.

Tenant accepts the premises in “as is” condition from Landlord. Landlord shall provide Tenant with
an “Improvement Allowance” in accordance with Section 37 of the Addendum to Lease to be used toward
the cost of completing Tenant’s improvements in the premises. Tenant shall be responsible for
payment of any construction or modification costs above and beyond the Improvement Allowance
provided by Landlord.

Tenant has identified a list of improvements to be completed in the premises. These improvements,
upon final approval by the Landlord, will be incorporated as Exhibit D-l.

Optelecom, Inc.

 

 

EXHIBIT E

Germantown Business Park

RULES AND REGULATIONS

     Tenant shall, and shall ensure that Tenant’s agents, servants, employees, sublessees,
contractors, licensees, invitees and guests, faithfully keep and observe and perform the following
rules and regulations, and such other and further reasonable rules and regulations as Landlord may
make, and which in Landlord’s judgment are needed for the general well being, safety, care and
cleanliness of the Premises and the Building of which they are a part, together with their
appurtenances, unless waived in writing by Landlord.

	1.	 	The sidewalks, doorways, entries, passages, elevators, public corridors, stairways, and other
parts of the Buildings and/or Project shall not be obstructed or used for any other purpose
than ingress or egress to and from the Premises and for going from one part of the Building
and/or Project to another. Tenant shall permit no loitering by any persons upon the common
area or elsewhere within the Building and/or Project.
	 
	2.	 	Tenant shall not place any objects, including antennas, outdoor furniture, etc., in the
parking areas, landscaped areas or other areas outside of its Premises, or on the roof of the
Building without Landlord’s prior written approval.
	 
	3.	 	Tenant shall not install or permit the installation of any awnings, shades, mylar films or
sun-filters, curtains, blinds, screens, signs or the like on windows without the prior written
approval of the Landlord. If Landlord has approved and Tenant has installed or hereinafter
installs any such items, Tenant shall not remove the same without Landlord’s prior written
approval. No awning or other projections shall be attached to the outside walls or windows.
	 
	4.	 	Tenant shall not construct, maintain, use or operate within the Premises or elsewhere in the
Building or on the Project, any equipment or machinery which produces music, sound or noise
audible beyond the Premises, or vibrations or odors outside the Lease Premises.
	 
	5.	 	No signs, posters, advertisements, or notices shall be attached to, or placed on the exterior
of the Building or the landscape areas, parking areas, or sidewalks of the Project without
specific prior written permission of the Landlord.
	 
	6.	 	No animal, bird, reptile or creature of any kind except Seeing Eye dogs shall be brought into
or kept in or about the Building and/or the Project.
	 
	7.	 	Tenant, or Tenant’s agents, shall not install or operate any steam or gas engine or boiler,
or other mechanical apparatus in the Building and/or Project, nor use, bring, or store in the
Building or Premises, any kerosene, gasoline, combustible, inflammable, explosive, or toxic
substance, or any illuminating material, unless it is battery powered, UL approved.
	 
	8.	 	No additional locks or bolts of any kind shall be placed on any of the doors or windows by
any Tenant, nor shall any changes be made to any existing locks or the mechanism thereof
without the Landlord’s prior written approval. Tenant must, upon the termination of its
tenancy, return to Landlord all keys of offices and toilet rooms, either furnished to, or
otherwise procured by, such Tenant, and in the event of the loss of any keys so furnished,
such Tenant shall pay to Landlord the cost of replacing the same or of changing the lock or
locks opened by such lost key if Landlord shall deem it necessary to make such change.
Should Tenant install a locking system that requires a code, such code shall be provided to
the Landlord in writing, and all subsequent changes to the code will be provided in writing 24
hours prior to such change taking place.
	 
	9.	 	Tenant shall not store or permit its employees or agents to store any trash or other objects
anywhere within the Building or on the Building’s property (other than within the Premises)
without first obtaining Landlord’s written consent. Garbage, trash, rubbish, and refuse shall
be kept in sanitary closed containers approved by Landlord so as not to be visible to the
public within the demised area. All moveable trash receptacles provided by the trash disposal
firm for the Premises must be kept in trash enclosure areas, if any, provided for that
purpose.
	 
