Document:

Exhibit 10.39

EXHIBIT 10.39

SECOND AMENDMENT TO OFFICE LEASE
This SECOND AMENDMENT TO OFFICE LEASE (“Second Amendment”) is made and entered into as of December 14, 2012, by and between KILROY REALTY, L.P., a Delaware limited partnership ("Landlord"), and VOLCANO CORPORATION, a Delaware corporation (“Tenant").
R E C I T A L S :
A.Landlord and Tenant are parties to that certain Office Lease dated December 28, 2009 (the "Office Lease"), as amended by that certain First Amendment to Office Lease dated January 14, 2011 (the "First Amendment") (the Office Lease and the First Amendment shall collectively be referred to as the "Lease"), whereby Landlord leases to Tenant and Tenant leases from Landlord approximately 34,986 rentable square feet of space commonly known as Suites 100, 150 and 200 (the "3661 Premises") located on the first (1st) and second (2nd) floors of that certain office building located at 3661 Valley Centre Drive, San Diego, California, commonly known as Building 3 (the "3661 Building").  The term "Project," as used in the Lease (as amended), shall mean (i) the 3661 Building and the Common Areas, (ii) the land (which is improved with landscaping, parking structures and/or facilities and other improvements) upon which the 3661 Building and the Common Areas are located, and (iii) the other office buildings located adjacent to the 3661 Building (as well as the land (which is improved with landscaping, parking structures and/or facilities and other improvements) upon which such adjacent office buildings are located) commonly known as (a) that certain building located at 3579 Valley Centre Drive, San Diego, California commonly known as Building 1, (b) that certain building located at 3611 Valley Center Drive, San Diego, California, commonly known as Building 2 (the "3611 Building"), (c) that certain building located at 3721 Valley Centre Drive, San Diego, commonly known as Building 4 (the "3721 Building"), and (d) that certain building located at 3811 Valley Centre Drive, San Diego, commonly known as Building 5.  
B.Landlord and Tenant desire to relocate the 3661 Premises, substituting for such 3661 Premises approximately 92,602 rentable square feet of space commonly known as Suites 100, 300, 400 and 500 (the "Substitute Premises") comprising (i) the entirety of the rentable square footage located on the first (1st) floor of the 3721 Building commonly known as Suite 100 consisting of approximately 18,047 rentable square feet of space ("Suite 100"), (ii) the entirety of the rentable square footage located on the third (3rd) floor of the 3721 Building commonly known as Suite 300 consisting of 24,937 rentable square feet of space ("Suite 300"), (iii) the entirety of the rentable square footage located on the fourth (4th) floor of the 3721 Building commonly known as Suite 400 consisting of 24,937 rentable square feet of space, and (iv) the entirety of the rentable square footage located on the fifth (5th) floor of the 3721 Building commonly known as Suite 500 consisting of 24,681 rentable square feet of space, as such Substitute Premises is more particularly delineated on Exhibit A attached hereto and made a part hereof, and to make other modifications to the Lease, and in connection therewith, Landlord and Tenant desire to amend the Lease as hereinafter provided.  

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.Capitalized Terms.  All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease unless expressly superseded by the terms of this Second Amendment.
2.    Premises.
2.1    Surrender of 3661 Premises.
2.1.1    In General.  The 3661 Premises is currently leased by Tenant and shall continue to be leased by Tenant until the date (the "3661 Surrender Date") which is fourteen (14) days after the occurrence of the "Substitute Premises Commencement Date" (as that term is defined in Section 2.2 of this Second Amendment, but ignoring any adjustment arising as a result of any "Tenant Delay" (as that term is defined in Section 5.2 of the Work Letter attached hereto as Exhibit B (the "Work Letter")).  Effective as of the 3661 Surrender Date, Landlord and Tenant hereby agree that each of them shall be fully and unconditionally released and discharged from their respective obligations arising under the Lease, as hereby amended, following the 3661 Surrender Date with respect to the 3661 Premises; provided, however, the foregoing releases shall not apply (A) to the extent expressly set forth to the contrary herein, or (B) with respect to those obligations which expressly survive the expiration or earlier termination of the Lease.  Until such 3661 Surrender Date, Tenant shall remain liable for the performance of all of its obligations under the Lease, as hereby amended, with respect to the 3661 Premises, including but not limited to Tenant's payment of Base Rent and Tenant's Share of Direct Expenses; provided, however, Tenant shall not be obligated to pay Base Rent and Tenant's Share of Direct Expenses during the period commencing on the Substitute Premises Commencement Date and ending on the 3661 Surrender Date.  Landlord and Tenant agree that, as of the 3661 Surrender Date, the Tenant shall no longer lease any space in the 3661 Building.  In the event Tenant does not timely vacate the 3661 Premises in accordance with the terms hereof, then, notwithstanding any contrary provision of the Lease, Tenant shall be deemed to be in holdover with respect to the 3661 Premises, and the terms and conditions of Article 16 of the Office Lease shall apply with respect thereto.  Notwithstanding any provision to the contrary contained in the Office Lease, Tenant shall not be required to remove any Improvements or Alterations existing in the 3661 Premises and Tenant shall satisfy its surrender obligations for the 3661 Premises so long as Tenant removes its personal property and trade fixtures (specifically including the portable clean room within the 3661 Premises) and leaves the 3661 Premises in broom clean condition; provided, however, with respect to Tenant's surrender obligations for the 3661 Premises, Tenant shall continue to be obligated to (a) repair any damage to the Premises and Building caused by Tenant's moving out of the 3661 Premises, and (b) restore and patch the affected portions of the 3661 Premises to a building standard improved condition as determined by Landlord (i.e., clean up and paint the impacted areas without having to build-out brand new improvements for potential future tenants).  Moreover, it is expressly acknowledged and agreed that the provisions of Section 15.2 of the Office Lease shall apply with respect to Tenant's surrender of the 3661 Premises.

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

2.1.2    Marketing of the 3661 Premises.  Notwithstanding any provision to the contrary in the Lease (as amended), commencing as of the date of this Second Amendment, Landlord and any third parties designated by Landlord shall be permitted to enter the 3661 Premises to inspect the same, to show the same to prospective tenants, and, only to the extent previously approved by Tenant (which approval may not be unreasonably withheld, conditioned or delayed, but which approval may be withheld if such work would interfere with Tenant's use or occupancy of the 3661 Premises), to alter, improve or repair the 3661 Premises or the 3661 Building in preparation for the leasing of the 3661 Premises to prospective tenants.  Any work in the 3661 Premises or the 3661 Building performed pursuant to this Section 2.1.2 prior to the occurrence of the 3661 Surrender Date shall be performed outside of Tenant's business hours and in a manner which minimizes interference with Tenant's use, occupancy and access to the 3661 Premises.
2.1.3    Representations of Tenant.  Tenant represents and warrants to Landlord that (a) Tenant has not heretofore assigned or sublet all or any portion of its interest in the Lease with respect to the 3661 Premises; (b) no other person, firm or entity has any right, title or interest in Tenant's interest in the Lease with respect to the 3661 Premises; (c) Tenant has the full right, legal power and actual authority to enter into this Second Amendment and to terminate the Lease with respect to the 3661 Premises without the consent of any person, firm or entity; and (d) Tenant has the full right, legal power and actual authority to bind Tenant to the terms and conditions hereof.  Tenant further represents and warrants to Landlord that to Tenant's knowledge, as of the date hereof there are no, and as of the 3661 Surrender Date there shall not be any, mechanic's liens or other liens encumbering all or any portion of the 3661 Premises, by virtue of any act or omission on the part of Tenant, its predecessors, contractors, agents, employees, successors or assigns.  Notwithstanding the termination of the Lease with respect to the 3661 Premises and the release of liability provided for herein, the representations and warranties set forth in this Section 2.1.3 shall survive the 3661 Surrender Date and Tenant shall be liable to Landlord for any inaccuracy or any breach thereof.
2.2    Substitution of Substitute Premises for the 3661 Premises.  Effective as of the date (the “Substitute Premises Commencement Date”) which is the earlier to occur of (i) the date upon which Tenant first commences to conduct business in the Substitute Premises, and (ii) the date upon which the Substitute Premises is "Ready for Occupancy," as that term is set forth in Section 5.1 of the Work Letter, which Substitute Premises Commencement Date is anticipated to be August 1, 2013, (x) the "Premises" under the Lease shall no longer be the 3661 Premises, and (y) Tenant shall lease from Landlord, and Landlord shall lease to Tenant, the Substitute Premises upon the terms and conditions set forth in the Lease, as hereby amended.  Consequently, effective upon the Substitute Premises Commencement Date, the Substitute Premises shall be substituted for the 3661 Premises and all references in the Lease (as hereby amended) to the “Premises” shall mean and refer instead to the Substitute Premises; provided, however, during the period commencing on the Substitute Premises Commencement Date and ending on the 3661 Surrender Date, the term "Premises" shall be deemed to mean the 3661 Premises and the Substitute Premises.  Additionally, as of the Substitute Premises Commencement Date, all references in the Lease to the “Building” shall be deemed to refer to the 3721 Building (rather than the 3661 Building); provided, however, during the period commencing on the Substitute Premises Commencement Date and ending on the 3661 Surrender Date, the term "Building" shall be deemed to mean the 3661 Building and the 3721 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

Building.  The required evidence of insurance coverage as set forth in Article 10 of the Office Lease pertaining to the Substitute Premises must be delivered to Landlord on or before the date Tenant and/or its employees, contractors and/or agents first enter the Substitute Premises for occupancy, construction of improvements, alterations, or any other move-in activities.  
2.3    Rentable Square Footage of the Substitute Premises.
2.3.1    Stipulation of Rentable Square Feet of the Substitute Premises (excepting only Suite 100).  For purposes of the Lease (as amended), the "rentable square feet" of the portion of the Substitute Premises comprising Suites 300, 400 and 500 are hereby stipulated to be, and shall therefore be deemed to be, as set forth in Recital B of this Second Amendment, and no re-measurement of the portion of the Substitute Premises comprising Suites 300, 400 and 500 will occur at any time during the Lease Term or any extensions thereof.
2.3.2    Verification of Rentable Square Feet of Suite 100.  For purposes of this Lease, "rentable square feet" of the Suite 100 component of the Substitute Premises shall be calculated pursuant to Office Buildings: Standard Methods of Measurement and Calculating Rentable Area – 2010 (Method B) (ANSI/BOMA Z65.1-2010), and its accompanying guidelines (collectively, "BOMA").  Within thirty (30) days after the Substitute Premises Commencement Date, Landlord may elect to cause Landlord’s space planner/architect to measure the rentable square feet of Suite 100, and thereafter the results thereof shall be presented to Tenant in writing.  Tenant's space planner/architect may review Landlord's space planner/architect's determination of the number of rentable square feet of Suite 100 and Tenant may, within fifteen (15) business days after Tenant's receipt of Landlord's space planner/architect's written determination, object to such determination by written notice to Landlord.  Tenant's failure to deliver written notice of such objection within said fifteen (15) business day period shall be deemed to constitute Tenant's acceptance of Landlord's space planner/architect's determination.  If Tenant objects to such determination, Landlord's space planner/architect and Tenant's space planner/architect shall promptly meet and attempt to agree upon the rentable square footage of Suite 100.  If Landlord's space planner/architect and Tenant's space planner/architect cannot agree on the rentable square footage of Suite 100 within thirty (30) days after Tenant's objection thereto, Landlord and Tenant shall mutually select an independent third party space measurement professional to field measure Suite 100 pursuant to BOMA.  Such third party independent measurement professional's determination shall be conclusive and binding on Landlord and Tenant.  Landlord and Tenant shall each pay one-half (1⁄2) of the fees and expenses of the independent third party space measurement professional.  If the Substitute Premises Commencement Date occurs prior to such final determination, Landlord's determination shall be utilized until a final determination is made, whereupon an appropriate adjustment, if necessary, shall be made retroactively, and Landlord shall make appropriate payment (if applicable) to Tenant.  In the event that pursuant to the procedure described in this Section 2.3.2 above, it is determined that the rentable square footage amounts pertaining to Suite 100 shall be different from those set forth in this Second Amendment, all amounts, percentages and figures appearing or referred to in this Second Amendment based upon such incorrect amount for Suite 100 (including, without limitation, the amount of the Rent and any Security Deposit) shall be modified in accordance with such determination.  If such determination is made, it will be confirmed in writing by Landlord to Tenant.

