Document:

Exhibit 10.05

Exhibit 10.05

LEASE AGREEMENT

THIS LEASE AGREEMENT (the “Lease”) is entered into this 5 day of November, 2007
between Mastro Willows 2, LLC a Washington Limited Liability Company (“Landlord”), and
Foundation 9 Entertainment, Inc. and Amaze Entertainment,
Inc. jointly and severally
(“Tenant”). Landlord and Tenant agree as follows:

1. LEASE SUMMARY.

	a.	 	Leased Premises. The leased commercial real estate (the “Premises”) consist of
approximately 54,453 rentable square feet, to be verified by final measurement and
include gym located on garage level, and are outlined on the floor plan attached as
Exhibit A, located on the land legally described on attached Exhibit B, and is
commonly known as Willows 124A, located at 12421 Willows Road NE, in Kirkland,
Washington. Tenant and Landlord shall agree on the final measurement of the Premises
no later than the Commencement Date. The Premises do not include, and Landlord
reserves, the exterior walls and roof of the Premises, the land beneath the
Premises, the pipes and ducts, conduits, wires, fixtures, and equipment above the
suspended ceiling or structural elements of the building in which the Premises are
located (the “Building”). The Building, the land upon which it is situated, all
other improvements located on such land, and all common areas appurtenant to the
Building are referred to as the “Property.” Within sixty (60) days after the
Commencement Date, Landlord and Tenant shall have the right to independently measure
and calculate the area of the Leased Premises in accordance with ANSI/BOMA z65.1-
1996 standard. The lease shall be amended to reflect the correct square footage and
attendant corrections(e.g. sec. 1.d.).

	b.	 	Lease Commencement Date. The Lease shall commence on April 1, 2008, or such earlier
or later date as provided in Section 3 (the “Commencement Date”).

	 
	c.	 	Lease Termination Date. The Lease shall terminate at midnight on September 30, 2015
or such earlier or later date as provided in Section 3 (the “Termination Date”).

	d.	 	Base Rent. The base monthly rent shall be per the Base Rent schedule below. Rent
shall be payable at Landlord’s address shown in Section l(h) below, or such other
place designated in writing by Landlord.

	 	 	 	 	 
	Months	 	Annual Base Rent per Square foot	 	Monthly Base Rent*
	1-4

	 	$00.00/sf/yr,
	 	$0.00, Plus Operating Expenses
	5-12

	 	$17.00/sf/yr
	 	$77,l41.75/mo.
	13-24

	 	$17.50/sf/yr
	 	$79,410.63/mo.
	25-36

	 	$18.00/sf/yr
	 	$8l,679.50/mo.
	37-48

	 	$18.50/sf/yr
	 	$83,948.38/mo.
	49-60

	 	$19.00/sf/yr
	 	$86,217.25/mo.
	61-72

	 	$19.50/sf/yr
	 	$88,486.13/mo.
	73-84

	 	$20.00/sf/yr
	 	$90,755.00/mo.
	85-90

	 	$20.50/sf/yr
	 	$93,023.88/mo.

	 	 	 
	*	 	Unless lease is amended in accordance with section l(a) herein.

 

 

 

	e.	 	Prepaid Rent. N/A

	f.	 	Security Deposit. The
amount of the security deposit currently held by Landlord is
$33,350.25. No additional security deposit shall be required.

	g.	 	Permitted Use.  The Premises shall be used only for general office, server room and related
uses and for no other purpose without the prior written consent of Landlord.

	h.	 	Notice and Payment Addresses:

	 	 	 
	Landlord:

Michael R. Mastro

Mastro Willows 2, LLC

510 Rainier Ave S.

Seattle, WA 98144

	 	

Phone: 206-323-5393 
Fax: 206-323-6980
	 
	 	 
	Tenant:

Amaze Entertainment, Inc.

12421 Willows RD NE Suite 200

Kirkland, WA 98034

	 	
Phone: (425) 825-6800

Fax: (425) 825-6700
	 
	 	 
	Foundation 9 Entertainment, Inc.

	 	Phone:

	 

	 	Fax:
	 

	 	 
	 
	 	 
	 

	 	 

	i.	 	Tenant’s Pro Rata Share. Landlord and Tenant agree that Tenant’s Pro Rata Share is 75.68% of
the Building, based on the ratio of the agreed rentable area of the Premises to the agreed
rentable area of the Building as of the date of this Lease. If the agreed rental area of the
Premises shall change as a result of the agreement or remeasurement
pursuant to Section 1a of
this lease, the Pro Rata Share shall be adjusted to reflect the final agreed rental area.

2. PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord the Premises upon the terms
specified in this Lease.

	a.	 	Right of First Refusal. Tenant shall have a continuous Right of First Refusal for all space
available or that may come available in the Building during the lease term. Landlord shall
notify Tenant in writing of any available space in the Building upon receipt by Landlord and
acceptance of a Third Party Offer to lease the available space by an unrelated party in an
arms length transaction. Tenant shall have five (5) business days after receipt by Tenant of
an official written notification by Landlord of a Third Party Offer to confirm its intent to
exercise its Right of First Refusal under the same lease terms as those outlined in the Third
Party Offer.

	b.	 	Roof Rights. Tenant
shall have roof top access to install communications receiving/sending
equipment, such as an antenna, satellite or microwave dish, as well as access through vertical
risers connecting the roof to the Premises without additional cost to Landlord; however Tenant
shall remove upon vacating premises and repair/restore to a like new condition.

 

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	c.	 	Parking. Landlord shall provide Tenant with parking for employees and visitors at no charge
during the term of the Lease and any Renewal Options. Landlord shall provide parking spaces at
the ratio of three (3) parking stalls per one thousand (1,000) rentable square feet of leased
area. Tenants parking shall be inclusive of 100% of the covered reserved parking stalls at the
building.

	d.	 	Tenant Access & Security System. Tenant shall have the right to access the
Premises and Building 24 hours per day, 7 days per week and 52 weeks per year.
Tenant shall have the same security hardware system as is currently installed in
the Premises. Tenant shall have the right to modify the existing building security
system or install its own security system within the Premises as part of the Tenant
Improvement Allowance.

	e.	 	Relocation Right. In no event shall Landlord have the right to relocate Tenant
during the term of the Lease and any Renewal Options.

	f.	 	Prior Leases. Upon
Commencement Date, any and all prior Leases between Landlord
and Tenant shall be null and void.

3. TERM.

	a.	 	Commencement Date. The Lease shall commence on the date specified in Section l(b).

	b.	 	Tenant Obligations. To the extent Tenant’s tenant improvements are not completed
in time for the Tenant to occupy or take possession of the Premises on the
Commencement Date the Lease shall nevertheless commence on the Commencement Date.
Except as specified elsewhere in this Lease, Landlord makes no representations or
warranties to Tenant regarding the Premises, including the structural condition of
the Premises and the condition of all mechanical, electrical, and other systems on
the Premises. Except for any tenant improvements described on attached Exhibit C to
be completed by Landlord (defined therein as “Landlord’s Work”), Tenant shall be
responsible for performing any work necessary to bring the Premises into condition
satisfactory to Tenant. By signing this Lease, Tenant acknowledges that it has had
adequate opportunity to investigate the Premises, acknowledges responsibility for
making any corrections, alterations and repairs to the Premises (other than the
Landlord’s Work), and acknowledges that the time needed to complete any such items
shall not delay the Commencement Date.

	 
	c.	 	Termination Option. Tenant shall have a right to terminate the lease at the end of the
sixtieth (60th) month by providing Landlord nine (9) months prior written notice.
Tenant shall pay at the time Tenant notifies Landlord, a termination fee equal to
(a) the unamortized cost of the Tenant Improvement Allowance, Additional
Improvement Allowance (if utilized) and Commissions and (b) six (6) months of
Base Rent and Operating Expenses.

	d.	 	Option to Renew. Tenant shall have Two (2), sixty (60) month renewal options at
ninety-five percent (95%) of fair market value (“effective rent”, e.g., after
taking into account, free rent, Tenant improvement allowances, and other
concessions and inducements in the market then given to new, non-renewal,
non-equity Tenants in comparable class office buildings). In no event shall a floor
or minimum exist for determining the rental rate. Tenant shall provide Landlord
written notice of its intent to renew nine (9) months prior to the expiration date
or the options shall expire and be null and void.

 

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4. RENT.
Tenant shall pay Landlord without demand, deduction or offset, in lawful money of the
United States, the monthly rental as outlined in section l(d) in advance on or before the first day
of each month during the Lease Term beginning on the Commencement Date, together with any other
additional payments due to Landlord, including Operating Costs (collectively the “Rent”) when
required under this Lease. Payments for any partial month at the beginning or end of the Lease term
shall be prorated. If any sums payable by Tenant to Landlord under this Lease are not received by
the fifth (5th) day of each month, Tenant shall pay Landlord in addition to the amount due, for the
cost of collecting and handling such late payment (“Late Charges”), an amount equal to the greater
of $100 or five percent (5%) of the delinquent amount. In addition, all delinquent sums payable by
Tenant to Landlord and not paid within five days of the due date, or the five (5) day cure period
as outlined below, shall, at Landlord’s option, bear interest at the rate of Eighteen percent (18%)
per annum, or the highest rate of interest allowable by law,
whichever is less. Interest on all
delinquent amounts shall be calculated from the original due date to the date of payment.
Landlord’s acceptance of less than the full amount of any payment due from Tenant shall not be
deemed an accord and satisfaction or compromise of such payment unless Landlord specifically
consents in writing to payment of such lesser sum as an accord and satisfaction or compromise of
the amount which Landlord claims. Notwithstanding the foregoing, Landlord shall provide Tenant with
written notice of the failure to pay and Tenant shall be granted five (5) days after receipt of
notice to submit payment in full. Tenant shall have the right to receive said written notice one
(1) time per twelve month period before the aforementioned Late Charges and interest rate as
outlined herein shall be assessed to Tenant.

5. SECURITY DEPOSIT. Upon execution of this Lease, Landlord warrants that it has received the
security deposit specified in Section 1(f) above. Landlord may commingle the security deposit with
its other funds. If Tenant breaches any covenant or condition of this Lease, including but not
limited to the payment of Rent, Landlord may apply all or any part of the security deposit to the
payment of any sum in default and any damage suffered by Landlord as a result of Tenant’s breach.
In such event, Tenant shall, within five (5) days after written demand by Landlord, deposit with
Landlord the amount so applied. Any payment to Landlord from the security deposit shall not be
construed as a payment of liquidated damages for any default. If Tenant is in compliance with all
of the covenants and conditions of this Lease at the end of the lease term or earlier termination
in accordance with the terms of this lease, Landlord shall repay the security deposit to Tenant
without interest within 30 days after the vacation of the
Premises.

6. USES.
The Premises shall be used only for the use(s) specified in Section 1(g) above (the
“Permitted Use”), and for no other business or purpose without the prior written consent of
Landlord. No act shall be done on or around the Premises that is unlawful, or cause the
cancellation of any insurance on the Premises or the Building. Tenant shall not commit or allow to
be committed any waste upon the Premises, or any public or private nuisance. Tenant shall not do or
permit anything to be done in the Premises or on the Property, which will obstruct or interfere
with the rights of other tenants or occupants of the Property, or their customers, clients and
visitors, or to injure or annoy such persons.

 

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7. COMPLIANCE WITH LAWS. Tenant shall not cause or permit the Premises to be used in any way, which
violates any law, ordinance, or governmental regulation or order. Landlord represents to Tenant, to
the best of Landlord’s knowledge, that with the exception of any Tenant’s Work, as of the
Commencement Date, the Premises comply with all applicable laws, rules, regulations, or orders,
including without limitation, the Americans With Disabilities Act, if applicable, and Landlord
shall be responsible to promptly cure any noncompliance which existed on the Commencement Date.
Tenant shall be responsible for complying with all laws applicable to the Premises as a result of
Tenant’s particular use, such as modifications required by the Americans With Disabilities Act as a
result of Tenant opening the Premises to the public as a place of public accommodation. If the
enactment or enforcement of any law, ordinance, regulation or code during the Lease term requires
any changes to the Premises during the Lease term, the Tenant shall perform all such changes at its
expense if the changes are required due to the nature of Tenant’s activities at the Premises,
excluding uses specified in section l(g) or to alterations that Tenant seeks to make to the
Premises; otherwise, Landlord shall perform all such changes at its expense.

8. OPERATING COSTS.

	a.	 	Definition. As used herein, “Operating Costs” shall mean all costs of operating, maintaining
and repairing the Premises, the Building, and the Property, determined in accordance with
generally accepted accounting principles, and including without limitation the following: all
taxes and assessments (including, but not limited to, real and personal property taxes and
assessments, local improvement district assessments and other special purpose assessments,
and taxes on pro-rata rent or gross receipts); insurance premiums paid by Landlord and (to
the extent used) deductibles; water, sewer and all other utility charges (other than
utilities separately metered and paid directly by Tenant or other tenants); janitorial and
all other cleaning services; refuse and trash removal; refurbishing and repainting of common
areas; carpet replacement of common areas; air conditioning, heating, ventilation and
elevator service; pest control; lighting systems, fire detection and security services;
landscape maintenance; management (fees and/or personnel costs);
parking lot, road, sidewalk
and driveway patching, resurfacing and maintenance; snow and ice removal; amortization (in
accordance with generally accepted accounting principles) of capital improvements as Landlord
may in the future install to comply with governmental regulations and rules or undertaken in
good faith with a reasonable expectation of reducing operating costs (the useful life of
which shall be determined by generally accepted accounting principles; and costs of legal
services (except those incurred directly relating to a particular occupant of the Building);
accounting services, labor, supplies, materials and tools. Landlord and Tenant agree that if
the Building is not one hundred percent (100%) occupied during any calendar year, on a
monthly average, then the variable Operating Costs shall be increased to reflect the
Operating Costs of the Building as though it were one hundred percent (100%) occupied and
Tenant’s Pro Rata Share of Operating Costs shall be based upon Operating Costs as so
adjusted. Operating Costs shall not include: Landlord’s income
tax or general corporate
overhead, depreciation on the Building or equipment therein; loan payments; real estate
broker’s commissions; capital improvements not described in this
paragraph (except for those
that apply to newly enacted laws or constitute cost savings and in each case only if
amortized over its useful life); improvements which are specific to another Tenants premises;
or any costs regarding the operation, maintenance and repair of the Premises, the Building,
or the Property paid directly by Tenant or other tenants in the Building. Operating Costs
which cannot be separately allocated to the tenants of other structures may include but are
not limited to: insurance premiums; taxes and assessments; management (fees and/or personnel
costs); exterior lighting; parking lot, road, sidewalk and driveway patching, resurfacing and
maintenance; snow and ice removal; and costs of legal services and accounting services. The
cost of any replacements of HVAC equipment less than $4,750 per occurrence shall be at the
sole expense of Landlord and repaid as part of Tenant’s Operating Expenses. Actual
replacement of equipment or repair in excess of $4,750 shall be amortized over the useful
life of the improvement and repaid as part of Tenants operating expenses. The useful life for
replacements shall be determined by an independent mechanical contractor. In no event shall
the repairs or replacement of HVAC equipment cause Tenants operating expenses to increase in
one year by more than $1.00 per square foot per year. Tenant shall have a one (1) year period
to audit operating expenses.

 

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	b.	 	Type of Payment: TRIPLE NET. As additional Rent, Tenant shall pay to Landlord on the first
of each month with payment of Tenant’s base Rent one-twelfth of Tenant’s Pro Rata Share of
Operating Costs.

	d.	 	Method of Payment. Tenant shall pay to Landlord Operating Costs as provided above pursuant
to the following procedure:

i) Landlord shall provide to Tenant, at or before the Commencement Date, a good faith estimate
of annual Operating Costs for the calendar year in which the Commencement Date occurs. Landlord
shall also provide to Tenant, as soon as possible following the first day of each succeeding
calendar year, a good faith estimate of Tenant’s annual Pro Rata Share of Operating Costs for
the then-current year;

(ii) Each estimate of Tenant’s annual Pro Rata Share of Operating Costs determined by Landlord
as described above, shall be divided into twelve (12) equal monthly installments. Tenant shall
pay to Landlord such monthly installment of Operating Costs with each monthly payment of base
Rent. In the event the estimated amount of Tenant’s Pro Rata Share of Operating Costs has not
yet been determined for any calendar year, Tenant shall pay the monthly installment in the
estimated amount determined for the preceding calendar year until the estimate for the current
calendar year has been provided to Tenant. At such time as the estimate for the current
calendar year is received, Tenant shall then pay any shortfall or receive a credit for any
surplus for the preceding months of the current calendar year and shall, thereafter, make the
monthly installment payment in accordance with the current estimate; and (iii) As soon as
reasonably possible following the end of each calendar year of the Lease term, but in no event
later than April 15th of the following calendar year, Landlord shall determine and provide to
Tenant a statement (the “Operating Costs Statement”) setting forth the amount of Operating
Costs actually incurred and the amount of Tenant’s Pro Rata Share of Operating Costs actually
payable by Tenant with respect to such calendar year. In the event the amount of Tenant’s Pro
Rata Share of Operating Costs exceeds the sum of the monthly installments actually paid by
Tenant for such calendar year, Tenant shall pay to Landlord the difference within thirty (30)
days following receipt of the Operating Costs Statement. In the event the sum of such
installments exceeds the amount of Tenant’s Pro Rata Share of Operating Costs actually due and
owing, the difference shall be applied as a credit to Tenant’s future Pro Rata Share of
Operating Costs payable by Tenant pursuant to this Section.

9. UTILITIES AND SERVICES. Landlord shall provide the Premises the following services, the cost of
which shall be included in the Operating Costs: water, sewage,
garbage removal and electricity for
the Premises seven (7) days per week, twenty-four (24) hours per day, and heating, ventilation and
air conditioning from 8:00 a.m. to 7:00 p.m. Monday through Friday,
and 9:00 a.m. to 3:00 p.m. on
Saturday, and shall provide janitorial service to the Premises and Building five (5) nights each
week, exclusive of holidays. Heating, ventilation and air conditioning services will also be
provided by Landlord to the Premises during additional hours on reasonable notice to Landlord, at
Tenant’s sole cost and expense, at an hourly rate reasonably established by Landlord from time to
time and payable by Tenant, as billed, as additional Rent. The current hourly rate charged by
Landlord for after hours HVAC is $35. Tenant shall furnish and pay, at Tenant’s sole expense, all
other services (including, but not limited to, telephone and cable service if available) and other
services which Tenant requires with respect to the Premises, except those to be provided by
Landlord as described above. Notwithstanding the foregoing, if Tenant’s use of the Premises incurs
utility service charges which are above ordinary usage for office tenants in Kirkland, WA,
Landlord reserves the right to require Tenant to pay a reasonable additional charge for such
usage.