	10.	 	The water and wash closets and other plumbing fixtures shall not be used for any purposes
other than those for which they were constructed, and no sweepings, rubbish, bags or other
substances (including, without limitation, coffee grounds) shall be thrown therein. The cost
of repairing any stoppage or damage resulting to any such fixtures or appliances from misuse
on the part of a tenant or such tenant’s officers, agents, servants, and employees shall be
paid by such tenant.
	 
	11.	 	Tenant covenants and agrees that its use of the Premises shall not cause a discharge of more
than its pro rata share on a square foot basis of the design flow gallonage per day of
sanitary (non-industrial) sewage allowed under the sewage discharge permit(s) for the Building.
Discharges in excess of that amount, and any discharge of industrial sewage, shall only be
permitted if Tenant, at its sole expense, shall have obtained all necessary permits and
licenses therefor, including without limitation permits from state and local authorities
having jurisdiction thereof. Tenant shall submit to the Landlord on December 31 of each year
of the Term of this Lease a statement, certified by an authorized officer of Tenant, which
contains the

 

 

	 	 	following information: name of all chemicals, gases, and hazardous substances, used,
generated, or stored on the Premises; type of substance (liquid, gas, or granular);
quantity used, stored or generated per year; method of disposal; permit number, if any,
attributable to each substance, together with copies of all permits for such substance; and
permit expiration date for each substance.
	 
	12.	 	Tenant shall not mark, paint, drill into or in any way deface any part of the building
exterior.
	 
	13.	 	Tenant shall not use or occupy or permit any portion of the Premises, Building, and/or
Project to be used or occupied for the storage, manufacture or sale of liquor, narcotics or
drugs.
	 
	14.	 	Tenant will report all Common Area work requests directly to the property management office
for the Building as designated by Landlord. Requirements of Tenant shall be attended to only
upon application at the property management office for the Building. Building employees shall
not be required to perform, and shall not be requested by any Tenant or occupant to perform
any work unless under specific instructions from the property management office of the
Building. Tenant shall not engage or pay any employees in the Building except those actually
working for the Tenant in the Building.
	 
	15.	 	The Premises shall not be used, or permitted to be used, for lodging or sleeping or for any
immoral or illegal purpose or for any purpose other than that specified in the Lease. No
gaming devices shall be operated in the Premises, Building, and/or Project.
	 
	16.	 	The Building and/or Project shall not be used for conducting any barter, trade, or exchange
of goods or sale through promotional give-away gimmicks or any business involving the sale of
secondhand goods, insurance salvage stock, or fire sale stock, and shall not be used for any
auction or pawnshop business, any fire sale, bankruptcy sale, going-out-of-business sale,
moving sale, bulk sale, or any other business which, because of merchandising methods or
otherwise, would tend to lower the first-class character of the Building.
	 
	17.	 	Tenant assumes full responsibility for protecting the Premises from theft, robbery and
pilferage.
	 
	18.	 	Landlord reserves the right to exclude or expel from the Project any person who, in the sole
judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall
in any manner do any act in violation of the Rules and Regulations of the Project.
	 
	19.	 	All contractors and technicians performing work for Tenant within the Building and/or Project
shall be referred to Landlord for Landlord’s reasonable approval before performing such work.
Such approval may require that the contractor provide evidence of insurance in sufficient
types and quantities as Landlord may require and naming the Landlord and its agent(s) as
additional insured entities under the contractor’s insurance policy. All work including, but
not limited to, installation of telephones, telegraph equipment, electrical and electronic
devices and attachments, and all installations affecting floors, walls, windows, doors,
ceilings or any other physical features of the Building, shall not be commenced prior to
written approval by Landlord. This shall be subject to any government security laws or
regulations that may be applicable because of any secret, confidential or restricted
activities carried on by Tenant in the Premises. All such work shall be performed in
accordance with all codes, regulations, laws, and ordinances that apply. Tenant and/or its
contractor will provide a copy of any permit(s) necessary prior to commencement of work.
Tenant is strictly prohibited from installing equipment of any kind in Building and/or Project
common areas including but not limited to telephone, electrical, mechanical rooms as well as
lobbies, corridors, and rest rooms. All such work shall be performed at Tenant’s sole expense.
	 