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

2.4    Right of First Refusal.  As of the date of this Second Amendment, Landlord hereby grants the Original Tenant and its Permitted Transferees an ongoing right of first refusal during remainder of the initial Lease Term (i.e., the term scheduled to expire on July 31, 2015) and the initial "Extended Term" (as that term is defined in Section 3.1 of this Second Amendment) only, with respect to all of the rentable square footage located on the second (2nd) floor of the 3721 Building  (the "First Refusal Space").  
2.4.1    Procedure for Lease.
2.4.1.1    Procedure for Offer.  Landlord shall notify Tenant (the "First Refusal Notice") from time-to-time when and if Landlord receives a "bona-fide third-party offer" for the First Refusal Space.  Pursuant to such First Refusal Notice, Landlord shall offer to lease to Tenant the applicable First Refusal Space.  The First Refusal Notice shall describe the First Refusal Space, and the lease term, rent and other fundamental economic terms and conditions upon which Landlord proposes to lease such First Refusal Space pursuant to the bona-fide third-party offer.  For purposes of this Section 2.4, a "bona-fide third-party offer" shall mean an offer or counter-offer received by Landlord to lease First Refusal Space from an unaffiliated and qualified third party which Landlord would otherwise be willing to accept (but for Tenant's superior rights hereunder).  For purposes of example only, the following would each constitute a bona-fide third-party offer:
		
	(a)
	Landlord receives a request for proposal from an unaffiliated and qualified third party.  Landlord responds to the request for proposal with a lease proposal and subsequently receives a written bona-fide counter proposal from the unaffiliated and qualified third party.

		
	(b)
	Landlord receives a written offer to lease from an unaffiliated and qualified third party.  Landlord responds to the offer with a written counter offer and subsequently receives a bona-fide counter to Landlord's counter offer from the unaffiliated and qualified third party.

		
	(c)
	Landlord submits a lease proposal to an unaffiliated and qualified third party and Landlord subsequently receives an acceptance of such proposal from such third party.

2.4.1.2    Procedure for Acceptance.  If Tenant wishes to exercise Tenant's right of first refusal with respect to the First Refusal Space described in the First Refusal Notice, then within five (5) business days of delivery of the First Refusal Notice to Tenant (the "Election Period"), Tenant shall deliver to Landlord written notice (an "Election Notice") of Tenant's exercise of its right of first refusal with respect to all of the First Refusal Space described in the First Refusal Notice at the rent, for the term and upon the other fundamental economic terms and conditions contained in such First Refusal Notice, including, but not limited to rental concessions and improvement allowances.  If Tenant does not so notify Landlord within such Election Period of Tenant's exercise of its first refusal right, or Tenant affirmatively elects not to exercise such first 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

refusal right (either of the foregoing being referred to herein as a "First Refusal Rejection"), then Landlord shall be free to negotiate and enter into a lease for the First Refusal Space to anyone whom it desires on the net-effective economic terms and the fundamental non-economic terms which are no more than five percent (5%) more beneficial to such party than those set forth in the First Refusal Notice.  In the event Landlord does not lease such First Refusal Space pursuant to the foregoing sentence within a period of one hundred eighty (180) days following the expiration of such Election Period, Tenant shall retain the right of first refusal set forth in this Section 2.4 and Landlord shall provide Tenant with another First Refusal Notice, when and if Landlord receives any subsequent "bona-fide third-party offer".  Notwithstanding the foregoing, Tenant's ongoing right of first refusal shall commence only following the expiration or earlier termination of any existing lease of the First Refusal Space (or portion thereof), including any renewal, extension or expansion rights set forth in such leases, regardless of whether such renewal, extension or expansion rights are executed strictly in accordance with their terms, or pursuant to a lease amendment or a new lease, and such right of first refusal shall further be subordinate to (A) all rights of the then-existing tenants in the First Refusal Space (i.e., at the time any applicable First Refusal Notice is delivered), (B) all rights of first offer, first refusal, expansion or other similar rights with respect to such First Refusal Space granted to third parties prior to the date hereof, and (C) all rights of extension (regardless of whether such renewal, extension or expansion rights are executed strictly in accordance with their terms, or pursuant to a lease amendment or a new lease), first offer, first refusal, expansion or other similar rights with respect to such First Refusal Space contained in an "Intervening Lease," as that term is defined below (each, a ROFR Superior Right Holder").  For purposes hereof, an "Intervening Lease" shall mean any lease to a third-party of First Refusal Space identified in a particular First Refusal Notice following Tenant's election (or deemed election) not to exercise its right to lease such space pursuant to the terms of Section 2.4 of this Second Amendment. 
2.4.1.3    Amendment to Lease.  If Tenant timely exercises Tenant's right of first refusal to lease First Refusal Space as set forth herein, Landlord and Tenant shall within thirty (30) days thereafter execute an amendment to the Lease (as amended) (the "First Refusal Space Amendment") for such First Refusal Space upon the terms set forth in the First Refusal Notice, including, but not limited to rent (the "First Refusal Space Rent"), but otherwise upon the TCCs set forth in the Lease (as hereby amended) and this Section 2.4.  Notwithstanding the foregoing, Landlord may, at its sole option, require that a separate lease be executed by Landlord and Tenant in connection with Tenant's lease of the First Refusal Space, in which event such lease (the "First Refusal Space Lease") shall be on the same TCCs as the Lease (as hereby amended), except as provided in this Section 2.4 and specifically in the Lease (as hereby amended) to the contrary.  The First Refusal Space Lease, if applicable, shall be executed by Landlord and Tenant within thirty (30) days following Tenant's exercise of its right to lease the First Refusal Space.  Notwithstanding the foregoing documentation obligations, Landlord and Tenant hereby acknowledge and agree that Tenant's timely delivery of the Election Notice shall, in and of itself, conclusively establish Tenant's obligation to lease the subject First Refusal Space on the express TCCs set forth in the corresponding First Refusal Notice.
2.4.1.4    No Defaults; Required Financial Condition of Tenant.  The rights contained in this Section 2.4 shall be personal to the Original Tenant and its Permitted Transferees and may only be exercised by the Original Tenant or a Permitted Transferee (and not 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

any other assignee, sublessee or other transferee of the Original Tenant's interest in the Lease (as amended)) if the Original Tenant and/or a Permitted Transferee occupies not less than seventy-five percent (75%) of the entire then‐existing Premises.  The right to lease the First Refusal Space as provided in this Section 2.4 may not be exercised if, as of the date Tenant attempts to exercise its right of first refusal with respect to the First Refusal Space described in the First Refusal Notice, or, at Landlord's option, as of the scheduled date of delivery of such First Refusal Space to Tenant, (A) Tenant is in economic or material non-economic default pursuant to the terms of the Lease (as amended) (beyond the applicable notice and cure periods), and (B) Tenant has previously been in economic or material non-economic default under the Lease (as amended) (beyond the applicable notice and cure periods) during the previous twenty-four (24) month period. 
2.4.1.5    First Refusal Space Commencement Date; Construction in First Refusal Space.  The commencement date for the First Refusal Space shall be the applicable date specified in the applicable First Refusal Notice (the "First Refusal Space Commencement Date") and the term of Tenant's lease of such First Refusal Space shall expire on the applicable date set forth in the First Refusal Notice (the "First Refusal Space Expiration Date").  The term of Tenant's occupancy of the First Refusal Space shall be referred to herein as a "First Refusal Space Lease Term."  Except as otherwise expressly identified in the First Refusal Notice, Tenant shall take the First Refusal Space in its "as is" condition, and the construction of improvements in the First Refusal Space shall comply with the terms of Article 8 of the Office Lease.
2.4.1.6    Termination of First Refusal Right.  Tenant's right of first refusal set forth in this Section 2.4 shall automatically terminate and be of no further force or effect as of the last day of the Lease Term, including any extension thereof.
2.5    Deletion.  Effective as of the date of this Second Amendment, the Right of First Refusal set forth in Section 1.3 of the Office Lease shall be deleted and be of no further force or effect.
3.    Lease Term.
3.1    Extension of Lease Term.  Landlord and Tenant acknowledge that the Lease Term is currently scheduled to expire on July 31, 2015, pursuant to the terms of the Lease.  Notwithstanding any provision to the contrary in the Lease, the Lease Term is hereby extended for the period commencing on August 1, 2015, and ending on the last day of the calendar month in which the tenth (10th) anniversary of the Substitute Premises Commencement Date occurs (which end date shall be referred to as the "Lease Expiration Date"); provided, however, to the extent the Substitute Premises Commencement Date occurs on the first (1st) day of a calendar month, then the Lease Expiration Date shall be the day immediately preceding the tenth (10th) anniversary of the Substitute Premises Commencement Date, unless sooner terminated as provided in the Lease, as hereby amended.  For purposes hereof, the term "Extended Term" shall mean the period commencing on August 1, 2015, and ending on the Lease Expiration Date.  For purposes of this Second Amendment, the term “SP Month” shall mean each consecutive monthly period occurring during the period commencing on the Substitute Premises Commencement Date and ending on the Lease Expiration Date; provided, however, the first SP Month shall commence on the Substitute Premises Commencement Date and end on the last day of the calendar month in which the Substitute 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

Premises Commencement Date occurs, and the second and each succeeding SP Month shall commence on the first day of the next calendar month; and further provided that the last SP Month shall end on the Lease Expiration Date.  
3.2    Option to Extend Lease Term.  Notwithstanding any provision to the contrary contained in the Lease (as amended), Landlord and Tenant acknowledge and agree that, except as provided in this Section 3.2 to the contrary, the Option Term provided in Section 2.2 of the Office Lease shall continue to remain in effect pursuant to the terms of Section 2.2 of the Office Lease; provided, however, such one (1) Option Term shall be for five (5) years (as opposed to three (3) years) and the Intent Notice shall be delivered (if at all) not less than eight (8) months prior to the expiration of the Extended Term.  Accordingly, the references to "three (3) years" in the first sentence and the second to last sentence of Section 2.2.1 of the Office Lease and Section 1 of Exhibit G attached to the Office Lease shall be deleted and replaced with "five (5) years" and the last sentence of Section 1 of Exhibit G shall be deleted and of no further force or effect.
3.3    Deletion.  Effective as of the date of this Second Amendment, the Tenant termination right set forth in Section 2.3 of the Office Lease shall be deleted and be of no further force or effect.
4.    Base Rent.
4.1    Base Rent for the 34,986 RSF Substitute Premises during the period commencing on the Substitute Premises Commencement Date and ending on the last day of SP Month 24.  Notwithstanding any provision to the contrary contained in the Lease, as hereby amended, prior to Substitute Premises Commencement Date, Tenant shall continue to pay Base Rent for the 3661 Premises in accordance with the terms of Article 3 of the Office Lease (as amended by Section 4 of the First Amendment).  Commencing on the Substitute Premises Commencement Date, and continuing through the last day of SP Month 24, Tenant shall pay to Landlord monthly installments of Base Rent for a portion of the Substitute Premises containing 34,986 rentable square feet of space (the "34,986 RSF Substitute Premises") as follows:

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

	
				
	Period During 
Lease Term
	 
 
 
 
 
Annualized 
Base Rent
	Monthly 
Installment 
of Base Rent
	Monthly Base Rent 
per Rentable 
Square Foot of the 34,986 RSF Substitute Premises

	

Substitute Premises Commencement Date – 
– July 31, 2014
	$1,183,926.20
	$98,660.52
	$2.82

	August 1, 2014 –  
July 31, 2015
	$1,217,512.80
	$101,459.40
	$2.90

	August 1, 2015 –  
SP Month 24 (only applicable to the extent the Substitute Premises Commencement Date occurs after August 1, 2013)
	$1,427,428.80
	$118,952.40
	$3.40

4.2    Base Rent for the Remaining Substitute Premises during the period commencing on the Substitute Premises Commencement Date and ending on the last day of SP Month 24.  Commencing on the Substitute Premises Commencement Date, and continuing through the last day of SP Month 24, Tenant shall pay to Landlord monthly installments of Base Rent for the remaining Substitute Premises that does not include the 34,986 RSF Substitute Premises identified in Section 4.1 above (the "Remaining Substitute Premises") as follows:
	
				
	Period During 
Lease Term
	 
 
Annualized 
Base Rent
	Monthly 
Installment 
of Base Rent
	Monthly Base Rent 
per Rentable 
Square Foot of the Remaining Substitute Premises

	

Substitute Premises Commencement Date – 
– SP Month 12
	$2,247,024.00*
	$187,252.00*
	$3.25

	SP Month 13 –  
Month 24
	$2,350,732.80
	$195,894.40
	$3.40

*  Subject to the terms set forth in Section 4.4 of this Second Amendment, the Base Rent attributable to Suite 300 for the twelve (12) month period commencing on the Substitute Premises Commencement Date, and ending on the last date of SP Month 12, shall be abated.
4.3    Base Rent for the entire Substitute Premises after SP Month 24.  