 

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	a.	 	Property Management. Upon request by Tenant Landlord shall consider hiring a professional
third party management company to manage the property. The management
company shall have
extensive experience working with Class B office properties in the Kirkland/Redmond submarkets.
Tenant reserves the ongoing right to approve any property management firm and or property
management fees. Tenant shall also have the ongoing right to approve/disapprove the cleaning
contractor selected for the Premises. Tenant shall be responsible for payment of any charges
incurred by Landlord in retaining a professional management firm, either directly or through
the payment of Operating Expenses.

10.
TAXES. Tenant shall pay all taxes, assessments, liens and license fees (“Taxes”) levied,
assessed or imposed by any authority having the direct or indirect power to tax or assess any such
liens, by reason of Tenant’s use of the Premises, and all Taxes on Tenant’s personal property
located on the Premises. Landlord shall pay all Taxes with respect to the Building and the
Project, including any Taxes resulting from a reassessment of the Building or the Project due to a
change of ownership or otherwise, which shall be included in Operating Costs.

11. COMMON AREAS.

	a.	 	Definition. The term “Common Areas” means all areas and facilities that are provided and
designated from time to time by Landlord for the general non-exclusive use and convenience of
Tenant with other tenants and which are not leased or held for the exclusive use of a
particular tenant. Common Areas may, but do not necessarily include, hallways, entryways,
stairs, elevators, driveways, walkways, terraces, docks, loading areas, restrooms, trash
facilities, parking areas and garages, roadways, pedestrian sidewalks, landscaped areas,
security areas and lobby or mall areas. Tenant shall comply with reasonable rules and
regulations concerning the use of the common areas adopted by Landlord from time to time.
Without advance notice to Tenant and without any liability to Tenant, Landlord may change the
size, use, or nature of any common areas, erect improvements on the Common Areas or convert
any portion of the Common Areas to the exclusive use of Landlord or selected tenants, so long
as Tenant is not thereby deprived of the substantial benefit of the
Premises. Landlord
reserves the use of exterior walls and the roof, and the right to install, maintain, use,
repair and replace pipes, ducts, conduits, and wires leading through the Premises in areas
which will not materially interfere with Tenant’s use thereof.

	b.	 	Use of the Common Areas.
Tenant shall have the non-exclusive right in common with such other
tenants to whom Landlord has granted or may grant such rights to use
the Common Areas. Tenant
shall abide by rules and regulations adopted by Landlord from time to time and shall use its
best efforts to cause its employees, contractors, and invitees to comply with those rules and
regulations, and not interfere with the use of Common Areas by others. Tenant shall have the
exclusive right to use the Gym and control access to the Gym which is located adjacent to the
parking garage. In no event shall any other Tenant have the right to use or access the Gym
without Tenant’s prior written consent.

	 
	c.	 	Maintenance of Common Areas. Landlord shall maintain the Common Areas in good order,
condition and repair. This maintenance cost shall be an Operating Cost chargeable to Tenant
pursuant to Section 8.

 

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12. ALTERATIONS. Tenant shall notify Landlord of all proposed alterations or improvements to the
Premises. If the Alterations cost under $25,000, Landlord’s prior written consent for such
alterations will not be required. If the Alterations cost over $25,000, then Landlord’s prior
written consent will be required, but in no event, shall Landlord’s consent be delayed, withheld or
conditioned unless the alterations affect the structural, mechanical, electrical or fire life
safety systems of the building. The term “Alterations”
shall not include the installation of
shelves, movable partitions, Tenant’s equipment, and trade fixtures which may be performed without
damaging existing improvements or the structural integrity of the Premises, and Landlord’s consent
shall not be required for Tenant’s installation of those items. Tenant shall complete all
Alterations at Tenant’s expense in compliance with all applicable laws and in accordance with plans
and specifications approved by Landlord if exceeding $25,000, using contractors mutually agreed
upon by Landlord and Tenant, and in a manner so as to not unreasonably interfere with other
tenants. Landlord shall be deemed the owner of all fixtures and fixed Alterations except for those,
which Landlord requires to be removed at the end of the Lease term. Tenant shall not be required to
remove any Alteration at the end of the Lease term unless Landlord conditioned its consent of the
approved Alteration upon Tenant removing the approved Alteration at the expiration of the lease
term, in which case Tenant shall remove such Alteration. Tenant shall immediately repair any damage
to the Premises caused by removal of Alterations.

13. REPAIRS AND MAINTENANCE. Tenant shall, at its sole expense, maintain the Premises in good
condition and promptly make all repairs and replacements necessary to keep the Premises safe and in
good condition. Landlord shall maintain and repair the Building structure, foundation, exterior
walls, and roof, and the Common Areas, the cost of which shall be included as an Operating Cost.
Tenant shall not damage any demising wall or disturb the structural integrity of the Premises and
shall promptly repair any damage or injury done to any such demising walls or structural elements
caused by Tenant or its employees, agents, contractors, or invitees. If Tenant fails to maintain or
repair the Premises, Landlord may enter the Premises and perform such repair or maintenance on
behalf of Tenant. In such case, Tenant shall be obligated to pay to Landlord immediately upon
receipt of demand for payment, as additional Rent, all costs incurred by Landlord. Notwithstanding
anything in this Section to the contrary, Tenant shall not be responsible for any repairs to the
Premises made necessary by the acts of Landlord or its agents, employees, contractors or invitees
therein or due to commercially reasonable wear and tear. Upon expiration of the Lease term, whether
by lapse of time or otherwise, Tenant shall promptly and peacefully surrender the Premises,
together with all keys, to Landlord in as good condition as when received by Tenant from Landlord
or as thereafter improved, reasonable wear and tear and insured casualty excepted.

14. ACCESS AND RIGHT OF ENTRY. After reasonable notice from Landlord, but in no event less than 24
hours, (except in cases of emergency, where no notice is required), Tenant shall permit Landlord
and its agents, employees and contractors to enter the Premises at all reasonable times to make
repairs, alterations, improvements or inspections. This Section shall not impose any repair or
other obligation upon Landlord not expressly stated elsewhere in this Lease. After reasonable
notice to Tenant, Landlord shall have the right to enter the Premises for the purpose of showing
the Premises to prospective purchasers or lenders at any time, and to prospective tenants within
180 days prior to the expiration or sooner termination of the Lease term.

 

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15. SIGNAGE. Tenant shall have the right to install building top signage at Tenants expense and as
permitted by local governmental codes. Tenant shall obtain Landlord’s written consent, which shall
not be unreasonably withheld, conditioned or delayed, before installing any signs upon Premises.
Tenant shall install any approved signage at Tenant’s sole expense and in compliance with all
applicable laws. Tenant shall not damage or deface the Premises in installing or removing signage
and shall repair any injury or damage to he Premises caused by such installation or removal.

16. DESTRUCTION OR CONDEMNATION.

	a.	 	Damage and Repair. If the Premises or the portion of the Property necessary for Tenant’s
occupancy are partially damaged but not rendered untenantable, by fire or other insured
casualty, then Landlord shall diligently restore the Premises and the portion of the Property
necessary for Tenant’s occupancy and this Lease shall not terminate; provided, however, Tenant
may terminate the Lease if Landlord is unable to restore the Premises within six (6) months of
the casualty event. The Premises or the portion of the Property necessary for Tenant’s
occupancy shall not be deemed untenantable if less than twenty-five percent (25%) of the
usable square footage area is damaged. Notwithstanding the foregoing, Landlord shall have no
obligation to restore the Premises or the portion of the Property necessary for Tenant’s
occupancy if insurance proceeds are not available to pay the entire cost of such restoration.
If insurance proceeds are available to Landlord but are not sufficient to pay the entire cost
of restoration, then Landlord may elect to terminate this Lease and keep the insurance
proceeds, by notifying Tenant within sixty (60) days of the date of such casualty. If the
Premises, the portion of the Property necessary for Tenant’s occupancy, or 50% or more of the
rentable area of the Property are entirely destroyed, or partially damaged and rendered
untenantable, by fire or other casualty, Landlord may, at its option: (a) terminate this Lease
as provided herein, or (b) restore the Premises and the portion of the Property necessary for
Tenant’s occupancy to their previous condition; provided, however, if such casualty event
occurs during the last 6 months of the Lease term (after considering any option to extend the
term timely exercised by Tenant) then either Tenant or Landlord may elect to terminate the
Lease. If, within thirty days (30) after receipt by Landlord from Tenant of written notice
that Tenant deems the Premises or the portion of the Property necessary for Tenant’s occupancy
untenantable, Landlord fails to notify Tenant of its election to restore those areas, or if
Landlord is unable to restore those areas within six (6) months of the date of the casualty
event, then Tenant may elect to terminate the Lease. If Landlord restores the Premises or the
Property under this Section 16(a), Landlord shall proceed with reasonable diligence to
complete the work, and the base Rent shall be abated in the same proportion as the
untenantable portion of the Premises bears to the leased Premises, provided that there shall
be a rent abatement only if the damage or destruction of the Premises or the Property did not
result from, or was not contributed to directly or indirectly by the act, fault or neglect of
Tenant, or Tenant’s officers, contractors, licensees, agents, servants, employees, guests,
invitees or visitors. Provided, Landlord complies with its obligations under this Section, no
damages, compensation or claim shall be payable by Landlord for inconvenience, loss of
business or annoyance directly, incidentally or consequentially arising from any repair or
restoration of any portion of the Premises or the Property. Landlord will not carry insurance
of any kind for the protection of Tenant or on Tenant’s furniture or on any fixtures,
equipment, or appurtenances of Tenant under this Lease, and Landlord shall not be obligated to
repair any damage thereto or replace the same unless the damage is caused by Landlord’s
negligence.

 

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	b.	 	Condemnation. If the Premises, the portion of the Property necessary for Tenant’s occupancy,
or 50% or more of the rentable area of the Property are made untenantable by eminent domain, or
conveyed under a threat of condemnation, this Lease shall terminate at the option of either
Landlord or Tenant as of the earlier of the date title vests in the condemning authority or the
condemning authority first has possession of the Premises or the portion of the Property and
all Rents and other payments shall be paid to that date. In case of taking of a part of the
Premises or the portion of the Property necessary for Tenant’s occupancy that does not render
those areas untenantable, then this Lease shall continue in full force and effect and the base
Rent shall be equitably reduced based on the proportion by which the floor area of any
structures is reduced, such reduction in Rent to be effective as of the earlier of the date the
condemning authority first has possession of such portion or title vests in the condemning
authority. The Premises or the portion of the Property necessary for Tenant’s occupancy shall
not be deemed untenantable if less than twenty-five percent (25%) of each of those areas are
condemned. Landlord shall be entitled to the entire award from the condemning authority
attributable to the value of the Premises or the Property and Tenant shall make no claim for
the value of its leasehold. Tenant shall be permitted to make a separate claim against the
condemning authority for moving expenses or damages resulting from interruption in its
business.

17. INSURANCE.

	a.	 	Liability Insurance. During the Lease term, Tenant shall pay for and maintain commercial
general liability insurance with broad form property damage and contractual liability
endorsements. This policy shall name Landlord as an additional insured, and shall insure
Tenant’s activities and those of Tenant’s employees, officers, contractors, licensees, agents,
servants, employees, guests, invitees or visitors with respect to the Premises against loss,
damage or liability for personal injury or death or loss or damage to property with a combined
single limit of not less than $1,000,000. The insurance will be non-contributory with any
liability insurance carried by Landlord.

	b.	 	Tenants Insurance. During the Lease term, Tenant shall pay for and maintain replacement cost
fire and extended coverage insurance, in an amount sufficient to cover not less than 100% of
the full replacement cost, as the same may exist from time to time, of all of Tenant’s
personal property, fixtures, and equipment.

	c.	 	Miscellaneous. Insurance required under this Section shall be with companies rated A-V or
better in Best’s Insurance Guide, and which are authorized to transact business in the State
of Washington. Tenant shall deliver to Landlord upon commencement of the Lease and from time
to time thereafter, copies or certificates of the insurance policies required by this Section.
In no event shall the limit of such policies be considered as limiting the liability of Tenant
under this Lease.

	d.	 	Landlord Insurance.
Landlord shall carry standard form extended coverage fire insurance of
the building shell and core in the amount of their full replacement value, and such other
insurance of such types and amounts as Landlord, in its discretion, shall deem reasonably
appropriate. The cost of any such insurance may be included in the Operating Costs by a
“blanket policy” insuring other parties and/or locations in addition to the Building, in which
case the portion of the premiums therefor allocable to the Building and Project shall be
included in the Operating Costs.

 

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	e.	 	Waiver of Subrogation. Landlord and Tenant hereby release each other and any other tenant,
their agents or employees, from responsibility for, and waive their entire claim of recovery
for any loss or damage arising from any cause covered by insurance required to be carried by
each of them. Each party shall provide notice to the insurance carrier or carriers of this
mutual waiver of subrogation, and shall cause its respective
insurance carriers to waive all
rights of subrogation against the other. This waiver shall not apply to the extent of the
deductible amounts to any such policies or to the extent of liabilities exceeding the limits of
such policies.

18. INDEMNIFICATION. Tenant shall defend, indemnify, and hold Landlord harmless against all
liabilities, damages, costs, and expenses, including attorneys’ fees, arising from any negligent or
wrongful act or omission of Tenant or Tenant’s officers, contractors, licensees, agents, servants,
employees, guests, invitees, or visitors on or around the Premises as a result of any act, omission
or negligence of Tenant, or Tenant’s officers, contractors, licensees, agents, servants, employees,
guests, invitees, or visitors, or arising from any breach of this Lease by Tenant. Tenant shall use
legal counsel acceptable to Landlord in defense of any action within Tenant’s defense obligation.
Landlord shall defend, indemnify and hold Tenant harmless against all liabilities, damages, costs,
and expenses, including attorneys’ fees, arising from any negligent or wrongful act or omission of
Landlord or Landlord’s officers, contractors, licensees, agents, servants, employees, guests,
invitees, or visitors on or around the Premises or arising from any breach of this Lease by
Landlord. Landlord shall use legal counsel acceptable to Tenant in defense of any action within
Landlord’s defense obligation. The provisions of this section 17 shall survive expiration or
termination of this Lease.

19. ASSIGNMENT AND SUBLETTING.

With the exception of a Permitted Transfer, Tenant shall not assign, sublet, mortgage, encumber or
otherwise transfer any interest in this Lease (collectively referred to as a “Transfer”) or any
part of the Premises, without first obtaining Landlord’s written consent, which shall not be
unreasonably withheld, conditioned or delayed. Landlord shall approve or disapprove any requested
Transfer within five (5) business days of written request by
Tenant. No Transfer shall relieve
Tenant of any liability under this Lease notwithstanding
Landlord’s consent to such Transfer.
Consent to any Transfer shall not operate as a waiver of the necessity for Landlord’s consent to
any subsequent Transfer. If Tenant is a partnership, limited liability company, corporation, or
other entity, any transfer of this Lease by merger, consolidation, redemption or liquidation, or
any change(s) in the ownership of, or power to vote, which singularly or collectively represents a
majority of the beneficial interest in Tenant, shall constitute a Transfer under this Section. As
a condition to Landlord’s approval, if given, any potential assignee or sublessee otherwise
approved by Landlord shall assume all obligations of Tenant under this Lease and shall be jointly
and severally liable with Tenant and any guarantor, if required, for the payment of Rent and
performance of all terms of this Lease. In connection with any Transfer, Tenant shall provide
Landlord with copies of all assignments, subleases and assumption instruments. With reasonable
notice to Landlord (not prior consent), Tenant shall be permitted to sublease or assign all or any
portion of its Premises, to any related entity or affiliate of Tenant, whether by merger,
consolidation or any successor entity, (collectively referred to as a “Permitted Transfer”)
without having the obligation of securing the Landlord’s approval or consent, and Landlord shall
not participate in any profits from said subleasing.

 

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20. LIENS. Tenant shall keep the Premises free from any liens created by or through Tenant. Tenant
shall indemnify and hold Landlord harmless from liability from any
such liens including, without
limitation, liens arising from any Alterations. If a lien is filed against the Premises by any
person claiming by, through or under Tenant, Tenant shall, upon request of Landlord, at Tenant’s
expense, immediately furnish to Landlord a bond in form and amount and issued by a surety
satisfactory to Landlord, indemnifying Landlord and the Premises against all liabilities, costs and
expenses, including attorneys’ fees, which Landlord could reasonably incur as a result of such
lien(s).

21. DEFAULT. The following occurrences shall each be deemed an Event of Default by Tenant:

	a.	 	Failure To Pay. Tenant fails to pay any sum, including Rent or NNN operating expense, due
under this Lease following five (5) business days after receipt of written notice from
Landlord of the failure to pay.

	b.	 	Vacation/Abandonment. Tenant vacates the Premises (defined as an absence for at least 30
consecutive days without prior notice to Landlord), or Tenant abandons the Premises (defined
as an absence of fifteen (15) days or more while Tenant is in breach of some other term of
this Lease). Tenant’s vacation or abandonment of the Premises shall not be subject to any
notice or right to cure.

	c.	 	Insolvency. Tenant becomes insolvent, voluntarily or involuntarily bankrupt, or a receiver,
assignee or other liquidating officer is appointed for Tenant’s business, provided that in the
event of any involuntary bankruptcy or other insolvency proceeding, the existence of such
proceeding shall constitute an Event of Default only if such proceeding is not dismissed or
vacated within 60 days after its institution or commencement.

	d.	 	Levy or Execution. Tenant’s interest in this Lease or the Premises, or any part thereof, is
taken by execution or other process of law directed against Tenant, or is taken upon or
subjected to any attachment by any creditor of Tenant, if such attachment is not discharged
within 15 days after being levied.

	e.	 	Other Non-Monetary Defaults. Tenant breaches any agreement, term or covenant of this Lease
other than one requiring the payment of money and not otherwise enumerated in this Section,
and the breach continues for a period of 30 days after written notice by Landlord to Tenant
of the breach.

	f.	 	Failure to Take Possession. Tenant fails to take possession of the Premises on the
Commencement Date.