	20.	 	Tenant shall ascertain from Landlord the maximum amount of electrical current that can safely
be used in the Premises, taking into account the capacity of the electrical wiring in the
Project and the Premises and the needs of other tenants, and shall not use more than such safe
capacity. Landlord’s consent to the installation of electric equipment shall not relieve
Tenant from the obligations not to use more electricity than such safe capacity.
	 
	21.	 	All parking drives and areas, pedestrian walkways and other public areas forming a part of
the Project shall be under the sole and absolute control of Landlord with the exclusive right
to regulate and control these areas. Tenant agrees to conform to the rules and regulations
that may be established by Landlord for these areas from time to time. Parking in the
parking lot is intended for daily use only by Tenants, their employees, and visitors.
Overnight or long-term parking of all vehicles is prohibited unless approved in writing by
Landlord. No for sale or junk vehicles, recreational vehicles, house trailers, or commercial
or industrial vehicles such as, but not limited to, moving vans, trucks, tractors, trailers,
vans (excepting personal standard or mini-vans), wreckers, hearses, buses, boats, boating
equipment, travel trailers, or camping equipment shall be regularly or habitually parked on
the property. In the event a vehicle is disabled, it shall be removed within 48 hours. No
vehicle services, including but not limited to, changing engine oil, replacing windshields, or
vehicle washing will be permitted on the Property without the prior written approval of the
Landlord.
	 
	22.	 	Directories may be placed by Landlord, at Landlord’s own expense, in conspicuous places in
the Project. No other directories shall be permitted.
	 
	23.	 	Tenant shall not do anything, or permit anything to be done, in or about the Building and/or
Project, or bring or keep anything therein, that will in any way increase the possibility of
fire or other casualty or obstruct or interfere with the rights of, or otherwise injure or
annoy, other tenants, or do anything in conflict with the valid pertinent laws, rules, or
regulations of any governmental authority.

 

 

	24.	 	Tenant shall maintain the Premises free from rodents, insects and other pests. Each tenant
shall cooperate with Project staff in keeping Building and/or Project neat and clean. Nothing
shall be swept or thrown into the corridors, halls, elevator shafts, or stairways, parking
lots, patios, or landscaped areas.

	25.	 	If any governmental license or permit shall be required for the proper and lawful conduct of
tenant’s business, tenant, before occupying the Premises, shall procure and maintain such
license or permit and submit it for Landlord’s inspection. Tenant shall at all times comply
with the terms of any such license or permit.

	26.	 	Landlord shall have the right, exercisable without notice and without liability to any
tenant, to change the name and street address of the Building and/or Project or any other
portion of the Building and/or Project.

	27.	 	Tenant will not display, paint, or place or cause to be displayed, painted or placed, any
handbills, bumper stickers, or other advertising or promotional materials or devices on any
vehicles parked in the parking areas of the Building and/or Project whether belonging to
Tenant or to Tenant’s employees or agents or to any other person.

	28.	 	Tenant shall use the Common Areas for ingress and egress only, and shall not use any portion
of the Common Areas for business or promotional purposes, nor shall Tenant place any
obstruction (including, without limitation, vending machines) thereon. Tenant shall not use,
suffer, or permit to be used any part of portion of the Common Areas for any “quick-type
service” of, among other things, cigarettes, food, beverages, ice cream, popcorn, candy, gum,
or any other edibles, whether or not such “quick type service” is effected through machines or
other dispensing devices.

	29.	 	Tenant shall not use or operate any electric or electrical devices or other devices that emit
sound waves, loud or objectionable noise, or are otherwise dangerous to other tenants and
occupants of the Project or that would interfere with the operation of any device or
equipment or radio or television broadcasting or reception from or within the Project or
elsewhere, or with the operation or roads or highways in the vicinity of the Building, and
shall not place or install any projections, antennae, aerials, or similar devices inside or
outside of the Premises, without the prior written approval of Landlord.