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

Commencing on the first (1st) day of SP Month 25, and continuing through the Lease Expiration Date, Tenant shall pay to Landlord monthly installments of Base Rent for the entire Substitute Premises as follows:
	
				
	Period During 
Lease Term
	 
 
Annualized 
Base Rent
	Monthly 
Installment 
of Base Rent
	Monthly Base Rent 
per Rentable 
Square Foot for the entire Substitute Premises

	SP Month 25 –  
SP Month 36
	$4,000,406.40
	$333,367.20
	$3.60

	SP Month 37 –  
SP Month 48
	$4,140,420.60
	$345,035.05
	$3.73**

	SP Month 49 –  
SP Month 60
	$4,285,335.36
	$357,111.28
	$3.86**

	SP Month 61 –  
SP Month 72
	$4,435,322.04
	$369,610.17
	$3.99**

	SP Month 73 –  
SP Month 84
	$4,590,558.36
	$382,546.53
	$4.13**

	SP Month 85 –  
SP Month 96
	$4,751,227.92
	$395,935.66
	$4.28**

	SP Month 97 –  
SP Month 108
	$4,917,520.92
	$409,793.41
	$4.43**

	SP Month 109 – Lease Expiration Date
	$5,089,634.16
	$424,136.18
	$4.58**

	**  The amounts identified in the column entitled "Monthly Base Rent per Rentable Square Foot of the entire Substitute Premises" are estimates and are provided for informational purposes only.

4.4    Base Rent Phase-In with Respect to Suite 300.  Provided that no event of economic or material non-economic default is occurring during the twelve (12) month period commencing on the Substitute Premises Commencement Date, and ending on last day of SP Month 12 (the "Suite 300 Base Rent Phase-In Period"), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the portion of the Substitute Premises comprising Suite 300 during such Suite 300 Base Rent Phase-In Period (the "Suite 300 Base Rent Phase-In").  Landlord and Tenant acknowledge that the aggregate amount of the Suite 300 Base Rent Phase-In equals Nine Hundred Seventy-Two Thousand Five Hundred Forty-Three and 00/100 Dollars ($972,543.00) (i.e., Eighty-One Thousand Forty-Five and 25/100 Dollars ($81,045.25) per month).  Tenant acknowledges and agrees that during such Suite 300 Base Rent Phase-In Period, such abatement of Base Rent for the Suite 300 Base Rent Phase-In shall have no effect on the calculation of any future increases in Base Rent or Direct Expenses payable by Tenant pursuant to the terms of the Lease (as amended), which increases shall be calculated without regard to such Suite 300 Base Rent Phase-In.  Additionally, and notwithstanding the foregoing, Tenant shall be obligated to pay all 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

Additional Rent during the Suite 300 Base Rent Phase-In Period.  In the event of a default by Tenant under the terms of the Lease (as amended) that results in an early termination pursuant to the provisions of Article 19 of the Office Lease, then as a part of the recovery set forth in Section 19.2 of the Office Lease, Landlord shall be entitled to recover the then-unamortized amount of the Suite 300 Base Rent Phase-In that was abated under the provisions of this Section 4.4.  The foregoing Suite 300 Base Rent Phase-In right set forth in this Section 4.4 shall be personal to the Original Tenant and its Permitted Transferees (and not any other assignee, sublessee or other transferee of the Original Tenant's interest in the Lease (as amended)) and shall only apply to the extent that the Original Tenant or its Permitted Transferees is the Tenant under the Lease (as amended) during such Suite 300 Base Rent Phase-In Period.
5.    Tenant’s Share of Direct Expenses/Direct Payment for Electricity.  
5.1    Direct Expenses.  Notwithstanding any provision to the contrary contained in the Lease, as hereby amended, prior to the Substitute Premises Commencement Date, Tenant shall continue to pay Direct Expenses for the 3661 Premises in accordance with the terms of Article 4 of the Office Lease.  Except as specifically set forth in this Section 5, commencing on the Substitute Premises Commencement Date, Tenant shall pay Tenant's Share of Operating Expenses  and Tax Expenses in connection with the Substitute Premises in accordance with the terms of the Lease, provided that with respect to the calculation of Tenant's Share of Operating Expenses and Tax Expenses in connection with the Substitute Premises, the following shall apply:
5.1.2    Tenant's Share shall equal 80.6778%; and
5.1.3    the Base Year pertaining to Operating Expenses and Tax Expenses shall be the calendar year 2014.
5.2    Electricity.  The Substitute Premises shall be separately metered for electricity (which separate meters shall initially be at Landlord's cost), and Tenant shall continue to pay directly to the utility company pursuant to the utility company's separate meters the cost of all electricity provided to and/or consumed in the Substitute Premises (including normal and excess consumption and including the cost of electricity to operate the HVAC air handlers, which electricity shall be separately metered).
5.3    Janitorial.  Janitorial service to the Substitute Premises shall be provided five (5) days per week and otherwise in accordance with Section 6.1.4 of the Lease.
6.    Improvements.  
6.1    In General.  Except as specifically set forth in the Work Letter and the Lease as amended by this Second Amendment, Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Substitute Premises, and Tenant shall accept the Substitute Premises in its presently existing, “as-is” condition.  Tenant also acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Substitute Premises, the 3721 Building or the Project or with respect to the suitability of any of the foregoing for the conduct of Tenant's business, except 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

as specifically set forth in the Lease (as amended) and the Work Letter.  Notwithstanding any provision to the contrary contained in the Lease (as amended), Landlord may, by written notice to Tenant, given at the time of Landlord's consent to the particular Improvements, require Tenant, at Tenant's expense, to remove any such Improvements in the Substitute Premises, and to repair any damage to the Substitute Premises and the 3721 Building caused by such removal and restore and patch the affected portions of the Substitute Premises to a building standard improved condition as determined by Landlord (i.e., clean up and paint the impacted areas without having to build-out brand new improvements for potential future tenants).  With respect to the Substitute Premises, Tenant shall at all times be permitted to remove any portable clean room(s) and any specialized equipment or specialized trade fixtures of Tenant (and not paid for my Landlord) in the Substitute Premises regardless of whether or not such items are attached to the Substitute Premises (provided Tenant will repair any damage caused by such removal, and restore and patch the affected portions of the Substitute Premises to a building standard improved condition as determined by Landlord (i.e., clean up and paint the impacted areas without having to build-out brand new improvements for potential future tenants)).  Notwithstanding any provision to the contrary contained herein, Landlord and Tenant expressly acknowledge and agree that the provisions of the Work Letter attached to the Office Lease as Exhibit B shall be inapplicable with respect to the Substitute Premises, and that any and all references to the Improvement Allowance set forth in the Office Lease shall be inapplicable with respect to the Substitute Premises. 
6.2    Condition of 3721 Building.  The taking of possession of the Substitute Premises by Tenant shall conclusively establish that such portions of the Substitute Premises and the 3721 Building were at such time in good and sanitary order, condition and repair, subject only to (i) the last two (2) sentences of this Section 6.2, (ii) latent defects to the extent identified and, thereafter, promptly communicated to Landlord, within twelve (12) months of the Substitute Premises Commencement Date, and (iii) Landlord's ongoing obligations set forth in Sections 1.1.3 and 29.33, and Articles 7 and 24 of the Office Lease.  Notwithstanding any provision to the contrary set forth in the Lease (as amended), Landlord shall, at Landlord's sole cost and expense, deliver the Substitute Premises to Tenant with the roof, and all Building Systems in the 3721 Building  serving and within the Substitute Premises, in good working condition, and Landlord covenants that (A) such Building Systems located in the 3721 Building have recently been operated, and (B) such Building Systems located in the 3721 Building have been regularly serviced, and if (x) the roof of the 3721 Building needs to be replaced during the Extended Term for any reason other than Tenant's over-standard use of the same or Tenant's obligation to repair the same due to a BS/BS Exception as defined in Article 7 of the Lease, the cost shall be paid by Landlord and not included in Operating Expenses except to the extent the same is permitted to be included in Operating Expenses pursuant to the terms of Section 4.2.4(xiii)(C) of the Office Lease, or (y) the Building Systems located in the 3721 Building need to be replaced during the period commencing on the date of this Second Amendment and ending on the fifth (5th) anniversary thereof for any reason other than Tenant's over-standard use of the same or Tenant's obligation to repair the same due to a BS/BS Exception, the cost shall be paid by Landlord and not included in Operating Expenses except to the extent the same is permitted to be included in Operating Expenses pursuant to the terms of Section 4.2.4(xiii)(C) of the Office Lease.  If, within six (6) months following the Substitute Premises Commencement Date, it is discovered that Landlord failed to deliver the Substitute Premises in compliance with the obligations listed in the immediately preceding sentence, then Landlord shall, at its sole cost and 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

expense, make any repairs and/or replacements necessary to put the Building Systems in the 3721 Building serving the Substitute Premises in the condition required by the immediately preceding sentence.
6.3    3721 Building Applicable Laws.  Landlord covenants that as of the Substitute Premises Commencement Date, the 3721 Building, the Substitute Premises, and the parking areas serving the 3721 Building, shall be in material compliance with all Applicable Laws in effect as of the Substitute Premises Commencement Date.  If, within the first (1st) six (6) months following Landlord’s delivery of the Substitute Premises to Tenant (provided such time limitation shall be twelve (12) months with respect to the Suite 300 only (and not the remaining 3721 Building, the remaining parts of the Substitute Premises or the parking areas serving the 3721 Building)), it is discovered that any work is required in the 3721 Building, the Substitute Premises or the parking areas in order to cause them to be in compliance with all Applicable Laws in effect as of the Substitute Premises Commencement Date as required by the immediately preceding sentence, Landlord shall, at its sole cost and expense, correct any material deficiency in such condition promptly following receipt of written notice thereof from Tenant within such six (6) month (or twelve (12) months with respect to the Suite 300 only) period if and to the extent (A) each such compliance with Applicable Laws obligation is not required as a result of the misconduct, breach, fault or negligence of Tenant or any of the other Tenant Parties, (B) Landlord's failure to comply with such Applicable Laws would (x) prohibit Tenant from obtaining or maintaining a certificate of occupancy for the Substitute Premises, (y) unreasonably and materially affect the safety of Tenant's employees or create a significant health hazard for Tenant's employees, (z) violate an affirmative mandate (directed specifically to the Project of an applicable governmental authority), or (zz) unreasonably and materially affect the operation of Tenant's business from the Substitute Premises.  Any such work by Landlord needed to bring the 3721 Building, the Substitute Premises and/or the parking areas serving the 3721 Building into material compliance with all Applicable Laws may be undertaken at the same time as construction of the "Improvements" (as that term is defined in Section 2.1 of the Work Letter) in the Substitute Premises pursuant to the provisions of the Work Letter, and Tenant shall promptly and diligently cooperate and comply with Landlord’s construction schedule for such work.
7.    Signage.  
7.1    In General.  Notwithstanding any provision to the contrary contained herein, Sections 23.4, 23.5, 23.6 and 23.7 of the Office Lease shall, as of the Substitute Premises Commencement Date, be deleted and be of no further force or effect and shall be replaced with the following:
"23.4    Tenant's Signage.  Tenant shall, at Tenant's sole cost and expense, be entitled to install the following signage in connection with Tenant's lease of the Substitute Premises (collectively, the "Tenant's Signage"):
		
	(i)
	3721 Building-top signage consisting of one (1) building-top sign identifying Tenant's name and logo located at the top of the Building (on the South-facing elevation) in one (1) 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

location; and
		
	(ii)
	One (1) slot on the currently-existing monument sign serving the 3721 Building, in a design, and with materials and other reasonable parameters to be approved by Landlord and Tenant in accordance with the TCCs of Section 23.4.1, below (the "Tenant's Monument Signage").  Tenant hereby acknowledges and agrees that Landlord may, at Landlord's sole cost and expense, place a standard "owned and managed" sign on such 3721 Building Monument Sign.

