NOTE 10: COMMITMENTS AND CONTINGENCIES Concentration of Credit Risk Commitments NOTE 11: STOCK OPTION PLANS AND STOCK GRANTS 48 In addition, the Stock Plan permits us to issue share awards to our employees and non-employee directors. A share award is an award of common stock which (i) may be fully vested upon issuance or (ii) may be subject to the risk of forfeiture under Section 83 of the Internal Revenue Code. Shares issued generally vest over a one to three year period from the date of issuance and the sale of the shares is restricted prior to the date of vesting. During 2003, we awarded 92,483 shares of common stock. These shares were record- Opt ions und er o ur plan have been granted at prices that are equal to the market value of the stock on the date of grant and expire ten years after the date of grant. Employee options vest ratably in three annual installments from the date of grant. Non-employee director options vest immediately on the date of grant. The options outstanding under the Stock Plan expire at various dates through October 2012. I n 199 7 , we ad o pte d a stock option and incentive plan (the “Stock Plan”) for the purpose of attracting and retaining the highest quality p e rso n nel, pro viding for additional incentives and promoting the success of the company by providing employees the opportunity to a c quir e comm o n st ock pursuant to (i) options to purchase common stock; and (ii) share awards. As of December 31, 2003, a total of 3 0 8,53 6 shares wer e reserved for the granting of future options and share awards under the Stock Plan. 1997 S tock Plan As of December 31, 2003, we were committed under the terms of construction contracts to complete the construction of properties under development at a remaining aggregate cost of $11.7 million. As of December 31, 2003, we were also committed to fund approximately $12.5 million for the construction of building infrastruc- ture improvements under the terms of leases and/or construction contracts and approximately $19.5 million for certain investments. Ground lease obligations as of December 31, 2003 include leases at six of our properties and one land development parcel. These lease obligations, of approximately $65.4 million, have remaining lease terms of 29 to 51 years, exclusive of extension options. We generally do not require collateral or other security from our tenants, other than security deposits. In addition to security deposits held in cash, we held $24.1 million in irrevocable letters of credit available from certain tenants as security deposits for 59 leases as of December 31, 2003. We are dependent on rental income from relatively few tenants in the life science industry. The inability of any single tenant to make its lease payments could adversely affect our operations. As of December 31, 2003, we held leases with a total of 179 tenants and 50 of our 89 properties were each leased to a single tenant. At December 31, 2003, our three largest tenants accounted for approx- imately 12.8% of our aggregate annualized base rent. We maintain our cash and cash equivalents at insured financial institutions. The combined account balances at each institution period- ically exceed FDIC insurance coverage, and, as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. We believe that the risk is not significant. W e ha v e a retir eme n t sa vings plan pursuant to Section 401(k) of the Internal Revenue Code whereby our employees may contribute a p o rtio n of their co m pen sation to their respective retirement accounts, in an amount not to exceed the maximum allowed under the In tern a l R e ven u e C o de. We have elected to provide discretionary profit sharing contributions (subject to statutory limitations), which a m ou n ted to $ 4 61,0 00, $428,000 and $353,000, respectively, for the years ended December 31, 2003, 2002 and 2001. Employees who p a rtici pate in the plan are immediately vested in their contributions and in the contributions of the company. Emplo yee Retirement Savings Plan stock totaling $1.7 million and $2.4 million for our Series A and Series B preferred stock, respectively, was recorded as a reduction to additional paid-in capital in the years that the preferred stock was issued. Upon any redemption of our Series A and Series B preferred stock, the respective offering costs, representing the excess of the fair value of the consideration transferred to the holders over the carrying amount of the preferred stock, will be recognized as a dividend to preferred stockholders. Dividends on preferred stock are deducted from net income to arrive at net income allocable to common stockholders.