	30.	 	Tenant shall not use the name of the Building and/or Project or use pictures or illustrations
of the Building and/or Project in advertising or other publicity without prior written consent
of Landlord. Landlord shall have the right to prohibit any advertising by Tenant which, in
Landlord’s opinion, tends to impair the reputation of the Building or its desirability for
offices, and upon written notice from Landlord, Tenant will refrain from or discontinue such
advertising.

	31.	 	Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or
indifference in the preservation of good order and cleanliness. Landlord shall not be
responsible to Tenant for any loss of property on the Premises, however occurring, or for any
damage done to Tenant’s personal property by the janitors or any other employee or person. Any
persons employed by any Tenant to do janitorial work shall, while in the Project and outside
of the Premises, be subject to and under the control and direction of the Property Manager
(but not as an agent or servant of the Property Manager or of Landlord, and Tenant shall be
responsible for all acts of such persons).

	32.	 	Tenant shall give Landlord prompt notice of any defects in the water, lawn sprinkler, sewage,
gas pipes, electrical lights and fixtures, heating apparatus, or any other service equipment
affecting the Premises. The specific requirements of Tenant will be attended to only upon
written application to the Property Manager.

	33.	 	No sale or auction (public or private) will be permitted on the Premises or the Project.
Canvassing, soliciting and peddling in the Project are prohibited, and each Tenant shall
cooperate to prevent the same.

	34.	 	Landlord shall have the right to make such other further reasonable rules and regulations as
in the judgement of Landlord, may from time-to-time be needed for the safety, appearance,
care, and cleanliness of the Building and for the preservation of good order therein. Landlord
shall not be responsible to Tenant for any violations of rules and regulations by other
tenants, but Landlord agrees to use reasonable efforts to enforce these rules with respect to
all tenants and occupants of the Building.

 

 

AMENDMENT TO LEASE

     THIS AMENDMENT TO LEASE (“Amendment”) is made this 9th day of March, 2005 by and
between 12920 CLOVERLEAF CENTER, LLC (“Landlord”) and OPTELECOM, INC. (“Tenant”).

RECITALS

     R-1. Glenborough Fund IX LLC, Landlord’s predecessor in interest, and Tenant entered into
Lease dated September 17, 2002 (“Lease”) for the lease of a certain building and premises located
in Germantown, Maryland, as more particularly described in the Lease.

     R-2. Landlord and Tenant desire to amend the Lease to clarify certain provisions.

     NOW, THEREFORE, in consideration of the premises, mutual premises and covenants herein
contained and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

     1. PREMISES. The definition of “Premises” as set forth in Section 2.13 of the
Lease is hereby deleted in its entirety and replaced with the following:

     All of the land and improvements located at 12920 Cloverleaf Center Drive, Germantown,
Maryland, including the building containing approximately 30,000 square feet of Usable Area, as
shown on Exhibit “A”.

     2. PROJECT. The definition of “Project” as set forth in Section 2.14 of the Lease is
hereby deleted in its entirety and replaced with the following:

	 	 	The building which is part of the Premises (the “Building”) and any other
buildings or improvements located on the real property located at 12920
Cloverleaf Center Drive, Germantown, Maryland (the “Property”).

     3. TENANT’S PROPORTION SHARE. The definition of “Tenant’s Proportionate
Share” as set forth in Section 2.18 of the Lease is hereby deleted in its entirety and replaced
with the following: 100%.

     4. OPERATING EXPENSES. The definition of “Operating Expenses” as set forth in Section
6.4.1 of the Lease is hereby amended to add the following additional specific category of expenses
which shall be included in Operating Expenses: Any and all sums paid by Landlord as the owner of
the Property pursuant to the terms of the certain Declaration of Covenants, Conditions and
Restrictions for Cloverleaf Commercial Association recorded in Liber 28306 at folio 723 among the
Land Records of Montgomery County, Maryland, and any amendments, modifications, extensions,
replacements or substitutions to or for such Declaration of Covenants, Conditions and Restrictions.