 

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22. REMEDIES. Landlord shall have the following remedies upon an Event of Default. Landlord’s
rights and remedies under this Lease shall be cumulative, and none shall exclude any other right or
remedy allowed by law.

a. Termination of Lease. Landlord may terminate Tenant’s interest under the Lease, but no act by
Landlord other than written notice from Landlord to Tenant of termination shall terminate this
Lease. The Lease shall terminate on the date specified in the notice of termination. Upon
termination of this Lease, Tenant will remain liable to Landlord for damages in an amount equal to
the rent and other sums that would have been owing by Tenant under this Lease for the balance of
the Lease term, less the net proceeds, if any, of any reletting of the Premises by Landlord
subsequent to the termination, after deducting all reasonable Landlord’s Reletting Expenses (as
defined below). Landlord shall be entitled to either collect damages from Tenant monthly on the
days on which rent or other amounts would have been payable under the Lease or alternatively,
Landlord may accelerate Tenant’s obligations under the Lease and recover from Tenant: (i) unpaid
rent which had been earned at the time of termination; (ii) the amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds the amount of rent
loss that Tenant proves could reasonably have been avoided; (iii) the amount by which the unpaid
rent for the balance of the term of the Lease after the time of award exceeds the amount of rent
loss that Tenant proves could reasonably be avoided (discounting such amount by the discount rate
of the Federal Reserve Bank of San Francisco at the time of the award, plus 1%); and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s
failure to perform its obligations under the Lease, or which in the ordinary course would be
likely to result from the Event of Default, including without limitation Reletting Expenses
described in Section 22b.

b. Re-Entry and Reletting. Landlord may continue this Lease in full force and effect, and without
demand or notice, re-enter and take possession of the Premises or any part thereof, expel the
Tenant from the Premises and anyone claiming through or under the Tenant, and remove the personal
property of either. Landlord may relet the Premises, or any part of them, in Landlord’s name, for
such period of time and at such other terms and conditions, as Landlord, in its discretion, may
determine. Landlord may collect and receive the rents for the Premises. Re-entry or taking
possession of the Premises by Landlord under this Section shall not be construed as an election on
Landlord’s part to terminate this Lease, unless a written notice of termination is given to Tenant.
Landlord reserves the right following any re-entry or reletting, or both, under this Section to
exercise its right to terminate the Lease. During the Event of Default, Tenant will pay Landlord
the rent and other sums which would be payable under this Lease if repossession had not occurred,
plus the net proceeds, if any, after reletting the Premises, after deducting Landlord’s reasonable
Reletting Expenses. “Reletting Expenses” is defined to include all expenses incurred by Landlord in
connection with reletting the Premises, including without limitation, all repossession costs,
brokerage commissions, attorneys’ fees, remodeling and repair costs, costs for removing and storing
Tenant’s property and equipment, and rent concessions granted by Landlord to any new Tenant,
prorated over the life of the new lease with Tenant responsible for its pro rata share of the
reasonable Reletting Expenses. Tenants pro rata share shall be defined as Tenants remaining lease
term in months divided by the total lease term of the new lease in months.

c. Waiver of Redemption Rights. Tenant, for itself, and on behalf of any and all persons claiming
through or under Tenant, including creditors of all kinds, hereby waives and surrenders all rights
and privileges which they may have under any present or future law, to redeem the Premises or to
have a continuance of this Lease for the Lease term, as it may have been extended.

d. Nonpayment of Additional Rent. All costs which Tenant agrees to pay to Landlord pursuant to this
Lease shall in the event of nonpayment be treated as if they were payments of Rent, and Landlord
shall have all the rights herein provided for in case of nonpayment of Rent.

 

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e. Failure to Remove Property. If Tenant fails to remove any of its property from the Premises at
Landlord’s request following an uncured Event of Default, Landlord may, at its option, remove and
store the property at Tenant’s expense and risk. If Tenant does not pay the storage cost within
five (5) business days of Landlord’s request, Landlord may, at its option, have any or all of such
property sold at public or private sale (and Landlord may become a purchaser at such sale), in such
manner as Landlord deems proper, without notice to Tenant. Landlord shall apply the proceeds of
such sale: (i) to the expense of such sale, including reasonable attorneys’ fees actually incurred;
(ii) to the payment of the costs or charges for storing such property; (iii) to the payment of any
other sums of money which may then be or thereafter become due Landlord from Tenant under any of
the terms hereof; and (iv) the balance, if any, to Tenant. Nothing in this Section shall limit
Landlord’s right to sell Tenant’s personal property as permitted by law to foreclose Landlord’s
lien for unpaid rent.

23. MORTGAGE SUBORDINATION AND ATTORNMENT. This Lease shall automatically be subordinate to any
mortgage or deed of trust created by Landlord which is now existing or hereafter placed upon the
Premises including any advances, interest, modifications, renewals, replacements or extensions
(“Landlord’s Mortgage”), provided the holder of any Landlord’s Mortgage or any person(s) acquiring
the Premises at any sale or other proceeding under any such Landlord’s Mortgage shall elect to
continue this Lease in full force and effect. Tenant shall attorn to the holder of any Landlord’s
Mortgage or any person(s) acquiring the Premises at any sale or other proceeding under any
Landlord’s Mortgage provided such person(s) assume the obligations of Landlord under this Lease.
Tenant shall promptly and in no event later than fifteen (15) days execute, acknowledge and deliver
documents which the holder of any Landlord’s Mortgage may reasonably require as further evidence of
this subordination and attornment. Notwithstanding the foregoing, Tenant’s obligations under this
Section are conditioned on the holder of each of Landlord’s Mortgage and each person acquiring the
Premises at any sale or other proceeding under any such Landlord’s Mortgage not disturbing Tenant’s
occupancy and other rights under this Lease, so long as no uncured Event of Default exists.

24. NON-WAIVER. Landlord’s waiver of any breach of any term contained in this Lease shall not be
deemed to be a waiver of the same term for subsequent acts of Tenant. The acceptance by Landlord of
Rent or other amounts due by Tenant hereunder shall not be deemed to be a waiver of any breach by
Tenant preceding such acceptance.

25. HOLDOVER. Tenant shall have the right to remain in the Premises on a month-to-month basis for
up to three (3) months (“Permitted Holdover”) after the Lease expiration under the same terms and
conditions that are in effect upon Lease expiration. After the Permitted Holdover period Tenant
shall have the right to holdover with Landlords consent, such tenancy shall be deemed to be on a
month-to-month basis and may be terminated according to Washington law. During such tenancy, Tenant
agrees to pay to Landlord 125% the rate of rental last payable under this Lease, unless Landlord
and Tenant agree upon a different rate. All other terms of the Lease shall remain in effect. Under
no conditions shall Tenant be liable for consequential and/or special damages as a result of any
holdover.

26. NOTICES. All notices under this Lease shall be in writing and effective (i) when delivered in
person, (ii) three (3) days after being sent by registered or certified mail to Landlord or Tenant,
as the case may be, at the Notice Addresses set forth in Section 1(h); or (iii) upon confirmed
transmission by facsimile to such persons at the facsimile numbers
set forth in Section 1(h) or
such other addresses/facsimile numbers as may from time to time be designated by such parties in
writing.

27. COSTS AND ATTORNEYS’ FEES. If Tenant or Landlord engage the services of an attorney to collect
monies due or to bring any action for any relief against the other, declaratory or otherwise,
arising out of this Lease, including any suit by Landlord for the recovery of Rent or other
payments, or possession of the Premises, the losing party shall pay the prevailing party a
reasonable sum for attorneys’ fees in such suit, at trial and on
appeal.

 

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28. ESTOPPEL CERTIFICATES. Tenant shall, from time to time, upon written request of Landlord,
execute, acknowledge and deliver to Landlord or its designee a written statement specifying the
following, subject to any modifications necessary to make such statements true and complete: (i)
the date the Lease term commenced and the date it expires; (ii) the amount of minimum monthly Rent
and the date to which such Rent has been paid; (iii) that this Lease is in full force and effect
and has not been assigned, modified, supplemented or amended in any way; (iv) that this Lease
represents the entire agreement between the parties; (v) that all conditions under this Lease to be
performed by Landlord have been satisfied; (vi) that there are no existing claims, defenses or
offsets which the Tenant has against the enforcement of this Lease by Landlord; (vii) that no Rent
has been paid more than one month in advance; and (viii) that no security has been deposited with
Landlord (or, if so, the amount thereof). A prospective purchaser of Landlord’s interest or
assignee of any mortgage or new mortgagee of Landlord’s interest in the Premises may rely upon any
such statement delivered pursuant to this Section. If Tenant shall fail to respond within ten(10)
business days of receipt by Tenant of a written request by Landlord as herein provided, Tenant
shall be deemed to have given such certificate as above provided without modification and shall be
deemed to have admitted the accuracy of any information supplied by Landlord to a prospective
purchaser or mortgagee.

29. TRANSFER OF LANDLORD’S INTEREST. This Lease shall be assignable by Landlord without the consent
of Tenant. In the event of any transfer or transfers of Landlord’s interest in the Premises, other
than a transfer for security purposes only, upon the assumption of this Lease by the transferee,
Landlord shall be automatically relieved of obligations and liabilities accruing from and after the
date of such transfer, except for any retained security deposit or prepaid rent, and Tenant shall
attorn to the transferee. See section 32. Not to adversely impact Tenant’s lease.

30. RIGHT TO PERFORM. If Tenant shall fail to timely pay any sum or perform any other act on its
part to be performed hereunder, Landlord may make any such payment or perform any such other act on
Tenant’s part to be made or performed as provided in this Lease. Tenant shall, on demand, reimburse
Landlord for its expenses incurred in making such payment or performance. Landlord shall (in
addition to any other right or remedy of Landlord provided by law) have the same rights and
remedies in the event of the nonpayment of sums due under this Section as in the case of default by
Tenant in the payment of Rent.

31. HAZARDOUS MATERIAL. Landlord represent and warrants that to the best of its knowledge after
investigation and inquiry, that Landlord has not used the Building to treat, store, refine,
process, or dispose of hazardous wastes, hazardous substances, or toxic substances, as those terms
are defined under CERCLA, 43 U.S.C. 9601 et seq., RECR, 52 U.S.C. 6901, et seq., or TSCA, 15 U.S.C.
2401 et seq. (hereinafter “Hazardous Materials”) except as is normal in the operation of a
commercial office building, including but not limited to janitorial supplies and duplicating
supplies. Landlord represents and warrants to Tenant that, to the best of Landlord’s knowledge,
there is no “Hazardous Material” (as defined below) on, in, or under the Premises as of the
Commencement Date except as otherwise disclosed to Tenant in writing before the execution of this
Lease. If there is any Hazardous Material on, in, or under the Premises as of the Commencement Date
which has been or thereafter becomes unlawfully released through no fault of Tenant, then Landlord
shall indemnify, defend and hold Tenant harmless from any and all claims, judgments, damages,
penalties, fines, costs, liabilities or losses including without limitation sums paid in settlement
of claims, attorneys’ fees, consultant fees and expert fees, incurred or suffered by Tenant either
during or after the Lease term as the result of such contamination. Tenant shall not cause or
permit any Hazardous Material to be brought upon, kept, or used in or about, or disposed of on the
Premises by Tenant, its agents,

 

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employees,
contractors or invitees, except in strict compliance with all applicable federal, state and local laws,
regulations, codes and ordinances. If Tenant breaches the obligations stated in the preceding
sentence, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses including, without limitation,
diminution in the value of the Premises, damages for the loss or restriction on use of rentable or
usable space or of any amenity of the Premises, or elsewhere, damages arising from any adverse
impact on marketing of space at the Premises, and sums paid in settlement of claims, attorneys’
fees, consultant fees and expert fees incurred or suffered by Landlord either during or after the
Lease term. These indemnifications by Landlord and Tenant include, without limitation, costs
incurred in connection with any investigation of site conditions or any clean-up, remedial, removal
or restoration work, whether or not required by any federal, state or local governmental agency or
political subdivision, because of Hazardous Material present in the Premises, or in soil or ground
water on or under the Premises. Tenant shall immediately notify Landlord of any inquiry,
investigation or notice that Tenant may receive from any third party regarding the actual or
suspected presence of Hazardous Material on the Premises. Without limiting the foregoing, if the
presence of any Hazardous Material brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees, results in any unlawful release of Hazardous
Materials on the Premises or any other property, Tenant shall promptly take all actions, at its
sole expense, as are necessary to return the Premises or any other property, to the condition
existing prior to the release of any such Hazardous Material; provided that Landlord’s approval of
such actions shall first be obtained, which approval may be withheld at Landlord’s sole discretion.
As used herein, the term “Hazardous Material” means any hazardous, dangerous, toxic or harmful
substance, material or waste including biomedical waste which is or becomes regulated by any local
governmental authority, the State of Washington or the United States Government, due to its
potential harm to the health, safety or welfare of humans or the environment. The provisions of
this Section 30 shall survive expiration or termination of this Lease.

32. QUIET ENJOYMENT. So long as Tenant pays the Rent and performs all of its obligations in this
Lease, Landlord or anyone claiming by, through or under Landlord, or by the holders of any
Landlord’s Mortgage or any successor thereto will not disturb Tenant’s right to quiet enjoyment of
the possession of the Premises.

33. GENERAL.

	a.	 	Heirs and Assigns. This Lease shall apply to and be binding upon Landlord and Tenant and
their respective heirs, executors, administrators, successors and assigns.

	b.	 	Brokers’ Fees. Tenant represents and warrants to Landlord that it has not engaged any broker,
finder or other person who would be entitled to any commission or fees for the negotiation,
execution, or delivery of this Lease other than as disclosed in
Section 35 of this Lease.
Tenant shall indemnify and hold Landlord harmless against any loss, cost, liability or expense
incurred by Landlord as a result of any claim asserted by any such broker, finder or other
person on the basis of any arrangements or agreements made or alleged to have been made by or
on behalf of Tenant. This subparagraph shall not apply to brokers with whom Landlord has an
express written brokerage agreement.

 

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	c.	 	Entire Agreement. This Lease contains all of the covenants and agreements between Landlord and
Tenant relating to the Premises. No prior or contemporaneous agreements or understanding
pertaining to the Lease shall be valid or of any force or effect and the covenants and
agreements of this Lease shall not be altered, modified or added to except in writing signed
by Landlord and Tenant.

	d.	 	Severability. Any provision of this Lease which shall prove to be invalid, void or illegal
shall in no way affect, impair or invalidate any other provision of this Lease.

	e.	 	Force Majeure. Time
periods for either party’s performance under any provisions of this
Lease (excluding payment of Rent) shall be extended for periods of time during which the
party’s performance is prevented due to circumstances beyond such party’s control, including
without limitation, fires, floods, earthquakes, lockouts, strikes, embargoes, governmental
regulations, acts of God, public enemy, war or other strife.

	f.	 	Governing Law. This Lease shall be governed by and construed in accordance with the laws of
the State of Washington.

	g.	 	Memorandum of Lease. Except for the pages containing the Commission Agreement, the parties
signatures and attached Exhibits A and B, this Lease shall not be recorded. However, Landlord
and Tenant shall, at the other’s request, execute and record a memorandum of Lease in
recordable form that identifies Landlord and Tenant, the commencement and expiration dates of
the Lease, and the legal description of the Premises as set forth on attached Exhibit B.

	h.	 	Submission of Lease Form Not an Offer. One party’s submission of this Lease to the other for
review shall not constitute an offer to lease the Premises. This Lease shall not become
effective and binding upon Landlord and Tenant until it has been fully signed by both
Landlord and Tenant.

	i.	 	No Light, Air or View
Easement. Tenant has not been granted an easement or other right for
light, air or view to or from the Premises. Any diminution or shutting off of light, air or
view by any structure which may be erected on or adjacent to the Building shall in no way
effect this Lease or the obligations of Tenant hereunder or impose any liability on Landlord.

	j.	 	Authority of Parties. Any individual signing this Lease on behalf of an entity represents
and warrants to the other that such individual has authority to do so and, upon such
individual’s execution, that this Lease shall be binding upon and enforceable against the
party on behalf of whom such individual is signing.

34. EXHIBITS AND RIDERS. The following exhibits and riders are made a part of this Lease: Exhibit A
Floor Plan Outline of the Premises Exhibit B Legal Description Exhibit C Landlords work Exhibit D
Additional Provisions.

35. AGENCY DISCLOSURE. At the signing of this Lease, Landlord’s Agent Chris Langer of Broderick
Group, Inc. represented Landlord and Tenant’s Licensee Sean Barnes and Adrienne Hunter of The
Staubach Company represented Tenant. The Staubach Company is Tenant’s Broker and Broderick Group,
Inc. is Landlord’s Broker. If Tenant’s Licensee and Landlord’s Agent are different salespersons
affiliated with the same Broker, then both Tenant and Landlord confirm their consent to that Broker
acting as a dual agent. If Tenant’s Licensee and Landlord’s Agent are the same salesperson
representing both parties, then both Landlord and Tenant confirm their consent to that salesperson
and his/her Broker acting as dual agents. If Tenant’s Licensee, Landlord’s Agent, or their Broker
are dual agents, Landlord and Tenant consent to Tenant’s Licensee, Landlord’s Agent and their
Broker being compensated based on a percentage of the rent or as otherwise disclosed on an attached
addendum. Neither Tenant’s Licensee, Landlord’s Agent or their Broker are receiving compensation
from more than one party to this transaction unless otherwise disclosed on an attached addendum, in
which case Landlord and Tenant consent
to such compensation. Landlord and Tenant confirm receipt of the pamphlet entitled “The Law of Real
Estate Agency.”

 

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36. COMMISSION AGREEMENT. Landlord agrees to pay a commission to Tenant’s Broker and Landlord’s
Broker per a separate agreement.