The remaining provisions of Article 23 shall apply to Tenant's Signage as the same has been defined in this Section 23.4.  For clarification purposes, Landlord and Tenant hereby expressly acknowledge and agree that Tenant shall, as of the Substitute Premises Commencement Date, have no signage rights with respect to the 3661 Building, and Tenant's suite signage shall be as set forth in Sections 23.1, 23.2 and 23.3 of the Office Lease as the same shall then apply to the 3721 Building.
23.4.1    Specifications and Permits.  Tenant's Signage shall set forth Tenant's name and logo as determined by Tenant in its sole discretion; provided, however, in no event shall Tenant's Signage include an "Objectionable Name," as that term is defined in Section 23.4.2, of this Lease.  The graphics, materials, color, design, lettering, lighting, size, illumination, specifications and exact location of Tenant's Signage (collectively, the "Sign Specifications") shall be selected by Tenant and subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and shall be consistent and compatible with the quality and nature of the Project and any commercially reasonable Project-standard signage specifications reasonably promulgated by Landlord.  For purposes of this Section 23.4.1, the reference to "name" shall mean name and/or logo.  In addition, Tenant's Signage shall be subject to Tenant's receipt of (i) all required governmental permits and approvals and shall be subject to all Applicable Laws and to any covenants, conditions and restrictions affecting the Project, and (ii) all required approvals from the Property Owner's Association pertaining to the Project.  Landlord shall use commercially reasonable efforts to assist Tenant in obtaining all necessary permits and approvals for Tenant's Signage.  Tenant hereby acknowledges that, notwithstanding Landlord's approval of Tenant's Signage, Landlord has made no representation or warranty to Tenant with respect to the probability of obtaining all necessary governmental approvals and permits for Tenant's Signage.  In the event Tenant does not receive the necessary governmental approvals and permits for Tenant's Signage, Tenant's and Landlord's rights and obligations under the remaining TCCs of this Lease shall be unaffected.  

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

23.4.2    Objectionable Name.  To the extent Tenant desires to change the name and/or logo set forth on Tenant's Signage, such name and/or logo shall not have a name which relates to an entity which is of a character or reputation, or is associated with a political faction or orientation, which is inconsistent with the quality of the Project, or which would otherwise reasonably offend a landlord of the Comparable Buildings (an "Objectionable Name").  The parties hereby agree that the name "Volcano Corporation" or any reasonable derivation thereof, shall be deemed not to constitute an Objectionable Name. 
23.4.3    Termination of Right to Tenant's Signage.  The rights contained in this Section 23.4 shall be personal to Tenant or any Permitted Transferee of Tenant or any assignee of this Lease approved pursuant to Article 14 of this Lease, and may only be exercised by such parties (and not any other assignee, sublessee or other transferee of the Original Tenant's interest in this Lease) if they are not in economic or material non-economic default under this Lease (beyond the applicable notice and cure period).
23.4.4    Cost, Maintenance and Removal of Tenant's Signage.  The costs of the actual signs comprising Tenant's Signage and the installation, design, construction, and any and all other costs associated with Tenant's Signage, including, without limitation, utility charges and hook-up fees, permits, and maintenance and repairs, shall be the sole responsibility of Tenant, at Tenant's sole cost and expense.  Landlord and Tenant hereby expressly acknowledge and agree that Tenant's Signage shall be installed and removed by a vendor designated by Landlord, and therefore Tenant shall contract with such Landlord designated vendor to perform the work identified herein.  Should Tenant's Signage require repairs and/or maintenance, as determined in Landlord's reasonable judgment, Landlord shall have the right to provide notice thereof to Tenant and Tenant shall cause such repairs and/or maintenance to be performed within thirty (30) days after receipt of such notice from Landlord, at Tenant's sole cost and expense; provided, however, if such repairs and/or maintenance are reasonably expected to require longer than thirty (30) days to perform, Tenant shall commence such repairs and/or maintenance within such thirty (30) day period and shall diligently prosecute such repairs and maintenance to completion.  Should Tenant fail to perform such repairs and/or maintenance within the periods described in the immediately preceding sentence, Landlord shall have the right to cause such work to be performed and to charge Tenant as Additional Rent for the actual cost of such work.  Upon the expiration or earlier termination of this Lease, Tenant shall, at Tenant's sole cost and expense, cause Tenant's Signage to be removed and shall cause the areas in which Tenant's Signage was located to be restored to substantially the condition existing immediately prior to the placement of such Tenant's Signage.  If Tenant fails to timely remove such 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

Tenant's Signage or to restore the areas in which such Tenant's Signage was located, as provided in the immediately preceding sentence, then Landlord may perform such work, and all actual costs incurred by Landlord in so performing shall be reimbursed by Tenant to Landlord within thirty (30) days after Tenant's receipt of an invoice therefor.  The TCCs of this Section 23.4.4 shall survive the expiration or earlier termination of this Lease."  
7.2    Removal of Tenant's Signage Serving the 3661 Premises.  Notwithstanding any provision to the contrary contained herein, Tenant shall, at Tenant's sole cost and expense, prior to the 3661 Surrender Date (i) remove the "Tenant's Signage" identified in Section 23.6 of the Office Lease as originally drafted (i.e., the Eyebrow Signage identified in Section 23.4 of the Office Lease as originally drafted and the Monument Signage identified in Section 23.5 of the Office Lease as originally drafted), (ii) repair any resulting damage caused by such removal, and (iii) cause the areas in which such Tenant’s Signage was located to be restored to substantially the condition existing immediately prior to the placement of such Tenant’s Signage thereon.
8.    Parking.  Section 9 of the Summary attached to the Office Lease shall be deleted in its entirety as of the Substitute Premises Commencement Date, and shall be replaced with the following:  
"Four (4) unreserved parking passes for every 1,000 rentable square feet of the Premises (i.e., three hundred seventy (370) unreserved parking passes)."
For clarification purposes, Landlord and Tenant hereby expressly acknowledge and agree that Tenant shall, as of the Substitute Premises Commencement Date, have no parking rights with respect to the 3661 Building (including, but not limited to, with respect to any or all of the 3661 Building parking facilities).   
9.    Security Deposit.  Notwithstanding any provision to the contrary contained in the Lease, the Security Deposit held by Landlord pursuant to the Lease, as amended hereby, shall equal Four Hundred Twenty-Four Thousand One Hundred Thirty-Six and 18/100 Dollars ($424,136.18).  Landlord and Tenant acknowledge that, in accordance with Article 21 of the Lease (as amended by Section 10 of the First Amendment), Tenant has previously delivered the sum of One Hundred One Thousand Five Hundred Ninety-Two and 79/100 Dollars ($101,592.79) (the "Existing Security Deposit") to Landlord as security for the faithful performance by Tenant of the terms, covenants and conditions of the Lease.  Concurrently with Tenant's execution of this Second Amendment, Tenant shall deposit with Landlord an amount equal to Three Hundred Twenty-Two Thousand Five Hundred Forty-Three and 39/100 Dollars ($322,543.39) to be held by Landlord as a part of the Security Deposit.  To the extent that Landlord applies any portion of the Security Deposit to cure a default as permitted by the Lease (as amended), and as a result the total amount held by Landlord at any time as security for the Lease, as hereby amended, is less than Four Hundred Twenty-Four Thousand One Hundred Thirty-Six and 18/100 Dollars ($424,136.18), Tenant shall pay the difference to Landlord within ten (10) days following Tenant's receipt of notice thereof from Landlord.  In the event of a transfer of Landlord's ownership interest in the 3721 Building, Landlord will transfer the Security Deposit to such transferee (i.e., the new owner of the 3721 Building).

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

10.    Brokers.  Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Second Amendment other than Hughes Marino (the "Broker"), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Second Amendment.  Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation reasonable attorneys' fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of any dealings with any real estate broker or agent, other than the Broker, occurring by, through, or under the indemnifying party.  The terms of this Section 10 shall survive the expiration or earlier termination of the term of the Lease, as hereby amended.  Landlord will pay the Broker any commission due to Broker as a result of this Second Amendment.
11.    Notices.  Notwithstanding anything to the contrary contained in the Lease, as of the date of this Second Amendment, any Notices to Landlord or Tenant (as the case may be) must be sent, transmitted, or delivered, as the case may be, to the following addresses:
		
	If to Landlord:
	Kilroy Realty, L.P. 
c/o Kilroy Realty Corporation 
12200 West Olympic Boulevard, Suite 200 
Los Angeles, California  90064 
Attention:  Legal Department

with copies to:
Kilroy Realty Corporation  
12200 West Olympic Boulevard, Suite 200 
Los Angeles, California  90064 
Attention:  Mr. John Fucci
and
Kilroy Realty Corporation  
3611 Valley Centre Drive, Suite 550 
San Diego, California  92130 
Attention:  Mr. Brian Galligan
and
Allen Matkins Leck Gamble Mallory & Natsis LLP 
1901 Avenue of the Stars, Suite 1800 
Los Angeles, California  90067 
Attention:  Anton N. Natsis, Esq.
		
	If to Tenant:
	Volcano Corporation 
3721 Valley Centre Drive, Suite 100 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

San Diego, California 92130 
Attention: Mr. John Dahldorf, Chief Financial Officer
with a copy to:
Volcano Corporation 
3721 Valley Centre Drive, Suite 100 
San Diego, California 92130 
Attention:  Darin Lippoldt, Esq., General Counsel
12.    Effectiveness of this Second Amendment.  Landlord and Tenant hereby acknowledge that portions of the Substitute Premises are currently occupied by third parties (the "Existing Tenants") pursuant to existing leases or occupancy agreements (collectively, the "Existing Leases").  Once the scheduled termination date has occurred under the Existing Leases, Landlord shall, to the extent some or all of the Existing Tenants have not vacated the Substitute Premises following the scheduled termination date, use commercially reasonable efforts to cause such particular Existing Tenants to vacate the Substitute Premises as soon as reasonably possible.  Landlord will not enter into any renewal agreement with the Existing Tenants or otherwise allow such Existing Tenants to remain in the Substitute Premises beyond the currently scheduled expiration date of the Existing Leases.  Notwithstanding any provision to the contrary contained herein, the parties hereto expressly acknowledge and agree that the Landlord shall have no liability whatsoever to Tenant relating to or arising from Landlord’s inability or failure to deliver, or Landlord’s delay in delivering, the Premises to Tenant to the extent such delay results in circumstances beyond the reasonable control of Landlord.
13.    Water Sensors.  Effective as of the date of this Second Amendment and pertaining to the Substitute Premises only (as opposed to the 3661 Premises), the following Section 29.36 is added after Section 29.35 of the Office Lease: 
"29.36    Water Sensors.  Tenant shall, at Tenant's sole cost and expense, be responsible for promptly installing web-enabled wireless water leak sensor devices designed to alert the Tenant on a twenty-four (24) hour seven (7) day per week basis if a water leak is occurring in the Premises (which water sensor device(s) located in the Premises shall be referred to herein as "Water Sensors").  The Water Sensors shall be installed in any areas in the Premises (excluding any and all restrooms located within the Premises or otherwise serving the Premises) where water is utilized (such as sinks, pipes, faucets, water heaters, coffee machines, ice machines, water dispensers and water fountains), and in locations that may be reasonably designated from time to time by Landlord (the "Sensor Areas").  In connection with any Alterations affecting or relating to any Sensor Areas, Landlord may require Water Sensors to be installed or updated in Landlord's sole and absolute discretion.  With respect to the installation of any such Water Sensors, Tenant shall obtain Landlord's prior written consent, use an experienced and qualified contractor reasonably designated by Landlord, and comply with all of the other provisions of Article 8 of this Lease.  Tenant shall, at Tenant's sole cost and expense, pursuant to Article 7 of this Lease keep any Water Sensors located in the Premises (whether installed by 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