 

 

     5. PARKING. Section 2.12 of the Lease is hereby amended to specify that the
fourteen (14) parking spaces of which Tenant has exclusive use shall be located on the Property.

     6. NO MODIFICATION. Except as specifically modified herein, the Lease shall remain in
full force and effect.

     7. AUTHORITY. The parties hereby represent that the undersigned signatories have been
duly authorized on behalf of each respective party to enter into this Amendment in accordance with
the terms and conditions set forth herein, and, upon request, each party shall deliver to the other
party appropriate evidence of the accuracy of the foregoing representation.

     IN WITNESS WHEREOF, the parties have executed this Amendment under seal as of the date first
above written.

	 	 	 	 	 	 	 	 	 
	WITNESS/ATTEST	 	 	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	12920 CLOVERLEAF CENTER, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Donald J. Drew      (SEAL)	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Donald J. Drew	 	 
	 

	 	 	 	Title:
	 	Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	OPTELECOM, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Kerstin Mahoney

	 	 	 	By:
	 	/s/ Edmund Ludwig      (SEAL)	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edmund Ludwig	 	 
	 

	 	 	 	Title:
	 	President & CEO	 	 

-2-exv10w18

 

EXHIBIT 10.18

CALLIDUS SOFTWARE INC.

2003 STOCK INCENTIVE PLAN

(Amended and Restated as of April 24, 2006)

     1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the Company’s business.

     2. Definitions. As used herein, the following definitions shall apply:

     (a) “Administrator” means the Board or any of its Committees as shall be administering
the Plan in accordance with Section 4 hereof.

     (b) “Applicable Laws” means the requirements relating to the administration of stock
plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any other country or jurisdiction where Awards are granted under the
Plan.

     (c) “Award” means any Option or other stock-based award granted under this Plan.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Code” means the U.S. Internal Revenue Code of 1986, as amended.

     (f) “Committee” means a committee of Directors appointed by the Board in accordance
with Section 4 hereof.

     (g) “Common Stock” means the common stock, par value $0.001 per share, of the Company.

     (h) “Company” means Callidus Software Inc., a Delaware corporation.

     (i) “Consultant” means any person who is engaged by the Company or any Parent or
Subsidiary to render consulting or advisory services to such entity.

     (j) “Director” means a member of the Board of Directors of the Company.

     (k) “Employee” means any person employed by the Company or any Parent or Subsidiary of
the Company. A Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or protected as a matter of local law or (ii)
transfers between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. Neither service as a Director nor payment of a

 

 

director’s fee by the Company shall be sufficient to constitute “employment” by the
Company.

     (l) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

     (m) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

     (i) If the Common Stock is listed on any established stock exchange or traded
on the Nasdaq National Market or the Nasdaq SmallCap Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system on the date of determination
(or if such date is not a trading date, on the previous trading date), as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;

     (ii) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Administrator.

     (n) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

     (o) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive
Stock Option.

     (p) “Option” means a stock option granted pursuant to the Plan.

     (q) “Option Agreement” means an agreement evidencing the terms and conditions of an
individual Option grant. Any Option Agreement is subject to the terms and conditions of the
Plan.

     (r) “Optionee” means the holder of an outstanding Option granted under the Plan.

     (s) “Outside Director” means a Director who is not an Employee.

     (t) “Participant” means the holder of an outstanding Award granted under the Plan.

     (u) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

     (v) “Plan” means this 2003 Stock Incentive Plan.

     (w) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3.

2

 

     (x) “Service Provider” means an Employee, Director or Consultant.

     (y) “Share” means a share of the Common Stock, as adjusted in accordance with Section
13 below.

     (z) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan.