37. BROKER PROVISIONS LANDLORD’S AGENT, TENANT’S LICENSEE AND THEIR BROKERS HAVE MADE NO
REPRESENTATIONS OR WARRANTIES CONCERNING THE PREMISES, THE MEANING OF THE TERMS AND CONDITIONS OF
THIS LEASE, LANDLORD’S OR TENANT’S FINANCIAL STANDING, ZONING, COMPLIANCE OF THE PREMISES WITH
APPLICABLE LAWS, SERVICE OR CAPACITY OF UTILITIES, OPERATING EXPENSES, OR HAZARDOUS MATERIALS.
LANDLORD AND TENANT ARE EACH ADVISED TO SEEK INDEPENDENT LEGAL ADVICE ON THESE AND OTHER MATTERS
ARISING UNDER THIS LEASE. IN WITNESS WHEREOF this Lease has been executed the date and year first
above written.

38. CONSENT OF OWNER. Willows Run Investments, LLC, a Washington Limited Liability Company
(“Owner”) is the fee owner of the Premises having acquired the Premises from Landlord. Landlord
remains landlord under the Lease pursuant to the terms of the Master Lease dated September 16,
2005. Owner joins in the execution of this Lease for the purpose of indicating its consent to the
terms hereof. Owner further agrees that in the event the Master Lease is terminated for any reason,
then so long as the Tenant is not in default under the terms of the Lease beyond the expiration of
any applicable notice and cure periods, Owner recognizes the Lease as a direct lease between Owner
and Tenant. In the event of such termination, Tenant agrees to attorn to and accept Owner as its
landlord for the remainder of the term of the Lease.

	 	 	 	 	 
	 	LANDLORD:

Mastro Willows 2, LLC

 	 
	 	/s/ Michael R. Mastro
 	 
	 	Michael R. Mastro
 	 
	 	Date: 7/27/08 	 
	 

	 	 	 	 	 
	 	TENANT:

Foundation 9 Entertainment, Inc.

 	 
	 	By:  	/s/ Michael Dean
 	 
	 	 	Michael Dean 	 
	 	 	Its: VP, Operations

1-18-2008 	 
	 

 

18 of 28

 

	 	 	 	 	 
	 	Date: 1-18-2008

Amaze Entertainment, Inc.

 	 
	 	By:  	/s/ Michael Dean
 	 
	 	 	Michael Dean 	 
	 	Its: VP, Operations
 

Date:                      	 
	 	 	 	 	 

 

19 of 28

 

	 	 	 	 	 
	STATE OF WASHINGTON

	 	 	)	 
	 

	 	 	)ss.	 
	COUNTY OF KING

	 	 	)	 

On
this 27 day of February, 2008, before me, the undersigned, a Notary Public in and
for the State of Washington, duly commissioned and sworn, personally appeared MICHAEL R.
MASTRO, to me known to be the Managing Member of Mastro Willows 2, LLC, the company
that executed the within and foregoing instrument, and acknowledged said instrument to be
the free and voluntary act and deed of said company, for the uses and purposes therein
mentioned, and on oath stated that she was authorized to execute said instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day and
year first above written.

	 	 	 	 	 
	 
	 	/s/ Donna
J. Reid	 
	 	 
NOTARY PUBLIC in and
for the State of Washington, residing 

at Auburn 

My commission expires 2/17/10

	 	 	 	 	 
	STATE OF WASHINGTON

	 	 	)	 
	 

	 	 	)ss.	 
	COUNTY OF KING

	 	 	)	 

On this 18 day of January, 2008, before me, the undersigned, a Notary Public in and for the
State of Washington, duly commissioned and sworn, personally appeared Michael Dean, to me
known to be the VP, Operations of Amaze Entertainment, Inc. the corporation that executed
the within and foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and
on oath stated that she was authorized to execute said instrument and that the seal affixed,
if any, is the corporate seal of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year first above written.

	 	 	 	 	 
	 

	 	/s/ ILLEGIBLE	 	 
	 

	 	 

	 	 
	 

	 	NOTARY PUBLIC in and for the State of Washington,
residing 
at Kirkland, WA	 
	 
	 	 	 	 
	 

	 	My commission expires 

6-9-2010	 	 

 

20 of 28

 

	 	 	 	 	 
	STATE OF WASHINGTON

	 	 	)	 
	 

	 	 	)ss.	 
	COUNTY OF KING

	 	 	)	 

On
this 18 day of January, 2008, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared
Michael Dean, to me known to be the VP, Operations of Foundation 9 Entertainment, Inc. the
corporation that executed the within and foregoing instrument, and acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for the uses and
purposes therein mentioned, and on oath stated that she was authorized to execute said
instrument and that the seal affixed, if any, is the corporate seal of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day and
year first above written.

	 	 	 	 
	 

	 	/s/ ILLEGIBLE

 
	 
	 
	 	 	 
	 

	 	NOTARY PUBLIC in and
for the State of Washington, residing 

at Kirkland, WA
	 
	 	 	 
	 

	 	My commission expires	 
	 

	 	6-9-2010	 

	 	 	 	 	 
	STATE OF WASHINGTON

	 	 	)	 
	 

	 	 	)ss.	 
	COUNTY OF KING

	 	 	)	 

On this
 _____ 
day of                                         , 2008, before me, the undersigned, a Notary Public in and for the State of
Washington, duly commissioned and sworn, personally appeared
                    
                    
, to me known to be the
                    
                     of                                         ,
the corporation that executed the within and foregoing instrument, and acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for the uses and
purposes therein mentioned, and on oath stated that she was authorized to execute said
instrument and that the seal affixed, if any, is the corporate seal of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day and
year first above written.

	 	 	 	 	 
	 

	 	 

 

	 	 
	 

	 	 

NOTARY PUBLIC in and for the State of Washington,
residing 

at                                        	 
	 
	 	 	 	 
	 

	 	My commission expires	 	 

 

21 of 28

 

Exhibit A

2nd Floor Plan

 

22 of 28

 

Exhibit A (continued)

1st Floor Plan (Existing)

 

23 of 28

 

Exhibit A (continued)

1st Floor Plan (with new demising wall)

 

24 of 28

 

Exhibit B

Legal Description

Willows 124 A

Lots 1 of Short Plat No. R278020(REV), according to the Short Plat Survey recorded under King
County recording No. 8902210369, being a revision of Short Plat recorded under recording No.
7906250893;

Together with an easement for a roadway and utilities as discovered be instrument recorded February
28, 1983, under recording No. 8302280506;

And together with easements and parking rights as disclosed be instrument recorded October 2, 1991
under Recording No. 9110020709;

Situate in the County of King, State of Washington.

 

25 of 28

 

Exhibit C 

Work Letter

1. Acceptance of Premises. Except for the demising wall depicted on Exhibit A that may
be constructed by Landlord, at Landlords sole expense, Tenant accepts the Premises in their “AS-IS”
condition on the date that this Lease is entered into.

2. Space Plans. On or before                     ,                    ; Tenant shall deliver
to Landlord a space plan prepared by                      or another design consultant chosen by Tenant and reasonably
acceptable to Landlord (the “Architect”) depicting improvements to be installed in the
Premises (the “Space Plans”). Landlord shall notify Tenant whether it approves of the
submitted Space Plans within five (5) business days after Tenant’s submission thereof. If Landlord
disapproves of such Space Plans, then Landlord shall notify Tenant thereof specifying in reasonable
detail the reasons for such disapproval, in which case Tenant shall, within three (3) business days
after such notice, revise such Space Plans in accordance with Landlord’s objections and resubmit
same to Landlord for its review and approval. Landlord shall notify Tenant in writing whether it
approves of the resubmitted Space Plans within three (3) business days after its receipt thereof.
This process shall be repeated until the Space Plans have been finally approved by Landlord and
Tenant. Landlord’s approval of the Space Plans shall not be a representation or warranty of
Landlord that such drawings are adequate for any use or comply with any Law, but shall merely be
the consent of Landlord thereto.

3. Drawings. Tenant shall cause its Architect to prepare all plans and specifications
(the “Drawings”) necessary to construct the interior improvements of the Premises (the
“Improvements”). The Drawings shall include, without limitation, the partition layout,
ceiling plan, electrical outlets and switches, telephone outlets, drawings for any modifications to
the mechanical and plumbing systems of the Building, and detailed plans and specifications for the
construction of the improvements called for under this Exhibit in accordance with all applicable
Laws. The Drawings shall be delivered to Landlord for its approval as soon as reasonably
practicable after the execution of this Lease, but in no event later than the tenth
(10th) day following the date on which the Space Plans are approved by Landlord (the
“Drawings Delivery Deadline”). Landlord shall notify Tenant whether it approves of the
submitted Drawings within seven (7) days after Tenant’s submission thereof. If Landlord disapproves
of such Drawings, then Landlord shall notify Tenant thereof specifying in detail the reasons for
such disapproval, in which case, Tenant shall correct the submitted Drawings and deliver them to
Landlord for its approval within ten (10) days after Tenant receives Landlord’s notice disapproving
the submitted drawings. Landlord shall have five (5) days to approve or disapprove any resubmitted
Drawings, and Tenant shall have five (5) days to correct any such resubmitted Drawings disapproved
by Landlord. This process shall be repeated until the Drawings have been finally approved. If
Landlord fails to notify Tenant that it approves of the initial Drawings within seven (7) days or
any resubmitted Drawings within five (5) days after the submission thereof, then Landlord shall be
deemed to have approved the Drawings. Landlord’s approval of such Drawings shall not be
unreasonably withheld, provided that (1) they comply with all Laws, (2) the improvements depicted
thereon do not adversely affect (in the reasonable discretion of Landlord) the Building’s
Structure, HVAC System, life-safety, plumbing, electrical, and mechanical systems, the exterior
appearance of the Building, or the appearance of the Building’s common areas or elevator lobby
areas (if any), (3) the Drawings are sufficiently detailed to allow construction of the
improvements in a good and workmanlike manner, and (4) the improvements depicted thereon conform to
the rules and regulations promulgated from time to time by Landlord for the construction of tenant
improvements, which rules and regulations do not presently exist. Tenant shall, at Landlord’s
request, sign the Working
Drawings to evidence its review and approval thereof.

 

26 of 28

 

4. Bidding of Work. Prior to commencing the construction of the Improvements (the
“Work”), Tenant shall competitively bid the Work to a minimum of three (3) contractors approved by
Landlord. Landlord and Tenant shall agree on the selection of the qualified bidder to perform the
Work.

5. Construction of Improvements. Tenant shall diligently construct the Improvements in
accordance with the Drawings in a good and workmanlike manner using first quality, new materials
and meet or exceed those standards or qualities presently performed or installed in the Building
and in compliance with Laws (including the ADA to the extent applicable) and shall obtain all
permits, licenses, and all other governmental improvements requisite for the construction thereof.
Tenant’s Work shall be subject to the inspection and approval of Landlord. Such inspection shall be
for Landlord’s sole benefit and shall in no event be construed as any benefit to, nor may Tenant
rely on same. Tenant will assign to Landlord all assignable contractor and manufacturer warranties
it receives in connection with the construction of the Improvements. In no event shall Tenant’s
failure to timely complete the Work result in any delay in the Commencement Date set forth in
Section 1(b) of the Lease. In no event shall Landlord be due any fees with respect to approval of
plans, approval of contractors or construction management services.

6. Tenant’s Insurance. In connection with the construction of the Work by Tenant,
Tenant shall secure, pay for and maintain (or cause its contractor to secure, pay for and maintain)
during the construction, the following insurance and in the amounts as set forth below:

(a) Commercial general liability insurance in amounts of $3,000,000 per occurrence, which
shall apply on a per location basis;

(b) Comprehensive general automobile liability insurance covering any owned, non-owned,
leased, rented or borrowed vehicles of Tenant with limits no less than $3,000,000 combined single
limit for property damage and bodily injury;

(c) Worker’s compensation insurance in amounts not less than statutorily required; and

 

27 of 28

 

(d) Builder’s Risk insurance.

Such insurance policies shall name Landlord as an additional insured and shall provide that no
change or cancellation of coverage shall be undertaken without thirty (30) days’ prior written
notice to Landlord. Tenant or Tenant’s contractor shall furnish to Landlord, certificates of
such insurance prior to commencing the Work.

7. Excess Costs. The entire cost of performing the Work (including design of the
Improvements and preparation of the Drawings); preparation of the Space Plans; costs of
construction labor and materials; permits; electrical usage during construction; additional
janitorial services; distribution and/or relocation of sprinklers, electrical, mechanical,
lights and HVAC per the Drawings; related taxes and insurance costs; construction management and
supervision fee; costs for separate metering of utilites as set forth in Section 8 of the Lease;
installation and repairs of the security/videosystems; and any other fees or costs associated
with the Tenant Improvement Work, all of which costs are herein collectively called the
(“Total Construction Costs”) in excess of the improvement Allowance shall be paid by
Tenant.

8. Improvement Allowance. Landlord shall provide to Tenant a construction allowance
of $15.00 per rentable square foot of the Premises (the “Improvement Allowance”) to be
applied toward the Total Construction Costs. The Construction Allowance shall not be disbursed
to Tenant in cash, but shall be applied by Landlord to the payment of the Total Construction
Costs, if, as, and when the cost of the Work is actually incurred and invoices are provided to
Landlord by Tenant. In the event the cost of the construction of the Improvements does not
exceed the Improvement Allowance, Tenant may spend such unused portion of the Improvement
Allowance up to a maximum amount of $15.00 per Rentable Square Foot of the Premises on Base
Rent, moving costs, equipment, phones, cabling and fixtures. All other work required to
construct the Improvements (the “Additional Work”) shall be performed at Tenant’s
expense.

 

28 of 28Exhibit 10.1

Exhibit 10.1

GRAND CANYON EDUCATION, INC.

2008 Equity Incentive Plan

(As Amended Through March 24, 2011)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1. Establishment, Purpose and Term of Plan
	 	 	1	 
	1.1 Establishment
	 	 	1	 
	1.2 Purpose
	 	 	1	 
	1.3 Term of Plan
	 	 	1	 
	 
	 	 	 	 
	2. Definitions and Construction
	 	 	1	 
	2.1 Definitions
	 	 	1	 
	2.2 Construction
	 	 	8	 
	 
	 	 	 	 
	3. Administration
	 	 	9	 
	3.1 Administration by the Committee
	 	 	9	 
	3.2 Authority of Officers
	 	 	9	 
	3.3 Administration with Respect to Insiders
	 	 	9	 
	3.4 Committee Complying with Section 162(m)
	 	 	9	 
	3.5 Powers of the Committee
	 	 	9	 
	3.6 Indemnification
	 	 	11	 
	 
	 	 	 	 
	4. Shares Subject to Plan
	 	 	11	 
	4.1 Maximum Number of Shares Issuable
	 	 	11	 
	4.2 Annual Increase in Maximum Number of Shares Issuable
	 	 	11	 
	4.3 Share Accounting
	 	 	11	 
	4.4 Adjustments for Changes in Capital Structure
	 	 	12	 
	 
	 	 	 	 
	5. Eligibility, Participation and Award Limitations
	 	 	12	 
	5.1 Persons Eligible for Awards
	 	 	12	 
	5.2 Participation in the Plan
	 	 	12	 
	5.3 Incentive Stock Option Limitations
	 	 	13	 
	5.4 Section 162(m) Award Limits
	 	 	13	 
	 
	 	 	 	 
	6. Stock Options
	 	 	13	 
	6.1 Exercise Price
	 	 	13	 
	6.2 Exercisability and Term of Options
	 	 	14	 
	6.3 Payment of Exercise Price
	 	 	14	 
	6.4 Effect of Termination of Service
	 	 	15	 
	6.5 Transferability of Options
	 	 	16	 
	 
	 	 	 	 
	7. Stock Appreciation Rights
	 	 	16	 
	7.1 Types of SARs Authorized
	 	 	16	 
	7.2 Exercise Price
	 	 	16	 
	7.3 Exercisability and Term of SARs
	 	 	16	 

 

-i-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	7.4 Exercise of SARs
	 	 	17	 
	7.5 Deemed Exercise of SARs
	 	 	17	 
	7.6 Effect of Termination of Service
	 	 	17	 
	7.7 Transferability of SARs
	 	 	17	 
	 
	 	 	 	 
	8. Restricted Stock Awards
	 	 	18	 
	8.1 Types of Restricted Stock Awards Authorized
	 	 	18	 
	8.2 Purchase Price
	 	 	18	 
	8.3 Purchase Period
	 	 	18	 
	8.4 Payment of Purchase Price
	 	 	18	 
	8.5 Vesting and Restrictions on Transfer
	 	 	19	 
	8.6 Voting Rights; Dividends and Distributions
	 	 	19	 
	8.7 Effect of Termination of Service
	 	 	19	 
	8.8 Nontransferability of Restricted Stock Award Rights
	 	 	19	 
	 
	 	 	 	 
	9. Restricted Stock Unit Awards
	 	 	20	 
	9.1 Grant of Restricted Stock Unit Awards
	 	 	20	 
	9.2 Purchase Price
	 	 	20	 
	9.3 Vesting
	 	 	20	 
	9.4 Voting Rights, Dividend Equivalent Rights and Distributions
	 	 	20	 
	9.5 Effect of Termination of Service
	 	 	21	 
	9.6 Settlement of Restricted Stock Unit Awards
	 	 	21	 
	9.7 Nontransferability of Restricted Stock Unit Awards
	 	 	21	 
	 
	 	 	 	 
	10. Performance Awards
	 	 	22	 
	10.1 Types of Performance Awards Authorized
	 	 	22	 
	10.2 Initial Value of Performance Shares and Performance Units
	 	 	22	 
	10.3 Establishment of Performance Period, Performance Goals and Performance
Award Formula
	 	 	22	 
	10.4 Measurement of Performance Goals
	 	 	23	 
	10.5 Settlement of Performance Awards
	 	 	24	 
	10.6 Voting Rights; Dividend Equivalent Rights and Distributions
	 	 	26	 
	10.7 Effect of Termination of Service
	 	 	26	 
	10.8 Nontransferability of Performance Awards
	 	 	27	 
	 
	 	 	 	 
	11. Cash-Based Awards and Other Stock-Based Awards
	 	 	27	 
	11.1 Grant of Cash-Based Awards
	 	 	27	 
	11.2 Grant of Other Stock-Based Awards
	 	 	27	 
	11.3 Value of Cash-Based and Other Stock-Based Awards
	 	 	27	 
	11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards
	 	 	28	 
	11.5 Voting Rights; Dividend Equivalent Rights and Distributions
	 	 	28	 

 

-ii-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	11.6 Effect of Termination of Service
	 	 	28	 
	11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards
	 	 	28	 
	 
	 	 	 	 
	12. Nonemployee Director Awards
	 	 	29	 
	 
	 	 	 	 
	13. Standard Forms of Award Agreement
	 	 	29	 
	13.1 Award Agreements
	 	 	29	 
	13.2 Authority to Vary Terms
	 	 	29	 
	 
	 	 	 	 
	14. Change in Control
	 	 	29	 
	14.1 Effect of Change in Control on Awards
	 	 	29	 
	14.2 Effect of Change in Control on Nonemployee Director Awards
	 	 	30	 
	14.3 Federal Excise Tax Under Section 4999 of the Code
	 	 	31	 
	 
	 	 	 	 
	15. Compliance with Securities Law
	 	 	31	 
	 
	 	 	 	 
	16. Compliance with Section 409A
	 	 	31	 
	16.1 Awards Subject to Section 409A
	 	 	31	 
	16.2 Deferral and/or Distribution Elections
	 	 	32	 
	16.3 Subsequent Elections
	 	 	32	 
	16.4 Payment of Section 409A Deferred Compensation
	 	 	33	 
	 
	 	 	 	 
	17. Tax Withholding
	 	 	35	 
	17.1 Tax Withholding in General
	 	 	35	 
	17.2 Withholding in Shares
	 	 	35	 
	 
	 	 	 	 
	18. Amendment or Termination of Plan
	 	 	35	 
	 
	 	 	 	 
	19. Miscellaneous Provisions
	 	 	36	 
	19.1 Repurchase Rights
	 	 	36	 
	19.2 Forfeiture Events
	 	 	36	 
	19.3 Provision of Information
	 	 	36	 
	19.4 Rights as Employee, Consultant or Director
	 	 	36	 
	19.5 Rights as a Stockholder
	 	 	36	 
	19.6 Delivery of Title to Shares
	 	 	37	 
	19.7 Fractional Shares
	 	 	37	 
	19.8 Retirement and Welfare Plans
	 	 	37	 
	19.9 Beneficiary Designation
	 	 	37	 
	19.10 Severability
	 	 	37	 
	19.11 No Constraint on Corporate Action
	 	 	37	 
	19.12 Unfunded Obligation
	 	 	38	 
	19.13 Choice of Law
	 	 	38	 

 

-iii-

 

Grand Canyon Education, Inc.