Tenant or someone else) in good working order, repair and condition at all times during the Lease Term and comply with all of the other provisions of Article 7 of this Lease.  Notwithstanding any provision to the contrary contained herein, Landlord has neither an obligation to monitor, repair or otherwise maintain the Water Sensors, nor an obligation to respond to any alerts it may receive from the Water Sensors or which may be generated from the Water Sensors.  Upon the expiration of the Lease Term, or immediately following any earlier termination of this Lease, Landlord may require Tenant to leave the Water Sensors in place together with all necessary user information such that the same may be used by a future occupant of the Premises (e.g., the water sensors shall be unblocked and ready for use by a third-party).  "
14.    No Lender as of the date of this Second Amendment.  Landlord covenants that there is no existing mortgage, deed of trust or other encumbrance encumbering the Project or any portion thereof as of the date of this Second Amendment.
15.    After-Hours HVAC Charge.  Notwithstanding any provision to the contrary contained in the Lease, effective as of the Substitute Premises Commencement Date, Landlord and Tenant hereby acknowledge and agree that the last sentence of Section 6.2 of the Office Lease shall be deleted and of no further force or effect, and shall be replaced with the following:
"If Tenant desires to use heat, ventilation or air conditioning during hours other than those for which Landlord is obligated to supply such utilities pursuant to the terms of Section 6.1 of this Lease, Tenant shall give Landlord such prior notice, if any, as Landlord shall from time to time reasonably establish as appropriate, of Tenant's desired use in order to supply such utilities, and Landlord shall supply such utilities to Tenant at such hourly cost to Tenant (which shall be treated as Additional Rent) as Landlord shall from time to time establish; provided, however, the hourly cost to Tenant during the period commencing on the Substitute Premises Commencement Date (as that term is defined in Section 2.2 of that certain Second Amendment dated December 14, 2012 (the "Second Amendment")) and ending on the last day of SP Month 12 shall be equal to Thirty-Five and 00/100 Dollars ($35.00) per hour per floor of the Premises; provided, however, in no event shall such aforementioned hourly rate exceed on an aggregate basis for any SP Year after the first (1st) SP Year the amount that the initial after-hours HVAC rate would have been had it increased by five percent (5%) per SP Year following the first (1st) SP Year (i.e., on a cumulative compounding basis).  For purposes hereof, the term “SP Year” shall mean each consecutive twelve (12) month period during the Extended Term; provided, however, that the first (1st) SP Year shall commence on the Substitute Premises Commencement Date and end on the last day of the month in which the first (1st) anniversary of the Substitute Premises Commencement Date occurs and the second (2nd) and each succeeding SP Year shall commence on the first (1st) day of the next calendar month; and further provided that the last SP Year shall end on the Lease Expiration Date."
16.    Confidentiality.  Notwithstanding any provision to the contrary contained in the Lease, effective as of the date of this Second Amendment, Landlord and Tenant hereby acknowledge 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

and agree that Section 29.28 of the Office Lease is hereby deleted and of no further force or effect, and shall be replaced with the following:
"29.28    Confidentiality.  Tenant and Landlord acknowledge that the content of this Lease and any related documents are confidential information (which related documentation shall including, but shall not be limited to, any amendments to this Lease).  Except as required by law (including, but not limited to, a valid order of a court or other governmental body or as otherwise required by law, or the requirements of the Securities and Exchange Commission (SEC) which apply to Landlord and Tenant), Tenant and Landlord shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant's or Landlord's employees, their financial, legal, and space planning consultants and/or prospective lenders or purchasers of their respective businesses or any part thereof (provided such third parties agree to maintain the confidential information strictly confidential).  Moreover, Landlord has advised Tenant that Landlord is the operating partnership of Kilroy Realty Corporation (“KRC”), a public company whose shares of stock are listed on the New York Stock Exchange, and Landlord and KRC are subject to the jurisdiction of the Federal Securities and Exchange Commission, among other governmental regulatory agencies.  Landlord and KRC are obligated to regularly provide KRC’s shareholders and the regulatory agencies with financial information concerning the Landlord and/or KRC, which information may include summaries of financial information concerning leases, rents, costs and results of operations of its real estate business, including any rents or results of operations affected by this Lease (and any amendments hereto).  The financial consequences of this Lease (and any amendments hereto) and summaries of information contained in this Lease (and any amendments hereto) may be disclosed by Landlord and/or KRC as a part of the Landlord’s and/or KRC’s compliance with governmental and regulatory requirements.  Such action by Landlord or KRC shall be and is hereby permitted.  In addition, the terms of this Section 29.28 shall not apply to any information (a) that has been or which becomes publicly known, through no wrongful act of either party; (b) which is rightfully received from a third party who is under no obligation of confidence to Landlord or Tenant (as the case may be); or (c) which is independently developed by Landlord or Tenant without resort to the information that has been disclosed pursuant to this Lease (and any amendments hereto).  Notwithstanding any provision to the contrary contained herein, Landlord may, at any time following the full execution of this Lease (and any amendments hereto), issue a press release or series of press releases stating that this Lease has been executed and the general details of this Lease (including any amendments thereto) (e.g., the approximate square footage, the approximate total Base Rent anticipated to be derived by Kilroy over the course of this Lease (including any amendments hereto), etc.)."

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

17.    Lease Modifications.  
17.1    Alterations.  Notwithstanding any provision to the contrary contained in the Lease, Section 8.1 of the Office Lease is hereby amended such that (i) all references located therein to "Thirty Thousand Dollar(s) ($30,000)" are deleted and replaced with "Fifty Thousand and 00/100 Dollar(s) ($50,000)," and (ii) all references located therein to "One Hundred Thousand Dollars ($100,000.00)" are deleted and replaced with "Three Hundred Thousand Dollars ($300,000.00)."
17.2    Transfers.  Section 14.4 of the Office Lease is hereby clarified to state that any recapture by Landlord will be applicable only to the portion of the Substitute Premises which was the subject of the proposed Transfer, and not any other portion thereof.  In addition, the sale or transfer of stock in Tenant over a nationally recognized exchange shall not be deemed a Transfer for purposes of the Lease (as amended).
17.3    Hazardous Materials.  Subject to all of the TCCs of the Lease (including, but not limited to, the provisions of Section 29.33 of the Office Lease), Tenant will be permitted to have small quantities of Hazardous Materials in the Substitute Premises so long as such Hazardous Materials are used in connection with the Permitted Use of the Substitute Premises and are kept, used and stored in compliance with all Applicable Laws.  If Tenant elects to bring Hazardous Materials into the Substitute Premises (as more particularly contemplated by the foregoing), such Hazardous Materials shall be stored, properly packaged and labeled, disposed of and/or used in accordance with applicable Environmental Laws.  In addition, Tenant agrees that it: (i) shall not cause or suffer to occur, the release, discharge, escape or emission of any Hazardous Materials at, upon, under or within the Substitute Premises or any contiguous or adjacent premises; (ii) shall not engage in activities at the Substitute Premises that could result in, give rise to, or lead to the imposition of liability upon Tenant or Landlord or the creation of a lien upon the building or land upon which the Substitute Premises is located; (iii) shall notify Landlord promptly following receipt of any knowledge with respect to any actual release, discharge, escape or emission (whether past or present) of any Hazardous Materials at, upon, under or within the Substitute Premises; and (iv) shall promptly forward to Landlord copies of all orders, notices, permits, applications and other communications and reports in connection with any release, discharge, escape or emission of any Hazardous Materials at, upon, under or within the Substitute Premises or any contiguous or adjacent premises.  At any time following Tenant's receipt of a request from Landlord, Tenant shall promptly complete a "hazardous materials questionnaire" using the form then-provided by Landlord. 
18.    No Further Modification.  Except as set forth in this Second Amendment, all of the terms and provisions of the Lease shall apply with respect to the Substitute Premises and shall remain unmodified and in full force and effect.
[Signatures follow on next page]

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

IN WITNESS WHEREOF, this Second Amendment has been executed as of the day and year first above written.
	
		
	“LANDLORD”
	“TENANT”

	KILROY REALTY, L.P., 
a Delaware limited partnership
	VOLCANO CORPORATION, 
a Delaware corporation

	By:   KILROY REALTY CORPORATION, 
a Maryland corporation, 
general partner
By:     
Name:     
Its:     
By:     
Name:     
Its:     

	

By:     
Name:     
Its:     
By:     
Name:     
Its:     

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	 
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

EXHIBIT A
KILROY CENTRE DEL MAR 
 
OUTLINE OF SUBSTITUTE PREMISES

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT A
-4-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT A
-4-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT A
-4-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT A
-4-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT A
-4-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

EXHIBIT B
KILROY CENTRE DEL MAR
WORK LETTER
This Work Letter shall set forth the terms and conditions relating to the construction of the improvements in the Substitute Premises, which shall be referred to in this Work Letter as the "Premises."  This Work Letter is essentially organized chronologically and addresses the issues of the construction of the improvements in the Premises desired by Tenant, in sequence, as such issues will arise during the actual construction thereof.  All references in this Work Letter to Articles or Sections of "this Amendment" shall mean the relevant portion of Sections 1 through 18 of the Second Amendment to which this Work Letter is attached as Exhibit B and of which this Work Letter forms a part, all references in this Work Letter to Articles or Sections of "this Lease" shall mean the relevant portions of Articles 1 through 29 of the Office Lease being amended by this Amendment, and all references in this Work Letter to Sections of "this Work Letter" shall mean the relevant portions of Sections 1 through 6 of this Work Letter.
SECTION 1 
 
DELIVERY OF PREMISES
1.1    Building Condition.  Landlord shall deliver the Premises and Tenant shall accept the Premises from Landlord in the condition required by Sections 6.2 and 6.3 of the Second Amendment.  Notwithstanding the foregoing or any contrary provision of this Work Letter, to the extent "Code" (as such term is defined in Section 2.2.3 below) compliance changes with respect to the current condition of the 3721 Building serving the Premises are required by a building inspector from the City of San Diego and are not triggered by any non-general office improvements or alterations included in the Improvements (e.g., improvements in excess of those considered to be normal office improvements or alterations typical of an office user) in the Premises requested by Tenant, then Landlord shall cause such Code compliance changes with respect to the current condition of the 3721 Building to be performed, at Landlord's sole cost, concurrently with its performance of the Landlord Work; provided, however, in no event shall any such Code compliance work to be performed at Landlord's sole cost and expense pursuant to the foregoing include Code compliance work pertaining to the Improvements in the Premises.  
1.2    Landlord Work.  Landlord shall remodel all restrooms, elevator cabs as well as the first (1st) floor lobby located in the 3721 Building at Landlord's sole cost (not to be included in Operating Expenses or charged against the Improvement Allowance) using methods, materials and finishes generally consistent with those which were recently used in connection with the remodel of the restrooms, elevator cabs and first (1st) floor lobby located in the 3611 Building (which aforementioned work shall be referred to as the "Landlord Work").  Subject to "Force Majeure Delays" (as that term is defined in Section 6.7 below) and any Tenant Delay, all of the foregoing work will be completed on or before the Substitute Premises Commencement Date.
SECTION 2 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