     (a) Subject to the provisions of Section 13 of the Plan, the maximum aggregate number
of Shares which may be issued under the Plan is 2,000,000 shares, plus (x) any Shares
remaining available for grant of awards under the Company’s 1997 Stock Option Plan on the
effective date of the Plan and (y) an annual increase on July 1 of each year during the term
of the Plan beginning July 1, 2004, in each case in an amount equal to the lesser of (i)
2,800,000 shares, (ii) 5.0% of the outstanding shares on the immediately preceding date or
(iii) an amount determined by the Board. The Shares may be authorized but unissued, or
reacquired, shares or treasury shares.

     (b) No Participant may receive Options and stock appreciation rights under the Plan in
any calendar year that relate to more than 1,500,000 Shares.

     (c) If any Shares covered by an Award, or to which such an Award relates, are
forfeited, or if an Award otherwise terminates in whole or in part without the delivery of
the full number of Shares related thereto, then the Shares covered by such Award, or to
which such Award relates, to the extent of any such forfeiture or termination, shall again
be, or shall become, available for issuance under the Plan. Shares that have been issued
but are repurchased by, or surrendered or forfeited to, the Company shall become available
for future grant under the Plan. For purposes of this paragraph, awards and options granted
under the Company’s 1997 Stock Option Plan shall be treated as Awards.

4. Administration of the Plan.

     (a) The Plan shall be administered by the Board or a Committee appointed by the Board,
which Committee shall be constituted to comply with Applicable Laws.

     (i) To the extent that the Administrator determines it to be desirable to
qualify Awards granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more “non-employee directors” within the meaning of Section
162(m) of the Code.

     (ii) To the extent desirable to qualify transactions hereunder as exempt under
Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy
the requirements for exemption under Rule 16b-3.

3

 

     (b) Subject to the provisions of the Plan and, in the case of a Committee, the specific
duties delegated by the Board to such Committee, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion:

     (i) to determine the Fair Market Value;

     (ii) to select the Service Providers to whom Awards may from time to time be
granted hereunder;

     (iii) to determine the number of Shares to be covered by each such award
granted hereunder;

     (iv) to approve forms of agreement for use under the Plan;

     (v) to determine the terms and conditions, of any Award granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole discretion,
shall determine;

     (vi) to amend the terms of any Award; provided that (A) no such amendment
shall directly or indirectly reduce the exercise price of any Award without the
approval of the Company’s stockholders and (B) no such amendment shall impair the
rights of any Participant without the consent of the Participant;

     (vii) to grant Awards with such terms as the Administrator deems necessary or
appropriate in order to comply with or take advantage of the laws of any
jurisdiction in which a Participant resides or is employed or to establish a
sub-plan under this Plan for such purposes;

     (viii) to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans established by the
Administrator for the purpose of qualifying for preferred tax treatment under
foreign tax laws or complying with foreign securities or other legal requirements;

     (ix) to allow Participants to satisfy withholding tax obligations by electing
to have the Company withhold from the Shares to be issued upon exercise of an Award
that number of Shares having a Fair Market Value equal to the amount required to be
withheld; and

     (x) to construe and interpret the terms of the Plan and awards granted
pursuant to the Plan.

     (c) All decisions, determinations and interpretations of the Administrator shall be
final and binding on all Participants.

4

 

     5. Eligibility.

     (a) Awards may be granted to Service Providers as determined by the Administrator in
its sole discretion, except that Incentive Stock Options may be granted only to Employees.

     (b) Neither the Plan nor any Award shall confer upon any Participant any right with
respect to continuing the Participant’s relationship as a Service Provider with the Company
or its Subsidiary, nor shall it interfere in any way with his or her right or the right of
the Company or its Subsidiary, as appropriate, to terminate such relationship at any time,
with or without cause.

     6. Term of Plan. The Plan shall become effective as determined by the Board. It shall
continue in effect for a term of ten years unless sooner terminated under Section 14 of the Plan.

     7. Terms of Options.

     (a) The term of each Option shall be stated in the Option Agreement; provided that the
term shall be no more than ten (10) years from the date of grant thereof. In the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all classes of stock
of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years
from the date of grant or such shorter term as may be provided in the Option Agreement.

     (b) Each Option shall be designated in the Option Agreement as either an Incentive
Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to
the extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee during any
calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 7(b), Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the time the
Option with respect to such Shares is granted.