2008 Equity Incentive Plan

(As Amended Through March 24, 2011)

1. Establishment, Purpose and Term of Plan.

1.1 Establishment. The Grand Canyon Education, Inc. 2008 Equity Incentive Plan (the “Plan”)
is hereby established effective as of September 26, 2008, the date of its approval by the
stockholders of the Company (the “Effective Date”).

1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain and reward persons
performing services for the Participating Company Group and by motivating such persons to
contribute to the growth and profitability of the Participating Company Group. The Plan seeks to
achieve this purpose by providing for Awards in the form of Options, Stock Appreciation Rights,
Restricted Stock Purchase Rights, Restricted Stock Bonuses, Restricted Stock Units, Performance
Shares, Performance Units, Cash-Based and Other Stock-Based Awards and Nonemployee Director Awards.

1.3 Term of Plan. The Plan shall continue in effect until its termination by the Committee;
provided, however, that all Awards shall be granted, if at all, within ten (10) years from the
Effective Date.

2. Definitions and Construction.

2.1 Definitions. Whenever used herein, the following terms shall have their respective
meanings set forth below:

(a) “Affiliate” means (i) an entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other
than a Subsidiary Corporation, that is controlled by the Company directly or indirectly through one
or more intermediary entities. For this purpose, the term “control” (including the term
“controlled by”) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the relevant entity, whether through the ownership of
voting securities, by contract or otherwise; or shall have such other meaning assigned such term
for the purposes of registration on Form S-8 under the Securities Act.

(b) “Award” means any Option, Stock Appreciation Right, Restricted Stock Purchase Right,
Restricted Stock Bonus, Restricted Stock Unit, Performance Share, Performance Unit, Cash-Based
Award, Other Stock-Based Award or Nonemployee Director Award granted under the Plan.

(c) “Award Agreement” means a written or electronic agreement between the Company and a
Participant setting forth the terms, conditions and restrictions of the Award granted to the
Participant.

 

1

 

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

(e) “Cash-Based Award” means an Award denominated in cash and granted pursuant to Section 11.

(f) “Cause” means, unless such term or an equivalent term is otherwise defined with respect to
an Award by the Participant’s Award Agreement or by a written contract of employment or service,
any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of
fiduciary duty for personal profit, or falsification of any Participating Company documents or
records; (ii) the Participant’s material failure to abide by a Participating Company’s code of
conduct or other policies (including, without limitation, policies relating to confidentiality and
reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation,
destruction or diversion of any tangible or intangible asset or corporate opportunity of a
Participating Company (including, without limitation, the Participant’s improper use or disclosure
of a Participating Company’s confidential or proprietary information); (iv) any intentional act by
the Participant which has a material detrimental effect on a Participating Company’s reputation or
business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned
duties after written notice from a Participating Company of, and a reasonable opportunity to cure,
such failure or inability; (vi) any material breach by the Participant of any employment, service,
non-disclosure, non-competition, non-solicitation or other similar agreement between the
Participant and a Participating Company, which breach is not cured pursuant to the terms of such
agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere)
of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which
impairs the Participant’s ability to perform his or her duties with a Participating Company.

(g) “Change in Control” means, unless such term or an equivalent term is otherwise defined
with respect to an Award by the Participant’s Award Agreement or by a written contract of
employment or service, the occurrence of any of the following:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing more than fifty
percent (50%) of the total Fair Market Value or total combined voting power of the Company’s
then-outstanding securities entitled to vote generally in the election of Directors; provided,
however, that a Change in Control shall not be deemed to have occurred if such level of beneficial
ownership results from any of the following: (A) an acquisition by any person who on the Effective
Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any
acquisition directly from the Company, including, without limitation, pursuant to or in connection
with a public offering of securities, (C) any acquisition by the Company, (D) any acquisition by a
trustee or other fiduciary under an employee benefit plan of a Participating Company or (E) any
acquisition by an entity owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the voting securities of the Company; or

 

2

 

(ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a
“Transaction”) in which the stockholders of the Company
immediately before the Transaction do not retain immediately after the Transaction direct or
indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power
of the outstanding securities entitled to vote generally in the election of Directors or, in the
case of an Ownership Change Event described in Section 2.1(dd)(iii), the entity to which the assets
of the Company were transferred (the “Transferee”), as the case may be; or

(iii) a liquidation or dissolution of the Company;

provided, however, that a Change in Control shall be deemed not to include a transaction described
in subsections (i) or (ii) of this Section 2.1(g) in which a majority of the members of the board
of directors of the continuing, surviving or successor entity, or parent thereof, immediately after
such transaction is comprised of Incumbent Directors. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or other business entities which own
the Company or the Transferee, as the case may be, either directly or through one or more
subsidiary corporations or other business entities. The Committee shall determine whether multiple
sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.

(h) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations
or administrative guidelines promulgated thereunder.

(i) “Committee” means the Compensation Committee and such other committee or subcommittee of
the Board, if any, duly appointed to administer the Plan and having such powers in each instance as
shall be specified by the Board. If, at any time, there is no committee of the Board then
authorized or properly constituted to administer the Plan, the Board shall exercise all of the
powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise
any or all of such powers.

(j) “Company” means Grand Canyon Education, Inc., a Delaware corporation, or any successor
corporation thereto.

(k) “Consultant” means a person engaged to provide consulting or advisory services (other than
as an Employee or a member of the Board) to a Participating Company, provided that the identity of
such person, the nature of such services or the entity to which such services are provided would
not preclude the Company from offering or selling securities to such person pursuant to the Plan in
reliance on registration on Form S-8 under the Securities Act.

(l) “Covered Employee” means, at any time the Plan is subject to Section 162(m), any Employee
who is or may reasonably be expected to become a “covered employee” as defined in Section 162(m),
or any successor statute, and who is designated, either as an individual Employee or a member of a
class of Employees, by the Committee no later than (i) the date that is ninety (90) days after the
beginning of the Performance Period, or (ii) the date on which twenty-five percent (25%) of the
Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable
Performance Period.

 

3

 

(m) “Director” means a member of the Board.

(n) “Disability” means the permanent and total disability of the Participant, within the
meaning of Section 22(e)(3) of the Code.

(o) “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of
the Committee or as otherwise provided by the Plan, to receive a credit for the account of such
Participant in an amount equal to the cash dividends paid on one share of Stock for each share of
Stock represented by an Award held by such Participant.

(p) “Employee” means any person treated as an employee (including an Officer or a member of
the Board who is also treated as an employee) in the records of a Participating Company and, with
respect to any Incentive Stock Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a member of the Board nor
payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.
The Company shall determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of such individual’s
employment or termination of employment, as the case may be. For purposes of an individual’s
rights, if any, under the terms of the Plan as of the time of the Company’s determination of
whether or not the individual is an Employee, all such determinations by the Company shall be
final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any
court of law or governmental agency subsequently makes a contrary determination as to such
individual’s status as an Employee.

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(r) “Fair Market Value” means, as of any date, the value of a share of Stock or other property
as determined by the Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:

(i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed or
quoted on a national or regional securities exchange or quotation system, the Fair Market Value of
a share of Stock shall be the closing price of a share of Stock as quoted on the national or
regional securities exchange or quotation system constituting the primary market for the Stock, as
reported in The Wall Street Journal or such other source as the Company deems reliable. If the
relevant date does not fall on a day on which the Stock has traded on such securities exchange or
quotation system, the date on which the Fair Market Value shall be established shall be the last
day on which the Stock was so traded or quoted prior to the relevant date, or such other
appropriate day as shall be determined by the Committee, in its discretion.

 

4

 

(ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair
Market Value on the basis of the opening, closing, or average of the high and low sale prices of a
share of Stock on such date or the preceding trading day, the actual sale price of a share of Stock
received by a Participant, any other reasonable basis using
actual transactions in the Stock as reported on a national or regional securities exchange or
quotation system, or on any other basis consistent with the requirements of Section 409A. The
Committee may also determine the Fair Market Value upon the average selling price of the Stock
during a specified period that is within thirty (30) days before or thirty (30) days after such
date, provided that, with respect to the grant of an Option or SAR, the commitment to grant such
Award based on such valuation method must be irrevocable before the beginning of the specified
period. The Committee may vary its method of determination of the Fair Market Value as provided in
this Section for different purposes under the Plan to the extent consistent with the requirements
of Section 409A.

(iii) If, on such date, the Stock is not listed or quoted on a national or regional securities
exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined by
the Committee in good faith without regard to any restriction other than a restriction which, by
its terms, will never lapse, and in a manner consistent with the requirements of Section 409A.

(s) “Incentive Stock Option” means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.

(t) “Incumbent Director” means a director who either (i) is a member of the Board as of the
Effective Date, or (ii) is elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such election or nomination,
but who was not elected or nominated in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.

(u) “Insider” means an Officer, Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.

(v) “Insider Trading Policy” means the written policy of the Company pertaining to the
purchase, sale, transfer or other disposition of the Company’s equity securities by Directors,
Officers, Employees or other service providers who may possess material, nonpublic information
regarding the Company or its securities.

(w) “Net-Exercise” means a procedure by which the Participant will be issued a number of
shares of Stock upon the exercise of an Option determined in accordance with the following formula:

N = X*((A-B)/A), where

“N” = the number of shares of Stock to be issued to the Participant upon exercise of the Option;

“X” = the total number of shares with respect to which the Participant has elected to exercise the Option;

“A” = the Fair Market Value of one (1) share of Stock determined on the exercise date; and

“B” = the exercise price per share (as defined in the Participant’s Award Agreement)

 

5

 

(x) “Nonemployee Director” means a Director who is not an Employee.

(y) “Nonemployee Director Award” means a Nonstatutory Stock Option, Stock Appreciation Right,
Restricted Stock Award or Restricted Stock Unit Award granted to a Nonemployee Director pursuant to
Section 12 of the Plan.

(z) “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award
Agreement) an incentive stock option within the meaning of Section 422(b) of the Code.

(aa) “Officer” means any person designated by the Board as an officer of the Company.

(bb) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to the Plan.

(cc) “Other Stock-Based Award” means an Award denominated in shares of Stock and granted
pursuant to Section 11.

(dd) “Ownership Change Event” means the occurrence of any of the following with respect to the
Company: (i) the direct or indirect sale or exchange in a single or series of related transactions
by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the
Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale,
exchange, or transfer of all or substantially all of the assets of the Company (other than a sale,
exchange or transfer to one or more subsidiaries of the Company).

(ee) “Parent Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.

(ff) “Participant” means any eligible person who has been granted one or more Awards.

(gg) “Participating Company” means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.

(hh) “Participating Company Group” means, at any point in time, the Company and all other
entities collectively which are then Participating Companies.

(ii) “Performance Award” means an Award of Performance Shares or Performance Units.

(jj) “Performance Award Formula” means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 10.3 which provides the basis for computing the
value of a Performance Award at one or more threshold levels of attainment of the applicable
Performance Goal(s) measured as of the end of the applicable Performance Period.

 

6

 

(kk) “Performance-Based Compensation” means compensation under an Award that satisfies the
requirements of Section 162(m) for certain performance-based compensation paid to Covered
Employees.

(ll) “Performance Goal” means a performance goal established by the Committee pursuant to
Section 10.3.

(mm) “Performance Period” means a period established by the Committee pursuant to Section 10.3
at the end of which one or more Performance Goals are to be measured.

(nn) “Performance Share” means a right granted to a Participant pursuant to Section 10 to
receive a payment equal to the value of a Performance Share, as determined by the Committee, based
on performance.

(oo) “Performance Unit” means a right granted to a Participant pursuant to Section 10 to
receive a payment equal to the value of a Performance Unit, as determined by the Committee, based
upon performance.

(pp) “Restricted Stock Award” means an Award of a Restricted Stock Bonus or a Restricted Stock
Purchase Right.

(qq) “Restricted Stock Bonus” means Stock granted to a Participant pursuant to Section 8 or
Section 12.

(rr) “Restricted Stock Purchase Right” means a right to purchase Stock granted to a
Participant pursuant to Section 8 or Section 12.

(ss) “Restricted Stock Unit” or “Stock Unit” means a right granted to a Participant pursuant
to Section 9 or Section 12 to receive a share of Stock on a date determined in accordance with the
provisions of such Sections, as applicable, and the Participant’s Award Agreement.

(tt) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.

(uu) “SAR” or “Stock Appreciation Right” means a right granted to a Participant pursuant to
Section 7 or Section 12 to receive payment, for each share of Stock subject to such SAR, of an
amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of
exercise of the SAR over the exercise price.

(vv) “Section 162(m)” means Section 162(m) of the Code.

(ww) “Section 409A” means Section 409A of the Code.

(xx) “Section 409A Deferred Compensation” means compensation provided pursuant to an Award
that constitutes deferred compensation subject to and not exempted from the requirements of Section
409A.

 

7

 

(yy) “Securities Act” means the Securities Act of 1933, as amended.

(zz) “Service” means a Participant’s employment or service with the Participating Company
Group, whether in the capacity of an Employee, a Director or a Consultant. Unless otherwise
provided by the Committee, a Participant’s Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders such Service or a change in
the Participating Company for which the Participant renders such Service, provided that there is no
interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service
shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company. However, unless otherwise provided by
the Committee, if any such leave taken by a Participant exceeds ninety (90) days, then on the
ninety-first (91st) day following the commencement of such leave the Participant’s Service shall be
deemed to have terminated, unless the Participant’s right to return to Service is guaranteed by
statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, an unpaid leave of absence shall not be treated as Service for purposes of
determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be
deemed to have terminated either upon an actual termination of Service or upon the business entity
for which the Participant performs Service ceasing to be a Participating Company. Subject to the
foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has
terminated and the effective date of such termination.

(aaa) “Stock” means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.4.

(bbb) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.

(ccc) “Ten Percent Owner” means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of
Section 422(b)(6) of the Code.

(ddd) “Vesting Conditions” mean those conditions established in accordance with the Plan prior
to the satisfaction of which shares subject to an Award remain subject to forfeiture or a
repurchase option in favor of the Company exercisable for the Participant’s monetary purchase
price, if any, for such shares upon the Participant’s termination of Service.

2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

 

8

 

3. Administration.

3.1 Administration by the Committee. The Plan shall be administered by the Committee. All
questions of interpretation of the Plan, of any Award Agreement or of any other form of agreement
or other document employed by the Company in the administration of the Plan or of any Award shall
be determined by the Committee, and such determinations shall be final, binding and conclusive upon
all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith.
Any and all actions, decisions and determinations taken or made by the Committee in the exercise of
its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than
determining questions of interpretation pursuant to the preceding sentence) shall be final, binding
and conclusive upon all persons having an interest therein. All expenses incurred in connection
with the administration of the Plan shall be paid by the Company.

3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, determination or election. The Board or
Committee may, in its discretion, delegate to a committee comprised of one or more Officers the
authority to grant one or more Awards, without further approval of the Board or the Committee, to
any Employee, other than a person who, at the time of such grant, is an Insider or a Covered
Person; provided, however, that (a) the exercise price per share of each such Award which is an
Option or SAR shall be not less than the Fair Market Value per share of the Stock on the effective
date of grant (or, if the Stock has not traded on such date, on the last day preceding the
effective date of grant on which the Stock was traded), (b) each such Award shall be subject to the
terms and conditions of the appropriate standard form of Award Agreement approved by the Board or
the Committee and shall conform to the provisions of the Plan, and (c) each such Award shall
conform to guidelines as shall be established from time to time by resolution of the Board or the
Committee.

3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.