 
IMPROVEMENTS
2.1    Improvement Allowance.  Tenant shall be entitled to a one-time improvement allowance (the "Improvement Allowance") in the amount of Four Million One Hundred Sixty-Seven Thousand Ninety and 00/100 Dollars ($4,167,090.00) (i.e., Forty-Five and 00/100 Dollars ($45.00) per rentable square foot of the Premises) for the costs relating to the initial design and construction of the improvements which are permanently affixed to the Premises (the "Improvements").  In no event shall Landlord be obligated to make disbursements pursuant to this Work Letter in the event that Tenant fails to timely pay any portion of the "Over-Allowance Amount," as defined and as required in Section 4.3.1, nor shall Landlord be obligated to pay a total amount which exceeds the Improvement Allowance.  Notwithstanding the foregoing or any contrary provision of this Lease, all Improvements shall be deemed Landlord's property under the terms of this Lease.  Any unused portion of the Improvement Allowance remaining as of December 31, 2013, shall remain with Landlord and Tenant shall have no further right thereto.
2.2    Disbursement of the Improvement Allowance.  Except as otherwise set forth in this Work Letter, the Improvement Allowance and the Over-Allowance Amount (if any) shall be disbursed by Landlord (each of which disbursements shall be made pursuant to Landlord's disbursement process, including, without limitation, Landlord's receipt of invoices for all costs and fees described herein) for costs related to the construction of the Improvements and for the following items and costs (collectively, the "Improvement Allowance Items"):
2.2.1    Payment of the fees of the "Architect" and the "Engineers," as those terms are defined in Section 3.1 of this Work Letter, and payment of the reasonable and actual fees incurred by, and the cost of documents and materials supplied by, Landlord and Landlord's consultants in connection with the preparation and review of the "Construction Drawings," as that term is defined in Section 3.1 of this Work Letter; 
2.2.2    The cost of any changes in the Base Building when such changes are required by the Construction Drawings; 
2.2.3    The cost of any changes to the Construction Drawings or Improvements required by all applicable building codes (the "Code"); 
2.2.4    The "Landlord Supervision Fee", as that term is defined in Section 4.3.2 of this Work Letter; 
2.2.5    The actual out-of-pocket cost of installing telephone and data cabling in the Premises; provided, however, in no event shall the cost of the foregoing telephone and data cabling and the installation thereof exceed an amount equal to Three and 00/100 Dollars ($3.00) per each of the rentable square feet located within the Premises; and
2.2.6    An amount not to exceed two percent (2%) of the Improvement Allowance payable to Hughes Marino as Tenant's construction representative; and

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

2.2.7    Plan check, permit and license fees and similar costs incurred in connection with the Improvements.
Landlord shall not charge any fees for freight elevator use, parking or access fees in connection with the construction of the Improvements.  
2.3    Building Standards.  Landlord has established or may establish specifications for certain Building standard components to be used in the construction of the Improvements in the Premises.  The quality of Improvements shall be equal to or of greater quality than the quality of such Building standards, provided that Landlord may, at Landlord’s option, require the Improvements to comply with certain Building standards.  Landlord may make changes to said specifications for Building standards from time to time.  Removal requirements for Improvements are addressed in Section 6 of this Second Amendment. 
SECTION 3 
 
CONSTRUCTION DRAWINGS
3.1    Selection of Architect/Construction Drawings.  Tenant shall retain an architect reasonably approved by Landlord (the "Architect") to prepare the "Construction Drawings," as that term is defined in this Section 3.1; provided, however, Landlord hereby approves "id Studios" as the Architect.  To the extent deemed reasonably necessary by Landlord, Tenant shall retain the engineering consultants designated by Landlord (the "Engineers") to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing and HVAC work of the Improvements provided, however, Landlord hereby approves "MWE" and "McParlane" as the Engineers.  The plans and drawings to be prepared by Architect and the Engineers hereunder shall be known collectively as the "Construction Drawings."  All Construction Drawings shall comply with the drawing format and specifications as determined by Landlord, and shall be subject to Landlord's approval.  Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the base Building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith.  Landlord's review of the Construction Drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord's review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like matters.  Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord's space planner, architect, engineers and consultants, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings, and Tenant's waiver and indemnity set forth in this Lease shall specifically apply to the Construction Drawings.
3.2    Final Space Plan.  On or before December 21, 2012, the Architect shall have prepared the final space plan for the Improvements in the Premises (collectively, the "Final Space Plan"), which Final Space Plan shall include a layout and designation of all offices, rooms and other partitioning, their intended use, and equipment to be contained therein, and shall deliver four (4) hard copies signed by Tenant to Landlord for Landlord's approval, and concurrently with Tenant's 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

delivery of such hard copies, Tenant shall send to Landlord via electronic mail one (1) .pdf electronic copy of such Final Space Plan.  Landlord shall approve or reasonably disapprove the Final Space Plan (with a detailed breakdown of the changes requested in order to obtain Landlord's approval) within five (5) business days after delivery of the same to Landlord.  If Landlord disapproves of the Final Space Plan, Tenant shall, within three (3) business days following its receipt of Landlord's disapproval, cause the Architect to revise such plans and will resubmit the Final Space Plan, as revised, to the Landlord for its approval; provided that Landlord's approval right shall be limited to those items disapproved on the previous Final Space Plan or any changes made by Tenant to such prior Final Space Plan.  Such procedure shall be repeated (except that the time to consent to any revisions will be shortened to three (3) business days) until the Final Space Plan is approved by Landlord.
3.3    Final Working Drawings.  On or before January 31, 2013, Tenant, the Architect and the Engineers (if any) shall complete the architectural and engineering drawings for the Premises based on the Final Space Plan.  The final architectural working drawings shall be in a form to allow subcontractors to bid on the work and to obtain all applicable permits (collectively, the "Final Working Drawings").  Tenant shall submit four (4) hard copies signed by Tenant of the Final Working Drawings to Landlord for Landlord's approval, and concurrently with Tenant's delivery of such hard copies, Tenant shall send to Landlord via electronic mail one (1) .pdf electronic copy of such Final Working Drawings.  Landlord shall approve or reasonably disapprove (with a detailed breakdown of the changes requested in order to obtain Landlord's approval) the Final Working Drawings within five (5) business days after delivery of the same to Landlord.  If Landlord disapproves of the Final Working Drawings, Tenant shall, within three (3) business days from its receipt of Landlord's disapproval, cause the Architect and/or Engineers to revise such drawings and will resubmit the Final Working Drawings, as revised, to the Landlord for its approval; provided that Landlord's approval right will be limited to those items disapproved on the previous Final Working Drawings or any changes made by Tenant to such prior Final Working Drawings.  Such procedure will be repeated (except that the time to consent to any revisions will be shortened to three (3) business days) until the Final Working Drawings are approved by Landlord.
3.4    Permits.  The Final Working Drawings shall be approved by Landlord (the "Approved Working Drawings") prior to the commencement of the construction of the Improvements.  Following Landlord's approval of the Approved Working Drawings, the Architect shall immediately submit the Approved Working Drawings to the appropriate municipal authorities for all applicable building and other permits necessary to allow "Contractor," as that term is defined in Section 4.1, below, to commence and fully complete the construction of the Improvements (the "Permits"), and, in connection therewith, Tenant shall coordinate with Landlord in order to allow Landlord, at its option,  to take part in all phases of the permitting process and shall supply Landlord, as soon as possible, with all plan check numbers and dates of submittal.  Notwithstanding anything to the contrary set forth in this Section 3.4, Tenant hereby agrees that neither Landlord nor Landlord's consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that the obtaining of the permits shall be the Architect's responsibility and the obtaining of the certificate of occupancy for the Premises shall be Contractor's responsibility; provided, however, that Landlord shall, in any event, cooperate with Tenant and the Architect in executing permit applications and performing other ministerial acts reasonably necessary to enable 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

Tenant to obtain any such permit or the Contractor to obtain the certificate of occupancy.  No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, provided that Landlord may withhold its consent, in its sole discretion, to any change in the Approved Working Drawings if such change would directly or indirectly delay the "Substantial Completion" of the Premises as that term is defined in Section 5.1 of this Work Letter.
3.5    Time Deadlines.  Tenant shall use its best, good faith, efforts and all due diligence to cooperate with the Architect, the Engineers, and Landlord to complete all phases of the Construction Drawings and the permitting process and to receive the permits, and with Contractor for approval of the "Cost Proposal," as that term is defined in Section 4.2 of this Work Letter, as soon as possible after the execution of this Amendment, and, in that regard, shall meet with Landlord on a scheduled basis to be determined by Landlord, to discuss Tenant's progress in connection with the same.  
3.6    Electronic Approvals.  Notwithstanding any provision to the contrary contained in the Lease or this Work Letter, Landlord may, in Landlord's sole and absolute discretion, transmit or otherwise deliver any of the approvals required under this Work Letter via electronic mail to Tenant's representative identified in Section 5.1 of this Work Letter, or by any of the other means identified in Section 29.18 of this Lease, and Tenant and Tenant's Agents are permitted and authorized to rely on such electronic notices.
SECTION 4 
 
CONSTRUCTION OF THE IMPROVEMENTS
4.1    Contractor.  Promptly following the approval of the Approved Working Drawings, Landlord shall proceed to competitively bid the Improvements to the following three (3) contractors (the "Bidding Contractors”):  (i) Turner Construction, (ii) Swinerton Builders, and (iii) Pacific Building Group.  The Bidding Contractor that submits the lowest bid (after necessary adjustments are made for assumptions, exclusions or qualifications and scheduling requirements pertaining to such bids) shall be retained by Landlord as the Contractor in connection with the construction of the Improvements.  The Bidding Contractor retained by Landlord to construct the Improvements pursuant to this Section 4 shall be referred to as the "Contractor."
4.2    Cost Proposal.  The bid of the Contractor selected pursuant to Section 4.1 above shall be referred to herein as the "Cost Proposal."  Landlord does not guaranty the accuracy of the Cost Proposal.  The date of selection of the Contractor shall be referred to herein as the "Cost Proposal Delivery Date".  
4.3    Construction of Improvements by Contractor under the Supervision of Landlord.
4.3.1    Over-Allowance Amount.  Tenant shall deliver to Landlord cash in an amount (the "Over-Allowance Amount") equal to the difference between (i) the amount of the Cost Proposal and (ii) the amount of the Improvement Allowance.  Fifty percent (50%) of the Over-Allowance Amount shall be paid by Tenant within five (5) business days following the occurrence 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

of the Cost Proposal Delivery Date and the remaining fifty percent (50%) of the Over-Allowance Amount shall be paid by Tenant to Landlord when approximately fifty percent (50%) of the Improvements are complete.  The Over-Allowance Amount shall be disbursed by Landlord on a pro-rata basis along with any then remaining portion of the Improvement Allowance, and such disbursement shall be pursuant to the same procedure as the Improvement Allowance.  In the event that, after the Cost Proposal Delivery Date, any revisions, changes, or substitutions shall be made to the Construction Drawings or the Improvements, any additional costs which arise in connection with such revisions, changes or substitutions or any other additional costs shall be paid by Tenant to Landlord immediately upon Landlord's request as an addition to the Over-Allowance Amount.  In addition, if the Final Working Drawings or any amendment thereof or supplement thereto shall require alterations in the Base Building (as contrasted with the Improvements), and if Landlord in its sole and exclusive discretion agrees to any such alterations, and notifies Tenant of the need and cost for such alterations, then Tenant shall pay the cost of such required changes in advance upon receipt of notice thereof.  Tenant shall pay all direct architectural and/or engineering fees in connection therewith, plus seven percent (7%) of such direct costs for Landlord's servicing and overhead.  In the event that Tenant fails to deliver the Over-Allowance Amount as provided in this Section 4.3.1, then Landlord may, at its option, cease work in the Premises until such time as Landlord receives payment of the Over-Allowance Amount (and such failure to deliver shall be treated as a Tenant delay in accordance with the terms of Section 5.2 below).
4.3.2    Landlord's Retention of Contractor.  Landlord shall independently retain Contractor to construct the Improvements in accordance with the Approved Working Drawings and the Cost Proposal and Landlord shall supervise the construction by Contractor, and Tenant shall pay a construction supervision and management fee (the "Landlord Supervision Fee") to Landlord in an amount equal to the product of (i) two percent (2%), and (ii) an amount equal to the Improvement Allowance plus the Over-Allowance Amount (as such Over-Allowance Amount may increase pursuant to the terms of this Work Letter).
4.3.3    Contractor's Warranties and Guaranties.  Landlord shall obtain industry standard guaranties and warranties from the Contractor and the Landlord hereby assigns to Tenant all warranties and guaranties by Contractor relating to the Improvements, and Tenant hereby waives all claims against Landlord relating to, or arising out of the construction of, the Improvements.
4.3.4    Tenant’s Covenants.  Tenant hereby indemnifies Landlord for any loss, claims, damages or delays arising from the actions of Architect on the Premises or in the Building.  Within fifteen (15) days after completion of construction of the Improvements, Contractor and/or Architect shall cause a Notice of Completion to be recorded in the office of the County Recorder of the county in which the Building is located in accordance with Section 8182 of the Civil Code of the State of California or any successor statute and furnish a copy thereof to Landlord upon recordation, failing which, Landlord may itself execute and file the same (and Tenant will cooperate as reasonably required to allow the same to be filed).  In addition, immediately after the Substantial Completion of the Premises, Tenant shall have prepared and delivered to the Building a copy of the “as built” plans and specifications (including all working drawings) for the Improvements.
SECTION 5 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