     (c) The per share exercise price for the Shares to be issued upon exercise of an Option
shall be such price as is determined by the Administrator, but in the case of any Incentive
Stock Option shall be subject to the following:

     (A) the exercise price of any Incentive Stock Option granted to an
Employee who, at the time of grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary shall be no less than 110% of the
Fair Market Value per Share on the date of grant; and

5

 

     (B) the exercise price of any Incentive Stock Option granted to any
other Employee shall be no less than 100% of the Fair Market Value per
Share on the date of grant.

     (d) The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the Administrator (and, in
the case of an Incentive Stock Option, shall be determined at the time of grant). Such
consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other Shares
which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as to which
such Option shall be exercised, (5) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan, or (6) any
combination of the foregoing methods of payment. In making its determination as to the type
of consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.

8. Exercise of Option.

     (a) Any Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set forth in the
Option Agreement. Unless the Administrator provides otherwise or unless required by local
law, vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

     (b) An Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with respect to which
the Option is exercised. Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Option Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such Shares
promptly after the Option is exercised. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

     (c) Exercise of an Option in any manner shall result in a decrease in the number of
Shares thereafter available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.

6

 

     9. Termination of Relationship as a Service Provider.

     (a) Termination. If an Optionee ceases to be a Service Provider, such Optionee may
exercise his or her Option within such period of time as is specified in the Option
Agreement (of at least 30 days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option as set
forth in the Option Agreement). In the absence of a specified time in the Option Agreement,
the vested portion of the Option shall remain exercisable for 90 days following the
Optionee’s termination. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein or in the Option Agreement, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     (b) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result
of the Optionee’s disability, the Optionee may exercise an Option to the extent the Option
is vested as of the date of termination, but only within 12 months from the date of such
termination (and in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement). If such disability is not a “disability” as such term
is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive Stock Option
and shall be treated for tax purposes as a Nonstatutory Stock Option on the day three months
and one day following such termination. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.

     (c) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be
exercised at any time within 12 months following the date of death (but in no event later
than the expiration of the term of such Option as set forth in the Option Agreement) to the
extent vested as of the date of death. The Option may be exercised by the executor or
administrator of the Optionee’s estate or, if none, by the person(s) entitled to exercise
the Option under the Optionee’s will or the laws of descent or distribution. If the Option
is not so exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

     (d) Buyout Provisions. The Administrator may at any time offer to buy out, for a
payment in cash or Shares, an Award previously granted, based on such terms and conditions
as the Administrator shall establish and communicate to the Participant at the time that
such offer is made.

     10. Formula Grants to Outside Directors. Options may be granted to Outside Directors in
accordance with the policies established from time to time by the Board specifying the number of
shares (if any) to be subject to each such award and the time(s) at which such awards shall be
granted. The current policy with respect to Options granted to Outside Directors under this
Section effective as of the date set forth under the title of this Plan and continuing until
modified or revoked by the Board from time to time, is as follows:

7

 

     (a) Initial Grants. As of the date on which any Outside Director first becomes a
member of the Board, whether by election by the stockholders or appointment by the Board,
such individual shall be granted automatically a Nonstatutory Stock Option to purchase
45,000 Shares (an “Initial Option”).

     (b) Annual Grants. Immediately after the Company’s regularly scheduled annual meeting
of stockholders each year, the following grants shall be made (each, an “Annual Option”):

     (i) Each Outside Director shall be granted automatically a Nonstatutory Stock
Option to purchase 15,000 Shares; provided that if such Outside Director has served
on the Board for less than one year, the number of Shares subject to such Annual
Option shall be reduced pro rata based on the portion of the year that such Outside
Director has served on the Board.

     (ii) The chair of the Audit Committee shall be granted automatically a
Nonstatutory Stock Option to purchase 10,000 Shares; provided that if such Director
has served in such capacity for less than one year, the number of Shares subject to
such Annual Option shall be reduced pro rata based on the portion of the year that
such Director has served in such capacity.