3.4 Committee Complying with Section 162(m). If the Company is a “publicly held corporation”
within the meaning of Section 162(m), the Board may establish a Committee of “outside directors”
within the meaning of Section 162(m) to approve the grant of any Award intended to result in the
payment of Performance-Based Compensation.

3.5 Powers of the Committee. In addition to any other powers set forth in the Plan and
subject to the provisions of the Plan, the Committee shall have the full and final power and
authority, in its discretion:

(a) to determine the persons to whom, and the time or times at which, Awards shall be granted
and the number of shares of Stock, units or monetary value to be subject to each Award;

 

9

 

(b) to determine the type of Award granted;

(c) to determine the Fair Market Value of shares of Stock or other property;

(d) to determine the terms, conditions and restrictions applicable to each Award (which need
not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the
exercise or purchase price of shares pursuant to any Award, (ii) the method of payment for shares
purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with any Award, including by the withholding or delivery of shares
of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or
any shares acquired pursuant thereto, (v) the Performance Measures, Performance Period, Performance
Award Formula and Performance Goals applicable to any Award and the extent to which such
Performance Goals have been attained, (vi) the time of the expiration of any Award, (vii) the
effect of the Participant’s termination of Service on any of the foregoing, and (viii) all other
terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not
inconsistent with the terms of the Plan;

(e) to determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;

(f) to approve one or more forms of Award Agreement;

(g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant thereto;

(h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any
shares acquired pursuant thereto, including with respect to the period following a Participant’s
termination of Service;

(i) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without
limitation, as the Committee deems necessary or desirable to comply with the laws or regulations of
or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose
citizens may be granted Awards; and

(j) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with
the provisions of the Plan or applicable law.

 

10

 

3.6 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or employees of the Participating Company
Group, members of the Board or the Committee and any officers or employees of the Participating
Company Group to whom authority to act for the Board, the Committee or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees,
actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any appeal therein,
to which they or any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan, or any right granted hereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in
duties; provided, however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the opportunity at its own
expense to handle and defend the same.

4. Shares Subject to Plan.

4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2, 4.3
and 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be
equal to 4,199,937 and shall consist of authorized but unissued or reacquired shares of Stock or
any combination thereof.

4.2 Annual Increase in Maximum Number of Shares Issuable. Subject to adjustment as provided
in Section 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan
as set forth in Section 4.1 shall be cumulatively increased on January 1, 2009 and on each
subsequent January 1 through and including January 1, 2018, by a number of shares (the “Annual
Increase”) equal to the smaller of (a) two and one-half percent (2.5%) of the number of shares of
Stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined
by the Board.

4.3 Share Accounting. If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant
to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an
amount not greater than the Participant’s purchase price, the shares of Stock allocable to the
terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be
available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued
pursuant to the Plan (a) with respect to any portion of an Award that is settled in cash or (b) to
the extent such shares are withheld or reacquired by the Company in satisfaction of tax withholding
obligations pursuant to Section 17.2. Upon payment in shares of Stock pursuant to the exercise of
an SAR, the number of shares available for issuance under the Plan shall be reduced only by the
number of shares actually issued in such payment. If the exercise price of an Option is paid by
tender to the Company, or attestation to the ownership, of shares of Stock owned by the
Participant, or by means of a Net-Exercise, the number of shares available for issuance under the
Plan shall be reduced by the net number of shares for which the Option is exercised.

 

11

 

4.4 Adjustments for Changes in Capital Structure. Subject to any required action by the
stockholders of the Company and the requirements of Section 409A and 424 of the Code to the extent
applicable, in the event of any change in the Stock effected without receipt of consideration by
the Company, whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in
the capital structure of the Company, or in the event of payment of a dividend or distribution to
the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that
has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate
adjustments shall be made in the number and kind of shares subject to the Plan and to any
outstanding Awards, in the Award limits set forth in Sections 5.3 and 5.4 and in the exercise or
purchase price per share under any outstanding Award in order to prevent dilution or enlargement of
Participants’ rights under the Plan. For purposes of the foregoing, conversion of any convertible
securities of the Company shall not be treated as “effected without receipt of consideration by the
Company.” If a majority of the shares which are of the same class as the shares that are subject
to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the
Committee may unilaterally amend the outstanding Awards to provide that such Awards are for New
Shares. In the event of any such amendment, the number of shares subject to, and the exercise or
purchase price per share of, the outstanding Awards shall be adjusted in a fair and equitable
manner as determined by the Committee, in its discretion. Any fractional share resulting from an
adjustment pursuant to this Section shall be rounded down to the nearest whole number, and in no
event may the exercise or purchase price under any Award be decreased to an amount less than the
par value, if any, of the stock subject to such Award. The Committee in its discretion, may also
make such adjustments in the terms of any Award to reflect, or related to, such changes in the
capital structure of the Company or distributions as it deems appropriate, including modification
of Performance Goals, Performance Award Formulas and Performance Periods. The adjustments
determined by the Committee pursuant to this Section shall be final, binding and conclusive.

The Committee may, without affecting the number of shares of Stock reserved or available
hereunder, authorize the issuance or assumption of benefits under this Plan in connection with any
merger, consolidation, acquisition of property or stock, or reorganization upon such terms and
conditions as it may deem appropriate, subject to compliance with Section 409A and any other
applicable provisions of the Code.

5. Eligibility, Participation and Award Limitations.

5.1 Persons Eligible for Awards. Awards, other than Nonemployee Director Awards, may be
granted only to Employees and Consultants. Nonemployee Director Awards may be granted only to
persons who, at the time of grant, are Nonemployee Directors.

5.2 Participation in the Plan. Subject to Section 3.2 above, Awards are granted solely at the
discretion of the Committee. Eligible persons may be granted more than one Award. However,
eligibility in accordance with this Section shall not entitle any person to be granted an Award,
or, having been granted an Award, to be granted an additional Award.

 

12

 

5.3 Incentive Stock Option Limitations.

(a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to
adjustment as provided in Section 4.4, the maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to the exercise of Incentive
Stock Options shall not exceed 4,199,937, cumulatively increased on January 1, 2009 and on
each subsequent January 1, through and including January 1, 2018, by a number of shares equal to
the smaller of the Annual Increase determined under Section 4.2 or 4,199,937 shares. The maximum
aggregate number of shares of Stock that may be issued under the Plan pursuant to all Awards other
than Incentive Stock Options shall be the number of shares determined in accordance with Section
4.1, subject to adjustment as provided in Sections 4.2, 4.3 and 4.4.

(b) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the
effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an “ISO-Qualifying Corporation”). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option.

(c) Fair Market Value Limitation. To the extent that options designated as Incentive Stock
Options (granted under all stock option plans of the Participating Company Group, including the
Plan) become exercisable by a Participant for the first time during any calendar year for stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of
such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For
purposes of this Section, options designated as Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of stock shall be determined as
of the time the option with respect to such stock is granted. If the Code is amended to provide
for a limitation different from that set forth in this Section, such different limitation shall be
deemed incorporated herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in
part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section, the Participant may designate which portion of such Option the Participant is exercising.
In the absence of such designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Upon exercise, shares issued pursuant to each such
portion shall be separately identified.

5.4 Section 162(m) Award Limits. Subject to adjustment as provided in Section 4.4, no
Employee shall be granted within any fiscal year of the Company one or more Awards intended to
qualify for treatment as Performance-Based Compensation which in the aggregate are for more than
Two Million (2,000,000) shares or, if applicable, which could result in such Employee receiving
more than Five Million dollars ($5,000,000) for each full fiscal year of the Company contained in
the Performance Period for such Award.

6. Stock Options.

Options shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time establish. Award Agreements
evidencing Options may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:

6.1 Exercise Price. The exercise price for each Option shall be established in the discretion
of the Committee; provided, however, that (a) the exercise price per share shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option and (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an exercise
price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of
Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise
price lower than the minimum exercise price set forth above if such Option is granted pursuant to
an assumption or substitution for another option in a manner qualifying under the provisions of
Section 424(a) of the Code.

 

13

 

6.2 Exercisability and Term of Options. Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Committee and set forth in the Award Agreement
evidencing such Option; provided, however, that (a) no Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option and (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5)
years after the effective date of grant of such Option. Subject to the foregoing, unless otherwise
specified by the Committee in the grant of an Option, each Option shall terminate ten (10) years
after the effective date of grant of the Option, unless earlier terminated in accordance with its
provisions.

6.3 Payment of Exercise Price.

(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or in cash equivalent, (ii) by tender to the Company, or attestation to
the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than
the exercise price, (iii) by delivery of a properly executed notice of exercise together with
irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of
a sale or loan with respect to some or all of the shares being acquired upon the exercise of the
Option (including, without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a “Cashless Exercise”), (iv) by delivery of a properly executed notice electing a
Net-Exercise, (v) by such other consideration as may be approved by the Committee from time to time
to the extent permitted by applicable law, or (vi) by any combination thereof. The Committee may
at any time or from time to time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.

(b) Limitations on Forms of Consideration.

(i) Tender of Stock. Notwithstanding the foregoing, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock. Unless otherwise provided by the Committee, an
Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of
Stock unless such shares either have been owned by the Participant for more than six (6) months (or
such other period, if any, as the
Committee may permit) and not used for another Option exercise by attestation during such
period, or were not acquired, directly or indirectly, from the Company.

 

14

 

(ii) Cashless Exercise. The Company reserves, at any and all times, the right, in the
Company’s sole and absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless Exercise, including with respect
to one or more Participants specified by the Company notwithstanding that such program or
procedures may be available to other Participants.

6.4 Effect of Termination of Service.

(a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided
herein and unless otherwise provided by the Committee, an Option shall terminate immediately upon
the Participant’s termination of Service to the extent that it is then unvested and shall be
exercisable after the Participant’s termination of Service to the extent it is then vested only
during the applicable time period determined in accordance with this Section and thereafter shall
terminate.

(i) Disability. If the Participant’s Service terminates because of the Disability of the
Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on
which the Participant’s Service terminated, may be exercised by the Participant (or the
Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Participant’s Service terminated, but in any event no later than
the date of expiration of the Option’s term as set forth in the Award Agreement evidencing such
Option (the “Option Expiration Date”).

(ii) Death. If the Participant’s Service terminates because of the death of the Participant,
the Option, to the extent unexercised and exercisable for vested shares on the date on which the
Participant’s Service terminated, may be exercised by the Participant’s legal representative or
other person who acquired the right to exercise the Option by reason of the Participant’s death at
any time prior to the expiration of twelve (12) months after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date. The Participant’s
Service shall be deemed to have terminated on account of death if the Participant dies within three
(3) months after the Participant’s termination of Service.

(iii) Termination for Cause. Notwithstanding any other provision of the Plan to the contrary,
if the Participant’s Service is terminated for Cause or if, following the Participant’s termination
of Service and during any period in which the Option otherwise would remain exercisable, the
Participant engages in any act that would constitute Cause, the Option shall terminate in its
entirety and cease to be exercisable immediately upon such termination of Service or act.

(iv) Other Termination of Service. If the Participant’s Service terminates for any reason,
except Disability, death or Cause, the Option, to the extent unexercised and exercisable for vested
shares on the date on which the Participant’s Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3)
months after the date on which the Participant’s Service terminated, but in any event no later
than the Option Expiration Date.

 

15

 

(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than
termination of Service for Cause, if the exercise of an Option within the applicable time periods
set forth in Section 6.4(a) is prevented by the provisions of Section 15 below, the Option shall
remain exercisable until the later of (i) thirty (30) days after the date such exercise first would
no longer be prevented by such provisions or (ii) the end of the applicable time period under
Section 6.4(a), but in any event no later than the Option Expiration Date.

6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. An
Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set
forth in the Award Agreement evidencing such Option, a Nonstatutory Stock Option shall be
assignable or transferable subject to the applicable limitations, if any, described in the General
Instructions to Form S-8 under the Securities Act.

7. Stock Appreciation Rights.

Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from time to time
establish. Award Agreements evidencing SARs may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:

7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a
related Option (a “Tandem SAR”) or may be granted independently of any Option (a “Freestanding
SAR”). A Tandem SAR may only be granted concurrently with the grant of the related Option.

7.2 Exercise Price. The exercise price for each SAR shall be established in the discretion of
the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR
shall be the exercise price per share under the related Option and (b) the exercise price per share
subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on
the effective date of grant of the SAR.

7.3 Exercisability and Term of SARs.

(a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and
only to the extent, that the related Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with respect to less than the full number of
shares of Stock subject to the related Option. The Committee may, in its discretion, provide in
any Award Agreement evidencing a Tandem SAR that such SAR may not be exercised without the advance
approval of the Company and, if such approval is not given, then the Option shall nevertheless
remain exercisable in accordance with its terms. A
Tandem SAR shall terminate and cease to be exercisable no later than the date on which the
related Option expires or is terminated or canceled. Upon the exercise of a Tandem SAR with
respect to some or all of the shares subject to such SAR, the related Option shall be canceled
automatically as to the number of shares with respect to which the Tandem SAR was exercised. Upon
the exercise of an Option related to a Tandem SAR as to some or all of the shares subject to such
Option, the related Tandem SAR shall be canceled automatically as to the number of shares with
respect to which the related Option was exercised.

 

16

 

(b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon
such event or events, and subject to such terms, conditions, performance criteria and restrictions
as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR;
provided, however, that no Freestanding SAR shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such SAR.

7.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section 7.5) of an
SAR, the Participant (or the Participant’s legal representative or other person who acquired the
right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive
payment of an amount for each share with respect to which the SAR is exercised equal to the excess,
if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the
exercise price. Payment of such amount shall be made (a) in the case of a Tandem SAR, solely in
shares of Stock in a lump sum upon the date of exercise of the SAR and (b) in the case of a
Freestanding SAR, in cash, shares of Stock, or any combination thereof as determined by the
Committee, in a lump sum upon the date of exercise of the SAR. When payment is to be made in
shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair
Market Value of a share of Stock on the date of exercise of the SAR. For purposes of Section 7, an
SAR shall be deemed exercised on the date on which the Company receives notice of exercise from the
Participant or as otherwise provided in Section 7.5.

7.5 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or
expire, the SAR by its terms remains exercisable immediately prior to such termination or
expiration and, if so exercised, would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.

7.6 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise
provided herein and unless otherwise provided by the Committee, an SAR shall be exercisable after a
Participant’s termination of Service only to the extent and during the applicable time period
determined in accordance with Section 6.4 (treating the SAR as if it were an Option) and thereafter
shall terminate.

7.7 Transferability of SARs. During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. An SAR
shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set
forth in the Award Agreement evidencing such Award, a Tandem SAR related to a
Nonstatutory Stock Option or a Freestanding SAR shall be assignable or transferable subject to
the applicable limitations, if any, described in the General Instructions to Form S-8 under the
Securities Act.

 

17

 

8. Restricted Stock Awards.

Restricted Stock Awards shall be evidenced by Award Agreements specifying whether the Award is
a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Stock
subject to the Award, in such form as the Committee shall from time to time establish. Award
Agreements evidencing Restricted Stock Awards may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and conditions:

8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be granted in
the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock
Awards may be granted upon such conditions as the Committee shall determine, including, without
limitation, upon the attainment of one or more Performance Goals described in Section 10.4. If
either the grant of or satisfaction of Vesting Conditions applicable to a Restricted Stock Award is
to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).

8.2 Purchase Price. The purchase price for shares of Stock issuable under each Restricted
Stock Purchase Right shall be established by the Committee in its discretion. No monetary payment
(other than applicable tax withholding) shall be required as a condition of receiving shares of
Stock pursuant to a Restricted Stock Bonus, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required
by applicable state corporate law, the Participant shall furnish consideration in the form of cash
or past services rendered to a Participating Company or for its benefit having a value not less
than the par value of the shares of Stock subject to a Restricted Stock Award.

8.3 Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a period
established by the Committee, which shall in no event exceed thirty (30) days from the effective
date of the grant of the Restricted Stock Purchase Right.

8.4 Payment of Purchase Price. Except as otherwise provided below, payment of the purchase
price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase
Right shall be made (a) in cash, by check or in cash equivalent, (b) by such other consideration as
may be approved by the Committee from time to time to the extent permitted by applicable law, or
(c) by any combination thereof.

 

18

 

8.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock
Award may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 10.4, as shall be established by the
Committee and set forth in the Award Agreement evidencing such Award.

During any period in which shares acquired pursuant to a Restricted Stock Award remain subject
to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or
otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section
8.8. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted
Stock Award that, if the satisfaction of Vesting Conditions with respect to any shares subject to
such Restricted Stock Award would otherwise occur on a day on which the sale of such shares would
violate the provisions of the Insider Trading Policy, then satisfaction of the Vesting Conditions
automatically shall be determined on the next trading day on which the sale of such shares would
not violate the Insider Trading Policy. Upon request by the Company, each Participant shall
execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock
hereunder and shall promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing
any such transfer restrictions.

8.6 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section
8.5 and any Award Agreement, during any period in which shares acquired pursuant to a Restricted
Stock Award remain subject to Vesting Conditions, the Participant shall have all of the rights of a
stockholder of the Company holding shares of Stock, including the right to vote such shares and to
receive all dividends and other distributions paid with respect to such shares. However, in the
event of a dividend or distribution paid in shares of Stock or other property or any other
adjustment made upon a change in the capital structure of the Company as described in Section 4.4,
any and all new, substituted or additional securities or other property (other than normal cash
dividends) to which the Participant is entitled by reason of the Participant’s Restricted Stock
Award shall be immediately subject to the same Vesting Conditions as the shares subject to the
Restricted Stock Award with respect to which such dividends or distributions were paid or
adjustments were made.

8.7 Effect of Termination of Service. Unless otherwise provided by the Committee in the Award
Agreement evidencing a Restricted Stock Award, if a Participant’s Service terminates for any
reason, whether voluntary or involuntary (including the Participant’s death or disability), then
(a) the Company shall have the option to repurchase for the purchase price paid by the Participant
any shares acquired by the Participant pursuant to a Restricted Stock Purchase Right which remain
subject to Vesting Conditions as of the date of the Participant’s termination of Service and (b)
the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to a
Restricted Stock Bonus which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company.