 
COMPLETION OF THE IMPROVEMENTS; 
SUBSTITUTE PREMISES COMMENCEMENT DATE
5.1    Ready for Occupancy.  The Premises shall be deemed "Ready for Occupancy" upon the Substantial Completion of the Improvements.  For purposes of this Lease, "Substantial Completion" of the Improvements shall occur upon the completion of construction of the Improvements in the Premises pursuant to the Approved Working Drawings, with the exception of any punch list items and any tenant fixtures, work-stations, built-in furniture, or equipment to be installed by Tenant or under the supervision of Contractor, and a Certificate of Occupancy or a Temporary Certificate of Occupancy, or either of their equivalents (e.g., a sign off from one of the City's building inspectors), has been obtained for the Premises, by Landlord or its Contractor.
5.2    Delay of the Substantial Completion of the Premises.  Except as provided in this Section 5.2, the Substitute Premises Commencement Date shall occur as set forth in the Lease and Section 5.1, above.  If there shall be a delay or there are delays in the Substantial Completion of the Improvements or in the occurrence of any of the other conditions precedent to the Substitute Premises Commencement Date, as set forth in the Lease, as a direct, indirect, partial, or total result of (each, a "Tenant Delay"):
5.2.1    Tenant's failure to timely approve any matter requiring Tenant's approval or any matter where Landlord has otherwise requested Tenant's approval;
5.2.2    A breach by Tenant of the terms of this Work Letter or the Lease;
5.2.3    Changes in any of the Construction Drawings because the same do not comply with Code or other applicable laws;
5.2.4    Tenant's request for changes in the Approved Working Drawings;
5.2.5    Tenant's requirement for materials, components, finishes or improvements which are not available in a commercially reasonable time given the anticipated date of Substantial Completion of the Improvements, as set forth in the Lease, or which are different from, or not included in Landlord's Building standards;
5.2.6    Tenant's use of specialized or unusual improvements and delays in obtaining Permits due thereto; 
5.2.7    Any failure by Tenant to timely pay to Landlord any portion of the Over‐Allowance Amount; 
5.2.8    Any acts or omissions of Tenant, or its agents, or employees which delay or otherwise impede Landlord's ability to obtain a Certificate of Occupancy, Temporary Certificate of Occupancy, or either of their equivalents (e.g., a sign off from one of the City's building inspectors); or
5.2.9    Any other acts or omissions of Tenant, or its agents, or employees; then, 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

notwithstanding anything to the contrary set forth in the Lease or this Work Letter and regardless of the actual date of the Substantial Completion of the Improvements, the Substitute Premises Commencement Date shall be deemed to be the date the Substitute Premises Commencement Date would have occurred if no Tenant delay or delays, as set forth above, had occurred.  Notwithstanding the foregoing, no Tenant Delay pursuant to this Section 5.2 shall be deemed to have occurred unless and until Landlord has provided written notice to Tenant specifying the action or inaction that Landlord contends constitutes a Tenant Delay.  If such action or inaction is not cured within one (1) day after receipt of such notice, then a Tenant Delay, as set forth in such notice, shall be deemed to have occurred commencing as of the date such notice was received and continuing for the number of days Landlord proves Substantial Completion of the Improvements was in fact delayed as a result of such action or inaction.
SECTION 6 
 
MISCELLANEOUS
6.1    Tenant's Entry Into the Premises Prior to Substantial Completion.  Provided that Tenant and its agents do not interfere with construction of the Improvements, Contractor shall allow Tenant access to the Premises prior to the Substantial Completion of the Improvements for the purpose of Tenant installing overstandard equipment or fixtures (including Tenant's data and telephone equipment) in the Premises.  Prior to Tenant's entry into the Premises as permitted by the terms of this Section 6.1, Tenant shall submit a schedule to Landlord and Contractor, for their approval, which schedule shall detail the timing and purpose of Tenant's entry.  Tenant shall hold Landlord harmless from and indemnify, protect and defend Landlord against any loss or damage to the Building or Premises and against injury to any persons caused by Tenant's actions pursuant to this Section 6.1..
6.2    Freight Elevators.  Landlord shall, consistent with its obligations to other tenants of the Building, make the freight elevator reasonably available to Tenant in connection with initial decorating, furnishing and moving into the Premises.
6.3    Tenant's Representative.  Tenant has designated John Dahldorf as its sole representative with respect to the matters set forth in this Work Letter (whose e-mail address for the purposes of this Work Letter is jdahldorf@volcanocorp.com, who, until further notice to Landlord, shall have full authority and responsibility to act on behalf of the Tenant as required in this Work Letter.
6.4    Landlord's Representatives.  Landlord has designated Mr. Jake Brehm as "Project Manager" (whose e-mail address for the purposes of this Work Letter is jbrehm@kilroyrealty.com), who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Work Letter and who shall be responsible for the implementation of all Improvements to be performed by Landlord in the Premises.  With regard to all matters involving such Improvements, Tenant shall communicate with the Project Manager rather than with the  Contractor.  Landlord shall not be responsible for any statement, representation or agreement made between Tenant and the Contractor or any subcontractor.  It is hereby expressly acknowledged by Tenant that such Contractor is not Landlord's agent and has no authority whatsoever to enter into 

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]

agreements on Landlord’s behalf or otherwise bind Landlord.  The Project Manager will furnish Tenant with notices of substantial completion, cost estimates for above standard Improvements, Landlord's approvals or disapprovals of all documents to be prepared by Tenant pursuant to this Work Letter and changes thereto.
6.5    Time is of the Essence.  Time is of the essence under this Work Letter.  Unless otherwise indicated, all references herein to a "number of days" shall mean and refer to calendar days.
6.6    Tenant's Lease Default.  Notwithstanding any provision to the contrary contained in the Lease or this Work Letter, if any default by Tenant under the Lease or this Work Letter (including, without limitation, any failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at any time on or before the Substantial Completion of the Improvements, then (i) in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right to withhold payment of all or any portion of the Improvement Allowance and/or Landlord may, without any liability whatsoever, cause the cessation of construction of the Improvements (in which case, Tenant shall be responsible for any delay in the Substantial Completion of the Improvements and any costs occasioned thereby), and (ii) all other obligations of Landlord under the terms of the Lease and this Work Letter shall be forgiven until such time as such default is cured pursuant to the terms of this Lease.
6.7    Outside Date/Tenant Termination Right.  If Landlord does not cause the Substantial Completion of the Improvements in the Premises on or before February 1, 2014, and the Substitute Premises Commencement Date has not otherwise occurred as of such date (the "Outside Date"), then the sole remedy of Tenant for such failure shall be the right to deliver a notice to Landlord (a "OD Termination Notice") electing to terminate this Lease effective upon the date occurring forty-five (45) business days following receipt by Landlord of the Termination Notice (the "OD Termination Effective Date").  The OD Termination Notice must be delivered by Tenant to Landlord, if at all, not earlier than the Outside Date nor later than five (5) business days after the Outside Date.  If Landlord causes the Substantial Completion of the Improvements in the Premises prior to the OD Termination Effective Date, then the OD Termination Notice shall be of no force or effect, and this Lease shall continue as if the OD Termination Notice had never been delivered.  If Landlord fails to cause the Substantial Completion of the Improvements in the Premises prior to the OD Termination Effective Date, then this Lease shall terminate as of the OD Termination Effective Date.  Notwithstanding the above provisions, the Outside Date and the OD Termination Effective Date shall each be extended for delays beyond the reasonable control of Landlord, including "Force Majeure Delays", as that term is defined below, and delays caused by Tenant, Tenant’s agents, employees, invitees, visitors, subtenants, contractors or any party claiming under them or for whose acts they are liable (including, but not limited to, any and all Tenant Delays).  "Force Majeure Delays" shall mean any delays resulting from strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the Landlord.

	
			
	701285.05/WLA
214064-00137/12-20-12/eg/eg
	EXHIBIT B
-9-
	

KILROY CENTRE DEL MAR
[Second Amendment/Substitute Premises Amendment]
[Volcano Corporation]Exhibit 10.40

***Text Omitted and Filed Separately with the Securities and Exchange Commission.
Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

EXHIBIT 10.40
SUPPLY AGREEMENT
THIS AGREEMENT, made on this 19th day of December 2012 (the “Effective Date”), by and between Santec Corporation, a corporation organized and existing under the laws of Japan with its principal office at 5823 Ohkusa-Nenjozaka, Komaki, Aichi 485-0802 Japan (hereinafter referred to as “Supplier”) and Volcano Corporation, a corporation organized and existing under the laws of the state of Delaware with its principal office at 3661 Valley Centre Drive Suite 200 San Diego, CA 92130 (hereinafter referred to as “Customer”).
WITNESSETH:
WHEREAS, Supplier manufactures and sells certain 100 kHz Scanning Laser whose Supplier’s part number is [...***...] (“Products,” as more specifically defined below);
WHEREAS, Customer desires to purchase Products from Supplier and to incorporate the Products into the Customer Product;
WHEREAS, Products include valuable trade secrets and know-how of Supplier;
WHEREAS, a subsidiary of Customer engages in developing and manufacturing scanning laser competitive with Products; and WHEREAS, notwithstanding the foregoing, Supplier is willing to sell Products to Customer subject to confidentiality obligations and purchase commitment of Products and other terms and conditions provided herein.
NOW, THEREFORE, in consideration of the covenants and conditions contained herein, the parties hereto agree as follows:
Article 1.Definitions
When used in this Agreement, the following terms shall have the meanings indicated in this Article.

1         ***Confidential Treatment Requested

“Affiliate” of a certain entity means any entity more than 50% of whose equity interest is held or controlled directly or indirectly by such entity, or who holds or controls directly or indirectly more than 50% of equity interest in such entity.
“Annual Blanket Order” shall have the meaning set forth in Article 2.2.1.
“Committed Products” mean Products covered by an Annual Blanket Order to be placed by Customer under Article 2.2.1 including Products to be purchased by Customer under Qualified Additional Orders as defined in Article 2.2.2, which shall be deemed as increase of the quantity of an Annual Blanket Order. Committed Products shall include neither Initial Products nor Spot Products.
“Confidential Information” means any and all information disclosed in the course of implementation of this Agreement by Disclosing Party to Receiving Party which information is designated in writing as confidential by Disclosing Party at the time of disclosure; provided, however, that Confidential Information shall not include any information which:
		
	(i)
	is publicly known and made generally available in the public domain prior to the time of disclosure by Disclosing Party;

		
	(ii)
	becomes publicly known and made generally available after disclosure by Disclosing Party other than as a result of a breach of the confidentiality obligation of Receiving Party;

		
	(iii)
	is already in the possession of Receiving Party at the time of disclosure;

		
	(iv)
	is obtained by Receiving Party from a third party without a breach of such third party's obligations of confidentiality ; or

		
	(v)
	is independently developed by Receiving Party without use of or reference to the Confidential Information.