     (iii) The chair of the Compensation Committee and the Nominating and Corporate
Governance Committee each shall be granted automatically a Nonstatutory Stock
Option to purchase 5,000 Shares; provided that if such Director has served in such
capacity for less than one year, the number of Shares subject to such Annual Option
shall be reduced pro rata based on the portion of the year that such Director has
served in such capacity.

     (c) Terms of Options. Options granted to Outside Directors pursuant to this Section 10
shall be on the following terms, unless otherwise determined by the Board:

     (i) The exercise price per Share shall be 100% of the Fair Market Value per
Share on the date of grant of the Option.

     (ii) Each Initial Option shall vest and become exercisable over four years,
with the first 25% vesting on the first anniversary of the grant date and the
remainder vesting monthly thereafter.

     (iii) Each Annual Option shall be fully vested and exercisable immediately.

     (iv) The term of each such Option shall be five years unless otherwise
specified in the Option Agreement, provided that the term may not exceed ten (10)
years.

     11. Non-Transferability of Awards. Except as otherwise determined by the Administrator,
Awards may not be sold, pledged, assigned, hypothecated, transferred, or

8

 

disposed of in any manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Participant, only by the Participant.

     12. Other Stock Awards. The Administrator is hereby authorized to grant to Participants such
other Awards (including, without limitation, grants of restricted stock, restricted stock units,
stock bonus awards, and stock appreciation rights) that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares) as are deemed by the Administrator to be consistent
with the purposes of the Plan. Subject to the terms of the Plan, the Administrator shall determine
the terms and conditions of such Awards, which shall be set forth in an Award Agreement.

     13. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

     (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding Award, and the
number of shares of Common Stock which have been authorized for issuance under the Plan but
as to which no Awards have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Award, as well as the price per share of Common Stock
covered by each such outstanding Award, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company. The conversion of any convertible
securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock subject to an Award.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. The Administrator in
its discretion may provide for a Participant to have the right to exercise his or her Award
prior to such transaction, including Shares as to which the Award would not otherwise be
exercisable. In addition, the Administrator may provide that any Company repurchase option
applicable to any Shares purchased upon exercise of an Award shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed action.

     (c) Merger or Asset Sale. In the event of a merger of the Company with or into another
corporation, or the sale of all or substantially all of the assets of the Company, each
outstanding Award shall be continued or assumed or an equivalent award substituted by the
Company or the successor corporation or a Parent or Subsidiary of the

9

 

successor corporation. In the event that any Award is not so continued, assumed or
substituted, such Award shall become fully vested and exercisable. If an Award becomes
fully vested and exercisable in lieu of continuation, assumption or substitution, the
Administrator shall notify the Participant in writing or electronically that the Award shall
be fully exercisable for a period of no less than 15 days from the date of such notice, and
the Award shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Award shall be considered assumed if, following the merger or sale of assets,
the option or right confers the right to purchase or receive, for each Share subject to the
Award immediately prior to the merger or sale of assets, the consideration (whether stock,
cash, or other securities or property) received in the merger or sale of assets by holders
of Common Stock for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided that if such consideration received is not
solely common stock of the successor corporation or its Parent, the Administrator may
provide for the consideration to be received upon the exercise of the Award, for each Share
subject to the Award, to be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received by holders of Common
Stock.

     14. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

     (b) Stockholder Approval. The Board shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.

     (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan by the Board shall impair the rights of any Participant with the
consent of the Participant. Termination of the Plan shall not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards granted under
the Plan prior to the date of such termination.

     15. Conditions Upon Issuance of Shares.

     (a) Legal Compliance. Shares shall not be issued pursuant to any Award granted
hereunder unless the issuance and delivery of such Shares shall comply with Applicable Laws.

     (b) Tax Withholding. The Administrator shall require payment of any amount the Company
may determine to be necessary to withhold for any income, employment or social insurance
taxes or contributions, as applicable, as a result of the exercise of an award.

     16. Inability to Obtain Authority. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the

10

 

Company of any liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

     17. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the
Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval
shall be obtained in the degree and manner required under Applicable Laws.

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