8.8 Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of Stock
pursuant to a Restricted Stock Award shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or the laws of descent
and distribution. All rights with respect to a Restricted Stock Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

 

19

 

9. Restricted Stock Unit Awards.

Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units subject to the Award, in such form as the Committee shall from time to time
establish. Award Agreements evidencing Restricted Stock Units may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the following terms and
conditions:

9.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 10.4. If either the grant of a
Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).

9.2 Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall
be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which
shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding
the foregoing, if required by applicable state corporate law, the Participant shall furnish
consideration in the form of cash or past services rendered to a Participating Company or for its
benefit having a value not less than the par value of the shares of Stock issued upon settlement of
the Restricted Stock Unit Award.

9.3 Vesting. Restricted Stock Unit Awards may (but need not) be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as described in Section
10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such
Award.

9.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion,
may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant
shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on
Stock during the period beginning on the date such Award is granted and ending, with respect to
each share subject to the Award, on the earlier of the date the Award is settled or the date on
which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid by crediting the
Participant with additional whole Restricted Stock Units as of the date of payment of such cash
dividends on Stock. The number of additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid on
such date with respect to the number of shares of Stock represented by the Restricted Stock Units
previously credited to the Participant by (b) the Fair Market Value per share of Stock on such
date. Such additional Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time as the Restricted Stock Units originally
subject to the
Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of
Stock or other property or any other adjustment made upon a change in the capital structure of the
Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s
Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all
new, substituted or additional securities or other property (other than normal cash dividends) to
which the Participant would be entitled by reason of the shares of Stock issuable upon settlement
of the Award, and all such new, substituted or additional securities or other property shall be
immediately subject to the same Vesting Conditions as are applicable to the Award.

 

20

 

9.5 Effect of Termination of Service. Unless otherwise provided by the Committee and set
forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a Participant’s Service
terminates for any reason, whether voluntary or involuntary (including the Participant’s death or
disability), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the Participant’s
termination of Service.

9.6 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on
the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its discretion, and set forth in the
Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 9.4) for each Restricted Stock
Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of
applicable taxes, if any. If permitted by the Committee, the Participant may elect, consistent
with the requirements of Section 409A, to defer receipt of all or any portion of the shares of
Stock or other property otherwise issuable to the Participant pursuant to this Section, and such
deferred issuance date(s) and amount(s) elected by the Participant shall be set forth in the Award
Agreement. Notwithstanding the foregoing, the Committee, in its discretion, may provide for
settlement of any Restricted Stock Unit Award by payment to the Participant in cash of an amount
equal to the Fair Market Value on the payment date of the shares of Stock or other property
otherwise issuable to the Participant pursuant to this Section. The Committee, in its discretion,
may provide in any Award Agreement evidencing a Restricted Stock Unit Award that, if the
satisfaction of Vesting Conditions with respect to any shares subject to the Award would otherwise
occur on a day on which the sale of such shares would violate the provisions of the Insider Trading
Policy, then the satisfaction of the Vesting Conditions automatically shall be determined on the
first to occur of (a) the next trading day on which the sale of such shares would not violate the
Insider Trading Policy or (b) the later of (i) last day of the calendar year in which the original
vesting date occurred or (ii) the last day of the Company’s taxable year in which the original
vesting date occurred.

9.7 Nontransferability of Restricted Stock Unit Awards. The right to receive shares pursuant
to a Restricted Stock Unit Award shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Restricted Stock Unit Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

 

21

 

10. Performance Awards.

Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall
from time to time establish. Award Agreements evidencing Performance Awards may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

10.1 Types of Performance Awards Authorized. Performance Awards may be granted in the form of
either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance
Award shall specify the number of Performance Shares or Performance Units subject thereto, the
Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award,
and the other terms, conditions and restrictions of the Award.

10.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by
the Committee in granting a Performance Award, each Performance Share shall have an initial
monetary value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as
provided in Section 4.4, on the effective date of grant of the Performance Share, and each
Performance Unit shall have an initial monetary value established by the Committee at the time of
grant. The final value payable to the Participant in settlement of a Performance Award determined
on the basis of the applicable Performance Award Formula will depend on the extent to which
Performance Goals established by the Committee are attained within the applicable Performance
Period established by the Committee.

10.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In
granting each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals which, when
measured at the end of the Performance Period, shall determine on the basis of the Performance
Award Formula the final value of the Performance Award to be paid to the Participant. Unless
otherwise permitted in compliance with the requirements under Section 162(m) with respect to each
Performance Award intended to result in the payment of Performance-Based Compensation, the
Committee shall establish the Performance Goal(s) and Performance Award Formula applicable to each
Performance Award no later than the earlier of (a) the date ninety (90) days after the commencement
of the applicable Performance Period or (b) the date on which 25% of the Performance Period has
elapsed, and, in any event, at a time when the outcome of the Performance Goals remains
substantially uncertain. Once established, the Performance Goals and Performance Award Formula
applicable to a Covered Employee shall not be changed during the Performance Period. The Company
shall notify each Participant granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award Formula.

 

22

 

10.4 Measurement of Performance Goals. Performance Goals shall be established by the
Committee on the basis of targets to be attained (“Performance Targets”) with respect to one or
more measures of business or financial performance (each, a “Performance Measure”), subject to the
following:

(a) Performance Measures. Performance Measures shall have the same meanings as used in the
Company’s financial statements, or, if such terms are not used in the Company’s financial
statements, they shall have the meaning applied pursuant to generally accepted accounting
principles, or as used generally in the Company’s industry. Performance Measures shall be
calculated with respect to the Company and each Subsidiary Corporation consolidated therewith for
financial reporting purposes or such division or other business unit as may be selected by the
Committee. For purposes of the Plan, the Performance Measures applicable to a Performance Award
shall be calculated in accordance with generally accepted accounting principles, if applicable, but
prior to the accrual or payment of any Performance Award for the same Performance Period and
excluding the effect (whether positive or negative) of any change in accounting standards or any
extraordinary, unusual or nonrecurring item, as determined by the Committee, occurring after the
establishment of the Performance Goals applicable to the Performance Award. Each such adjustment,
if any, shall be made solely for the purpose of providing a consistent basis from period to period
for the calculation of Performance Measures in order to prevent the dilution or enlargement of the
Participant’s rights with respect to a Performance Award. Performance Measures may be one or more
of the following, as determined by the Committee:

(i) revenue;

(ii) sales;

(iii) expenses;

(iv) operating income;

(v) gross margin;

(vi) operating margin;

(vii) earnings before any one or more of: stock-based compensation expense, interest, taxes,
depreciation and amortization;

(viii) pre-tax profit;

(ix) net operating income;

(x) net income;

(xi) economic value added;

(xii) free cash flow;

(xiii) operating cash flow;

(xiv) balance of cash, cash equivalents and marketable securities;

(xv) stock price;

 

23

 

(xvi) earnings per share;

(xvii) return on stockholder equity;

(xviii) return on capital;

(xix) return on assets;

(xx) return on investment;

(xxi) employee satisfaction;

(xxii) employee retention;

(xxiii) market share;

(xxiv) customer satisfaction;

(xxv) product development;

(xxvi) research and development expenses;

(xxvii) completion of an identified special project; and

(xxviii) completion of a joint venture or other corporate transaction.

(b) Performance Targets. Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award determined under
the applicable Performance Award Formula by the level attained during the applicable Performance
Period. A Performance Target may be stated as an absolute value or as a value determined relative
to an index, budget or other standard selected by the Committee.

10.5 Settlement of Performance Awards.

(a) Determination of Final Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained and the resulting final value
of the Award earned by the Participant and to be paid upon its settlement in accordance with the
applicable Performance Award Formula.

(b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either
at the time it grants a Performance Award or at any time thereafter, provide for the positive or
negative adjustment of the Performance Award Formula applicable to a Performance Award granted to
any Participant who is not a Covered Employee to reflect such Participant’s individual performance
in his or her position with the Company or such other factors as the Committee may determine. If
permitted under a Covered Employee’s Award Agreement, the Committee shall have the discretion, on
the basis of such criteria as may be established by the Committee, to reduce some or all of the
value of the Performance Award that
would otherwise be paid to the Covered Employee upon its settlement notwithstanding the
attainment of any Performance Goal and the resulting value of the Performance Award determined in
accordance with the Performance Award Formula. No such reduction may result in an increase in the
amount payable upon settlement of another Participant’s Performance Award that is intended to
result in Performance-Based Compensation.

 

24

 

(c) Effect of Leaves of Absence. Unless otherwise required by law or a Participant’s Award
Agreement, payment of the final value, if any, of a Performance Award held by a Participant who has
taken in excess of thirty (30) days in unpaid leaves of absence during a Performance Period shall
be prorated on the basis of the number of days of the Participant’s Service during the Performance
Period during which the Participant was not on an unpaid leave of absence.

(d) Notice to Participants. As soon as practicable following the Committee’s determination
and certification in accordance with Sections 10.5(a) and (b), the Company shall notify each
Participant of the determination of the Committee.

(e) Payment in Settlement of Performance Awards. As soon as practicable following the
Committee’s determination and certification in accordance with Sections 10.5(a) and (b), but in any
event within the Short-Term Deferral Period described in Section 16.1 (except as otherwise provided
below or consistent with the requirements of Section 409A), payment shall be made to each eligible
Participant (or such Participant’s legal representative or other person who acquired the right to
receive such payment by reason of the Participant’s death) of the final value of the Participant’s
Performance Award. Payment of such amount shall be made in cash, shares of Stock, or a combination
thereof as determined by the Committee. Unless otherwise provided in the Award Agreement
evidencing a Performance Award, payment shall be made in a lump sum. If permitted by the
Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer
receipt of all or any portion of the payment to be made to Participant pursuant to this Section,
and such deferred payment date(s) elected by the Participant shall be set forth in the Award
Agreement. If any payment is to be made on a deferred basis, the Committee may, but shall not be
obligated to, provide for the payment during the deferral period of Dividend Equivalent Rights or
interest.

(f) Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock,
the number of such shares shall be determined by dividing the final value of the Performance Award
by the Fair Market Value of a share of Stock determined by the method specified in the Award
Agreement. Shares of Stock issued in payment of any Performance Award may be fully vested and
freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in
Section 8.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award
Agreement and shall be subject to the provisions of Sections 8.5 through 8.8 above.

 

25

 

10.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement
evidencing any Performance Share Award that the Participant shall be entitled to Dividend
Equivalent Rights with respect to the payment of cash dividends on Stock during the period
beginning on the date the Award is granted and ending, with respect to each share subject to the
Award, on the earlier of the date on which the Performance Shares are settled or the date on which
they are forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant
in the form of additional whole Performance Shares as of the date of payment of such cash dividends
on Stock. The number of additional Performance Shares (rounded to the nearest whole number) to be
so credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend
payment date with respect to the number of shares of Stock represented by the Performance Shares
previously credited to the Participant by (b) the Fair Market Value per share of Stock on such
date. Dividend Equivalent Rights may be paid currently or may be accumulated and paid to the
extent that Performance Shares become nonforfeitable, as determined by the Committee. Settlement
of Dividend Equivalent Rights may be made in cash, shares of Stock, or a combination thereof as
determined by the Committee, and may be paid on the same basis as settlement of the related
Performance Share as provided in Section 10.5. Dividend Equivalent Rights shall not be paid with
respect to Performance Units. In the event of a dividend or distribution paid in shares of Stock
or other property or any other adjustment made upon a change in the capital structure of the
Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s
Performance Share Award so that it represents the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than normal cash dividends) to which
the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the
Performance Share Award, and all such new, substituted or additional securities or other property
shall be immediately subject to the same Performance Goals as are applicable to the Award.

10.7 Effect of Termination of Service. Unless otherwise provided by the Committee and set
forth in the Award Agreement evidencing a Performance Award, the effect of a Participant’s
termination of Service on the Performance Award shall be as follows:

(a) Death or Disability. If the Participant’s Service terminates because of the death or
Disability of the Participant before the completion of the Performance Period applicable to the
Performance Award, the final value of the Participant’s Performance Award shall be determined by
the extent to which the applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the Participant’s Service
during the Performance Period. Payment shall be made following the end of the Performance Period
in any manner permitted by Section 10.5.

(b) Other Termination of Service. If the Participant’s Service terminates for any reason
except death or Disability before the completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the
event of an involuntary termination of the Participant’s Service, the Committee, in its discretion,
may waive the automatic forfeiture of all or any portion of any such Award (e.g., by determining
the final value of the Performance Award in the manner provided by Section 10.7(a)) and provide for
payment following the end of the Performance Period in any manner permitted by Section 10.5.

 

26

 

10.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the
provisions of the Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

11. Cash-Based Awards and Other Stock-Based Awards.

Cash-Based Awards and Other Stock-Based Awards shall be evidenced by Award Agreements in such
form as the Committee shall from time to time establish. Award Agreements evidencing Cash-Based
Awards and Other Stock-Based Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:

11.1 Grant of Cash-Based Awards. Subject to the provisions of the Plan, the Committee, at any
time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon
such terms and conditions, including the achievement of performance criteria, as the Committee may
determine.

11.2 Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based
or equity-related Awards not otherwise described by the terms of this Plan (including the grant or
offer for sale of unrestricted securities, stock-equivalent units, stock appreciation units,
securities or debentures convertible into common stock or other forms determined by the Committee)
in such amounts and subject to such terms and conditions as the Committee shall determine. Such
Awards may involve the transfer of actual shares of Stock to Participants, or payment in cash or
otherwise of amounts based on the value of Stock and may include, without limitation, Awards
designed to comply with or take advantage of the applicable local laws of jurisdictions other than
the United States.

11.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a
monetary payment amount or payment range as determined by the Committee. Each Other Stock-Based
Award shall be expressed in terms of shares of Stock or units based on such shares of Stock, as
determined by the Committee. The Committee may require the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including, without limitation,
Performance Goals as described in Section 10.4, as shall be established by the Committee and set
forth in the Award Agreement evidencing such Award. If the Committee exercises its discretion to
establish performance criteria, the final value of Cash-Based Awards or Other Stock-Based Awards
that will be paid to the Participant will depend on the extent to which the performance criteria
are met. The establishment of performance criteria with respect to the grant or vesting of any
Cash-Based Award or Other Stock-Based Award intended to result in Performance-Based Compensation
shall follow procedures substantially equivalent to those applicable to Performance Awards set
forth in Section 10.

 

27

 

11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards. Payment or
settlement, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made
in accordance with the terms of the Award, in cash, shares of Stock or other securities or any
combination thereof as the Committee determines. The determination and certification of the final
value with respect to any Cash-Based Award or Other Stock-Based Award intended to result in
Performance-Based Compensation shall comply with the requirements applicable to Performance Awards
set forth in Section 10. To the extent applicable, payment or settlement with respect to each
Cash-Based Award and Other Stock-Based Award shall be made in compliance with the requirements of
Section 409A.

11.5 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Other Stock-Based Awards until the
date of the issuance of such shares of Stock (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), if any, in settlement of such
Award. However, the Committee, in its discretion, may provide in the Award Agreement evidencing
any Other Stock-Based Award that the Participant shall be entitled to Dividend Equivalent Rights
with respect to the payment of cash dividends on Stock during the period beginning on the date such
Award is granted and ending, with respect to each share subject to the Award, on the earlier of the
date the Award is settled or the date on which it is terminated. Such Dividend Equivalent Rights,
if any, shall be paid in accordance with the provisions set forth in Section 9.4. Dividend
Equivalent Rights shall not be granted with respect to Cash-Based Awards.

11.6 Effect of Termination of Service. Each Award Agreement evidencing a Cash-Based Award or
Other Stock-Based Award shall set forth the extent to which the Participant shall have the right to
retain such Award following termination of the Participant’s Service. Such provisions shall be
determined in the discretion of the Committee, need not be uniform among all Cash-Based Awards or
Other Stock-Based Awards, and may reflect distinctions based on the reasons for termination,
subject to the requirements of Section 409A, if applicable.

11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards. Prior to the
payment or settlement of a Cash-Based Award or Other Stock-Based Award, the Award shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. The Committee may impose such
additional restrictions on any shares of Stock issued in settlement of Cash-Based Awards and Other
Stock-Based Awards as it may deem advisable, including, without limitation, minimum holding period
requirements, restrictions under applicable federal securities laws, under the requirements of any
stock exchange or market upon which such shares of Stock are then listed and/or traded, or under
any state securities laws applicable to such shares of Stock.

 

28

 

12. Nonemployee Director Awards.

From time to time, the Board or the Committee shall set the amount(s) and type(s) of
Nonemployee Director Awards that shall be granted to all Nonemployee Directors on a
periodic, nondiscriminatory basis pursuant to the Plan, as well as the additional amount(s)
and type(s) of Nonemployee Director Awards, if any, to be awarded, also on a periodic,
nondiscriminatory basis, in consideration of one or more of the following: (a) the initial election
or appointment of an individual to the Board as a Nonemployee Director, (b) a Nonemployee
Director’s service as Chairman or Lead Director of the Board, (c) a Nonemployee Director’s service
as the chairman of a committee of the Board, and (d) a Nonemployee Director’s service other than as
the chairman of a committee of the Board. The terms and conditions of each Nonemployee Director
Award shall comply with the applicable provisions of the Plan. Subject to the foregoing, the Board
or the Committee shall grant Nonemployee Director Awards having such terms and conditions as it
shall from time to time determine.

13. Standard Forms of Award Agreement.

13.1 Award Agreements. Each Award shall comply with and be subject to the terms and
conditions set forth in the appropriate form of Award Agreement approved by the Committee and as
amended from time to time. No Award or purported Award shall be a valid and binding obligation of
the Company unless evidenced by a fully executed Award Agreement. Any Award Agreement may consist
of an appropriate form of Notice of Grant and a form of Agreement incorporated therein by
reference, or such other form or forms, including electronic media, as the Committee may approve
from time to time.

13.2 Authority to Vary Terms. The Committee shall have the authority from time to time to
vary the terms of any standard form of Award Agreement either in connection with the grant or
amendment of an individual Award or in connection with the authorization of a new standard form or
forms; provided, however, that the terms and conditions of any such new, revised or amended
standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.

14. Change in Control.

14.1 Effect of Change in Control on Awards. Subject to the requirements and limitations of
Section 409A, if applicable, the Committee may provide for any one or more of the following:

(a) Accelerated Vesting. In its discretion, the Committee may provide in the grant of any
Award or at any other time may take such action as it deems appropriate to provide for acceleration
of the exercisability, vesting and/or settlement in connection with a Change in Control of each or
any outstanding Award or portion thereof and shares acquired pursuant thereto upon such conditions,
including termination of the Participant’s Service prior to, upon, or following such Change in
Control, and to such extent as the Committee shall determine.

 

29

 

(b) Assumption, Continuation or Substitution. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business entity or parent
thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, either
assume or continue the Company’s rights and obligations under each or any Award or portion thereof
outstanding immediately prior to the Change in Control or substitute for each or any such
outstanding Award or portion thereof a substantially equivalent
award with respect to the Acquiror’s stock, as applicable. For purposes of this Section, if
so determined by the Committee in its discretion, an Award denominated in shares of Stock shall be
deemed assumed if, following the Change in Control, the Award confers the right to receive, subject
to the terms and conditions of the Plan and the applicable Award Agreement, for each share of Stock
subject to the Award immediately prior to the Change in Control, the consideration (whether stock,
cash, other securities or property or a combination thereof) to which a holder of a share of Stock
on the effective date of the Change in Control was entitled; provided, however, that if such
consideration is not solely common stock of the Acquiror, the Committee may, with the consent of
the Acquiror, provide for the consideration to be received upon the exercise or settlement of the
Award, for each share of Stock subject to the Award, to consist solely of common stock of the
Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock
pursuant to the Change in Control. Any Award or portion thereof which is neither assumed or
continued by the Acquiror in connection with the Change in Control nor exercised or settled as of
the time of consummation of the Change in Control shall terminate and cease to be outstanding
effective as of the time of consummation of the Change in Control.

(c) Cash-Out of Outstanding Stock-Based Awards. The Committee may, in its discretion and
without the consent of any Participant, determine that, upon the occurrence of a Change in Control,
each or any Award denominated in shares of Stock or portion thereof outstanding immediately prior
to the Change in Control and not previously exercised or settled shall be canceled in exchange for
a payment with respect to each vested share (and each unvested share, if so determined by the
Committee) of Stock subject to such canceled Award in (i) cash, (ii) stock of the Company or of a
corporation or other business entity a party to the Change in Control, or (iii) other property
which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market
Value of the consideration to be paid per share of Stock in the Change in Control, reduced (but not
below zero) by the exercise or purchase price per share, if any, under such Award. In the event
such determination is made by the Committee, an Award having an exercise or purchase price per
share equal to or greater than the Fair Market Value of the consideration to be paid per share of
Stock in the Change in Control may be canceled without payment of consideration to the holder
thereof. Payment pursuant to this Section (reduced by applicable withholding taxes, if any) shall
be made to Participants in respect of the vested portions of their canceled Awards as soon as
practicable following the date of the Change in Control and in respect of the unvested portions of
their canceled Awards in accordance with the vesting schedules applicable to such Awards.

14.2 Effect of Change in Control on Nonemployee Director Awards. Subject to the requirements
and limitations of Section 409A, if applicable, in the event of a Change in Control, each
outstanding Nonemployee Director Award shall become immediately exercisable and vested in full and,
except to the extent assumed, continued or substituted for pursuant to Section 14.1(b), shall be
settled effective immediately prior to the time of consummation of the Change in Control.

 

30

 

14.3 Federal Excise Tax Under Section 4999 of the Code.

(a) Excess Parachute Payment. In the event that any acceleration of vesting pursuant to an
Award and any other payment or benefit received or to be received by a
Participant would subject the Participant to any excise tax pursuant to Section 4999 of the
Code due to the characterization of such acceleration of vesting, payment or benefit as an “excess
parachute payment” under Section 280G of the Code, the Participant may elect to reduce the amount
of any acceleration of vesting called for under the Award in order to avoid such characterization.

(b) Determination by Independent Accountants. To aid the Participant in making any election
called for under Section 14.3(a), no later than the date of the occurrence of any event that might
reasonably be anticipated to result in an “excess parachute payment” to the Participant as
described in Section 14.3(a), the Company shall request a determination in writing by independent
public accountants selected by the Company (the “Accountants”). As soon as practicable thereafter,
the Accountants shall determine and report to the Company and the Participant the amount of such
acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit
to the Participant. For the purposes of such determination, the Accountants may rely on
reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Participant shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make their required determination.
The Company shall bear all fees and expenses the Accountants may reasonably charge in connection
with their services contemplated by this Section.

15. Compliance with Securities Law.

The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject
to compliance with all applicable requirements of federal, state and foreign law with respect to
such securities and the requirements of any stock exchange or market system upon which the Stock
may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award
unless (a) a registration statement under the Securities Act shall at the time of such exercise or
issuance be in effect with respect to the shares issuable pursuant to the Award, or (b) in the
opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in
accordance with the terms of an applicable exemption from the registration requirements of the
Securities Act. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the
lawful issuance and sale of any shares hereunder shall relieve the 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. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

16. Compliance with Section 409A.

16.1 Awards Subject to Section 409A. The Company intends that Awards granted pursuant to the
Plan shall either be exempt from or comply with Section 409A, and the Plan shall be so construed.
The provisions of this Section 16 shall apply to any Award or portion thereof that constitutes or
provides for payment of Section 409A Deferred Compensation. Such Awards may include, without
limitation:

 

31

 

(a) A Nonstatutory Stock Option or SAR that includes any feature for the deferral of
compensation other than the deferral of recognition of income until the later of (i) the exercise
or disposition of the Award or (ii) the time the stock acquired pursuant to the exercise of the
Award first becomes substantially vested.

(b) Any Restricted Stock Unit Award, Performance Award, Cash-Based Award or Other Stock-Based
Award that either (i) provides by its terms for settlement of all or any portion of the Award at a
time or upon an event that will or may occur later than the end of the Short-Term Deferral Period
(as defined below) or (ii) permits the Participant granted the Award to elect one or more dates or
events upon which the Award will be settled after the end of the Short-Term Deferral Period.

Subject to the provisions of Section 409A, the term “Short-Term Deferral Period” means the 21/2
month period ending on the later of (i) the 15th day of the third month following the end of the
Participant’s taxable year in which the right to payment under applicable portion of the Award is
no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third month
following the end of the Company’s taxable year in which the right to payment under the applicable
portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose,
the term “substantial risk of forfeiture” shall have the meaning provided by Section 409A.

16.2 Deferral and/or Distribution Elections. Except as otherwise permitted or required by
Section 409A, the following rules shall apply to any compensation deferral and/or payment elections
(each, an “Election”) that may be permitted or required by the Committee pursuant to an Award
providing Section 409A Deferred Compensation:

(a) Elections must be in writing and specify the amount of the payment in settlement of an
Award being deferred, as well as the time and form of payment as permitted by this Plan.

(b) Elections shall be made by the end of the Participant’s taxable year prior to the year in
which services commence for which an Award may be granted to such Participant.

(c) Elections shall continue in effect until a written revocation or change in Election is
received by the Company, except that a written revocation or change in Election must be received by
the Company prior to the last day for making the Election determined in accordance with paragraph
(b) above or as permitted by Section 16.3.

16.3 Subsequent Elections. Except as otherwise permitted or required by Section 409A, any
Award providing Section 409A Deferred Compensation which permits a subsequent Election to delay the
payment or change the form of payment in settlement of such Award shall comply with the following
requirements:

(a) No subsequent Election may take effect until at least twelve (12) months after the date on
which the subsequent Election is made.

 

32

 

(b) Each subsequent Election related to a payment in settlement of an Award not described in
Section 16.4(a)(ii), 16.4(a)(iii) or 16.4(a)(vi) must result in a delay of the payment for a period
of not less than five (5) years from the date on which such payment would otherwise have been made.

(c) No subsequent Election related to a payment pursuant to Section 16.4(a)(iv) shall be made
less than twelve (12) months before the date on which such payment would otherwise have been made.

(d) Subsequent Elections shall continue in effect until a written revocation or change in the
subsequent Election is received by the Company, except that a written revocation or change in a
subsequent Election must be received by the Company prior to the last day for making the subsequent
Election determined in accordance the preceding paragraphs of this Section 16.3.

16.4 Payment of Section 409A Deferred Compensation.

(a) Permissible Payments. Except as otherwise permitted or required by Section 409A, an Award
providing Section 409A Deferred Compensation must provide for payment in settlement of the Award
only upon one or more of the following:

(i) The Participant’s “separation from service” (as such term is defined by Section 409A);

(ii) The Participant’s becoming “disabled” (as such term is defined by Section 409A);

(iii) The Participant’s death;

(iv) A time or fixed schedule that is either (i) specified by the Committee upon the grant of
an Award and set forth in the Award Agreement evidencing such Award or (ii) specified by the
Participant in an Election complying with the requirements of Section 16.2 or 16.3, as applicable;

(v) A change in the ownership or effective control or the Company or in the ownership of a
substantial portion of the assets of the Company determined in accordance with Section 409A; or

(vi) The occurrence of an “unforeseeable emergency” (as such term is defined by Section 409A).

 

33

 

(b) Required Delay in Payment to Specified Employee Pursuant to Separation from Service.
Notwithstanding any provision of the Plan or an Award Agreement to the contrary, except as
otherwise permitted by Section 409A, no payment pursuant to Section 16.4(a)(i) in settlement of an
Award providing for Section 409A Deferred Compensation may be made to a Participant who is a
“specified employee” (as such term is defined by Section 409A) as of the date of the Participant’s
separation from service before the date (the “Delayed Payment Date”) that is six (6) months after
the date of such Participant’s separation from service, or, if
earlier, the date of the Participant’s death. All such amounts that would, but for this
paragraph, become payable prior to the Delayed Payment Date shall be accumulated and paid on the
Delayed Payment Date.

(c) Payment Upon Disability. All distributions payable by reason of a Participant becoming
disabled shall be paid in a lump sum or in periodic installments as established by the
Participant’s Election. If the Participant has made no Election with respect to distributions upon
becoming disabled, all such distributions shall be paid in a lump sum upon the determination that
the Participant has become disabled.

(d) Payment Upon Death. If a Participant dies before complete distribution of amounts payable
upon settlement of an Award subject to Section 409A, such undistributed amounts shall be
distributed to his or her beneficiary under the distribution method for death established by the
Participant’s Election upon receipt by the Committee of satisfactory notice and confirmation of the
Participant’s death. If the Participant has made no Election with respect to distributions upon
death, all such distributions shall be paid in a lump sum upon receipt by the Committee of
satisfactory notice and confirmation of the Participant’s death.

(e) Payment Upon Change in Control. Notwithstanding any provision of the Plan or an Award
Agreement to the contrary, to the extent that any amount constituting Section 409A Deferred
Compensation would become payable under this Plan by reason of a Change in Control, such amount
shall become payable only if the event constituting a Change in Control would also constitute a
change in ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company within the meaning of Section 409A.

(f) Payment Upon Unforeseeable Emergency. The Committee shall have the authority to provide
in the Award Agreement evidencing any Award providing for Section 409A Deferred Compensation for
payment in settlement of all or a portion of such Award in the event that a Participant
establishes, to the satisfaction of the Committee, the occurrence of an unforeseeable emergency.
In such event, the amount(s) distributed with respect to such unforeseeable emergency cannot exceed
the amounts reasonably necessary to satisfy the emergency need plus amounts necessary to pay taxes
reasonably anticipated as a result of such distribution(s), after taking into account the extent to
which such emergency need is or may be relieved through reimbursement or compensation by insurance
or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship) or by cessation of deferrals under the
Award. All distributions with respect to an unforeseeable emergency shall be made in a lump sum as
soon as practicable following the Committee’s determination that an unforeseeable emergency has
occurred. The Committee’s decision with respect to whether an unforeseeable emergency has occurred
and the manner in which, if at all, the payment in settlement of an Award shall be altered or
modified, shall be final, conclusive, and not subject to approval or appeal.

(g) Prohibition of Acceleration of Payments. Notwithstanding any provision of the Plan or an
Award Agreement to the contrary, this Plan does not permit the acceleration of the time or schedule
of any payment under an Award providing Section 409A Deferred Compensation, except as permitted by
Section 409A.

 

34

 

17. Tax Withholding.

17.1 Tax Withholding in General. The Company shall have the right to deduct from any and all
payments made under the Plan, or to require the Participant, through payroll withholding, cash
payment or otherwise, to make adequate provision for, the federal, state, local and foreign taxes,
if any, required by law to be withheld by any Participating Company with respect to an Award or the
shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock,
to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make
any payment in cash under the Plan until the Participating Company Group’s tax withholding
obligations have been satisfied by the Participant.

17.2 Withholding in Shares. The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an
Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a
Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding
obligations of any Participating Company. The Fair Market Value of any shares of Stock withheld or
tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by
the applicable minimum statutory withholding rates.

18. Amendment or Termination of Plan.

The Committee may amend, suspend or terminate the Plan at any time. However, without the
approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued under the Plan (except by operation of the provisions
of Section 4.4), (b) no change in the class of persons eligible to receive Incentive Stock Options,
and (c) no other amendment of the Plan that would require approval of the Company’s stockholders
under any applicable law, regulation or rule, including the rules of any stock exchange or market
system upon which the Stock may then be listed. No amendment, suspension or termination of the
Plan shall affect any then outstanding Award unless expressly provided by the Committee. Except as
provided by the next sentence, no amendment, suspension or termination of the Plan may adversely
affect any then outstanding Award without the consent of the Participant. Notwithstanding any
other provision of the Plan to the contrary, the Committee may, in its sole and absolute discretion
and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect
retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the
Plan or such Award Agreement to any present or future law, regulation or rule applicable to the
Plan, including, but not limited to, Section 409A.

 

35

 

19. Miscellaneous Provisions.

19.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase
options, or other conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt
of shares of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement on such certificates
of appropriate legends evidencing any such transfer restrictions.

19.2 Forfeiture Events.

(a) The Committee may specify in an Award Agreement that the Participant’s rights, payments,
and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or
recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting
or performance conditions of an Award. Such events may include, but shall not be limited to,
termination of Service for Cause or any act by a Participant, whether before or after termination
of Service, that would constitute Cause for termination of Service.

(b) If the Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, any Participant who knowingly or through gross negligence engaged in the
misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any
Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, shall reimburse the Company for (i) the amount of any payment in
settlement of an Award received by such Participant during the twelve- (12-) month period following
the first public issuance or filing with the United States Securities and Exchange Commission
(whichever first occurred) of the financial document embodying such financial reporting
requirement, and (ii) any profits realized by such Participant from the sale of securities of the
Company during such twelve- (12-) month period.

19.3 Provision of Information. Each Participant shall be given access to information
concerning the Company equivalent to that information generally made available to the Company’s
common stockholders.

19.4 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to
Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be
selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right to remain an Employee, Consultant or Director or interfere with
or limit in any way any right of a Participating Company to terminate the Participant’s Service at
any time. To the extent that an Employee of a Participating Company other than the Company
receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean
that the Company is the Employee’s employer or that the Employee has an employment relationship
with the Company.

19.5 Rights as a Stockholder. A Participant shall have no rights as a stockholder with
respect to any shares covered by an Award until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date such shares are issued, except as provided in
Section 4.4 or another provision of the Plan.

 

36

 

19.6 Delivery of Title to Shares. Subject to any governing rules or regulations, the Company
shall issue or cause to be issued the shares of Stock acquired pursuant to an Award and shall
deliver such shares to or for the benefit of the Participant by means of one or more of the
following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to
the account of the Participant, (b) by depositing such shares of Stock for the benefit of the
Participant with any broker with which the Participant has an account relationship, or (c) by
delivering such shares of Stock to the Participant in certificate form.

19.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise or settlement of any Award.

19.8 Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Stock or
cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the
benefits payable to any Participant under any Participating Company’s retirement plans (both
qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides
that such compensation shall be taken into account in computing a Participant’s benefit.

19.9 Beneficiary Designation. Subject to local laws and procedures, each Participant may file
with the Company a written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participant’s death before he or she
receives any or all of such benefit. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participant’s lifetime. If a
married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness
of such designation may be subject to the consent of the Participant’s spouse. If a Participant
dies without an effective designation of a beneficiary who is living at the time of the
Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal
representative.

19.10 Severability. If any one or more of the provisions (or any part thereof) of this Plan
shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so
as to make it valid, legal and enforceable, and the validity, legality and enforceability of the
remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired
thereby.

19.11 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a)
limit, impair, or otherwise affect the Company’s or another Participating Company’s right or power
to make adjustments, reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of
its business or assets; or (b) limit the right or power of the Company or another Participating
Company to take any action which such entity deems to be necessary or appropriate.

 

37

 

19.12 Unfunded Obligation. Participants shall have the status of general unsecured creditors
of the Company. Any amounts payable to Participants pursuant to the Plan shall be considered
unfunded and unsecured obligations for all purposes, including, without
limitation, Title I of the Employee Retirement Income Security Act of 1974. No Participating
Company shall be required to segregate any monies from its general funds, or to create any trusts,
or establish any special accounts with respect to such obligations. The Company shall retain at
all times beneficial ownership of any investments, including trust investments, which the Company
may make to fulfill its payment obligations hereunder. Any investments or the creation or
maintenance of any trust or any Participant account shall not create or constitute a trust or
fiduciary relationship between the Committee or any Participating Company and a Participant, or
otherwise create any vested or beneficial interest in any Participant or the Participant’s
creditors in any assets of any Participating Company. The Participants shall have no claim against
any Participating Company for any changes in the value of any assets which may be invested or
reinvested by the Company with respect to the Plan.

19.13 Choice of Law. Except to the extent governed by applicable federal law, the validity,
interpretation, construction and performance of the Plan and each Award Agreement shall be governed
by the laws of the State of Arizona, without regard to its conflict of law rules.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets
forth the Grand Canyon Education, Inc. 2008 Equity Incentive Plan as duly adopted by the Board on
September 26, 2008 and as amended through March 24, 2011.

	 	 	 	 	 
	 	/c/ Christopher C. Richardson
 	 
	 	Christopher C. Richardson 	 
	 	Secretary 	 

 

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