In addition, design, specification, manufacturing processes and any other similar information obtained from Products or samples or prototypes thereof shall constitute Confidential 

2    
 

Information of Supplier, regardless of whether Supplier designate such information as confidential.
“Conflict Minerals” means columbite-tantalite (coltan), cassiterite, gold, wolframite or their derivatives, tantalum, tin and tungsten and any other minerals or derivatives that the United States Secretary of State determines after the date hereof to be financing conflict in a Covered Country, and “Conflict Mineral” shall mean any of them.
“Covered Countries” means the Democratic Republic of the Congo and its adjoining countries, including, as of the date hereof, Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia, and “Covered Country” shall mean any of them.
“Customer Product” means Customer’s OCT (optical coherence tomography) system for use in intracoronary imaging, including, without limitation, any improvements, updates and upgrades to such product.
“Delivery Schedule Table” means a table setting forth quantity of Committed Products to be delivered in each month during the applicable Fiscal Year.
“Design Files” has the meaning set forth in Section 5.7.
“Disclosing Party” referred in connection with certain Confidential Information means the party who discloses such Confidential Information to Receiving Party.
“FDA” shall mean the United States Food and Drug Administration and any successor agency thereto.
“Fiscal Quarter” means each three month period commencing April 1, July 1, October 1 or January 1 of each Fiscal Year.
“Fiscal Year” means each one year period commencing on April 1 and ending on March 31 of the following year.

3    
 

“Individual Contract” means a contract for individual sale and purchase of specific Products to be entered by and between the parties in accordance with the order and acceptance procedures provided in Article 2.
“Initial Products” mean the initial [...***...] units of the Products to be sold by Supplier purchased by Customer under Article 2.1 of this Agreement.
“Latent Defect” means a defect that causes a Product to not conform to the Product Warranty, which defect is not discoverable upon reasonable physical inspection.
“Minimum Delivery Quantity” means the minimum quantity of each delivery of Products (other than the Initial Products) under this Agreement. The parties hereby agree that the Minimum Delivery Quantity is [...***...] units.
“Minimum Aggregate Purchase Quantity” means the minimum quantity of Products which Customer is required to purchase from Supplier during the entire term of this Agreement.
“Minimum Purchase Quantity” means the minimum quantity of Products which Customer is required to purchase from Supplier during a certain Fiscal Year.
“Per-Unit Price” means per-unit price of Products purchased under a certain Individual Contract.
“Products” mean 100 kHz Scanning Laser of Supplier sold to Customer hereunder whose part number in Supplier is [...***...]; provided that if Supplier releases new versions of [...***...] or new products with functionality similar to [...***...], such new versions or new products shall be included in Products on the condition that the parties have reached a written agreement on the pricing and specification of such new versions or new products.
“Qualified Additional Orders” shall have the meaning ascribed in Article 2.2.2.
“Receiving Party” referred in connection with certain Confidential Information means the party who receives such Confidential Information from Disclosing Party.

4         ***Confidential Treatment Requested

“Quality Standards” means the standards and regulations related to the implementation, conduct and maintenance of quality controls, set forth in Annex 2.
“Related Parties” of a certain party means:
		
	(i)
	Directors, officers or employees of such party;

		
	(ii)
	An Affiliate of such party;

		
	(iii)
	Directors, officers or employees, of an Affiliate of such party; and

		
	(iv)
	Lawyers, accountants or tax lawyers retained by such party or its Affiliate.

“Recycled Sources” means recycled metals, which are reclaimed end-user or post-consumer products, or scrap processed metals created during product manufacturing, including excess, obsolete, defective, and scrap metal materials which contain refined or processed metals that are appropriate to recycle in the production of tin, tantalum, tungsten and/or gold, but excluding minerals partially processed, unprocessed or a by-product from another ore.
“Specification” means the specification of Products set forth in the Detailed Specification attached hereto as Annex 1.
“Spot Order” shall have the meaning ascribed in Article 2.3.
“Spot Products” mean Products ordered under a Spot Order.
“Taxes” mean any value-added taxes, consumption, sales or use tax, duty or tariff (now or hereafter enacted), excise, ad valorem, stamp, documentary and other taxes, or other similar taxes or charges imposed by governmental authorities (e.g., national governments, local governments, and customs) relating to Products.
Article 2.    Order and Order Acceptance
		
	2.1
	Order for Initial Products.  Customer shall submit, and Supplier shall accept, an order for the Initial Products (i.e., [...***...] units) at the Per-Unit Price of $[...***...] upon the execution of this Agreement. The price for the Initial Products, $1,875,300, shall be prepaid within 30 days from the date of execution of this Agreement.

		
	2.2
	Annual Blanket Order.

5         ***Confidential Treatment Requested

		
	2.2.1
	Placement of Annual Blanket Order. Customer shall submit an annual blanket order for each Fiscal Year by December 31 of the previous Fiscal Year (the “Annual Blanket Order”); provided that the quantity of Products (Committed Products) to be ordered under such Annual Blanket Order shall be no less than the Minimum Purchase Quantity for such Fiscal Year set forth in the following Minimum Purchase Quantity Table (subject to reductions as set forth in this Agreement). If Customer fails to provide an Annual Blanket Order for a certain Fiscal Year in compliance with this Article on or prior to the end of December of the previous Fiscal Year, Customer shall be deemed to have issued an Annual Blanket Order in the quantity equal to the Minimum Purchase Quantity for such Fiscal Year as of the end of December of the previous Fiscal Year. No order shall bind Supplier unless and until finally confirmed and accepted by Supplier’s written confirmation; provided that Supplier shall be obligated to confirm and accept the Annual Blanket Order properly submitted by Customer pursuant to this Article. Upon acceptance of an order by Supplier, an Individual Contract for the Products so ordered shall be formed and become irrevocable and binding. The Per-Unit Price shall be as set forth in the following Minimum Purchase Quantity Table, subject to price adjustment under Article 2.2.3.

(Minimum Purchase Quantity Table)
	
			
	Delivery Period
	Per-Unit Price*
	Minimum Purchase Quantity

	Fiscal Year 2013 (April 2013 – March 2014)
	$[...***...]
	[...***...] units**

	Fiscal Year 2014 (April 2014 - March 2015)
	$[...***...]
	[...***...] units***

	Fiscal Year 2015 (April 2015 – March 2016)
	$[...***...]
	[...***...] units***

 
* Per-Unit Price shall be adjusted based on the quantity in accordance with Article 2.2.3.
**[...***...] units do not include Initial Products to be delivered during Fiscal Year 2013.
***Subject to adjustment under Article 2.4.
		
	2.2.2
	Increase of Quantity of Annual Blanket Order.  Customer may place additional orders in addition to the Annual Blanket Order for each Fiscal Year. Additional orders for a certain Fiscal Year (i) ordering up to 15% of the original purchase quantity of such Annual Blanket Order for such Fiscal Year in cumulative total and (ii) placed at least 3 months prior to the end of such fiscal year (“Qualified Additional Orders”) 

6         ***Confidential Treatment Requested

shall be treated as increase of the quantity of such Annual Blanket Order. Other additional orders shall be treated as Spot Orders under Article 2.3.
No Qualified Additional Orders shall bind Supplier unless and until finally confirmed and accepted by Supplier’s written confirmation; provided that Supplier shall be obligated to confirm and accept the Qualified Additional Orders properly submitted by Customer pursuant to this Article. Upon acceptance of an order by Supplier, an Individual Contract for the Products so ordered shall be formed and become irrevocable and binding.
The same Per-Unit Price as Committed Products ordered under the Annual Blanket Order shall be applied to Committed Products ordered under such Qualified Additional Orders for the same Fiscal Year, subject to price revision in accordance with Article 2.2.3.
		
	2.2.3
	Price Revision Reflecting Quantity of Committed Products.  If (i) the quantity of the Committed Products for a certain Fiscal Year (i.e., the total of the quantity ordered under the Annual Blanket Order for such Fiscal Year and the cumulative total quantity ordered under the Qualified Additional Orders for such Fiscal Year) exceeds the Minimum Purchase Quantity for such Fiscal Year, and (ii) the Per-Unit Price determined by applying the Volume Pricing Table below to the quantity of Committed Products so ordered is lower than the Per-Unit Price set forth in the Minimum Purchase Quantity Table in Article 2.2.1, the Per-Unit Price of the Products ordered under the Annual Blanket Order (Committed Products) for such Fiscal Year shall become the Per-Unit Price determined by applying the Volume Pricing Table below to the quantity ordered under the Annual Blanket Order.

If (i) Customer places Qualified Additional Orders for a certain Fiscal Year after the commencement of such Fiscal Year, and (ii) the Per-Unit Price determined by applying the Volume Pricing Table below to the increased quantity of the Committed Products for such Fiscal Year is lower than the then-current Per-Unit Price, the Per-Unit Price of all the Committed Products for such Fiscal Year shall be retroactively revised to the Per-Unit Price determined by applying the Volume Pricing Table below. If Customer has already paid the price for certain Committed Products for such Fiscal Year, the difference between the price paid by Customer and the price calculated based on the revised Per-Unit Price shall be treated as the credit against future payments by Customer to Supplier.
Notwithstanding the foregoing, [...***...] units of the Initial Products to be delivered during Fiscal Year 2013 shall be added to the quantity of the Committed Products for Fiscal Year 2013 solely for the purpose of the revision under this Article of the 

7         ***Confidential Treatment Requested

Per-Unit Price of the Committed Products for Fiscal Year 2013. For example, if Customer places the Annual Blanket Order for the Fiscal Year 2013 in the quantity of [...***...] and a Qualified Additional Order of [...***...] units, (i) the Per-Unit Price for [...***...] units of the Initial Products to be delivered during the period from April through September 2013 shall remain unchanged, (ii) the Per-Unit Price of (a) the [...***...] units ordered under the Annual Blanket Order and (b) the [...***...] units ordered under the Qualified Additional Order shall become $[...***...], which is the pricing for the annual purchase of [...***...] units (i.e., the total of [...***...] units of the Initial Products, [...***...] units ordered under the Annual Blanket Order and [...***...] units ordered under the Qualified Additional Order) under the Volume Pricing Table below.

(Volume Pricing Table)
	
		
	Purchase Quantity
	Per-Unit Price

	[...***...]
	$[...***...]

	[...***...]
	$[...***...]

	[...***...]
	$[...***...]

	[...***...]
	$[...***...]

	[...***...]
	$[...***...]

		
	2.3
	Spot Orders.  In addition to Annual Blanket Orders and Qualified Additional Orders described in Article 2.2 above, Customer may place additional orders (“Spot Orders”) for Products from time to time. Per-Unit Price, lead-time and delivery schedule for each Spot Order shall be determined on a case-by-case basis through mutual agreement between the parties, which shall be formed prior to the placement of the Spot Order; provided that in any event, the Per-Unit Price shall not exceed the Per-Unit Price on the Volume Pricing Table in Article 2.2.3 for the quantity of such Spot Order without taking into account any of the Committed Products for such Fiscal Year (i.e., if Customer places a Spot Order for [...***...] units, the Per-Unit Price shall not exceed $[...***...] regardless of the quantity of Committed Products ordered); provided further that the Per-Unit Price for Spot Orders 

8         ***Confidential Treatment Requested

for less than [...***...] units shall not exceed $[...***...].  Customer acknowledges that lead time for a Spot Order may be longer than the standard lead time of Supplier (i.e., 8 weeks for [...***...] units, 12 weeks for [...***...] units, 16 weeks for [...***...] units and 20 weeks for [...***...]-).  Upon acceptance of a Spot Order by Supplier, such Spot Order shall become irrevocable, and Supplier shall become obliged to sell, and Customer shall become obliged to purchase, the Spot Products ordered under such accepted Spot Order at the Per-Unit Price, lead-time and delivery schedule so agreed between the parties.
		
	2.4
	Count of Order in excess of Minimum Purchase Quantity and Spot Products against Minimum Aggregate Purchase Quantity of [...***...] Units.  Notwithstanding anything else in this Agreement, Customer shall have no obligation to purchase more than [...***...] units of Product under this Agreement. If Customer (i) has purchased more Committed Products for a certain Fiscal Year than the Minimum Purchase Quantity for the same Fiscal Year or (ii) has purchased Spot Products, the Minimum Purchase Quantity for the subsequent Fiscal Year shall be reduced by the sum of (a) the difference between the quantity of the Committed Products so purchased and the Minimum Purchase Quantity, plus (b) the quantity of Spot Products so purchased.

If, as a result of decrease of the Minimum Purchase Quantity for a Fiscal Year, the Per-Unit Price determined by applying the Volume Pricing Table of Article 2.2.3 to the quantity of the Committed Products ordered for such Fiscal Year is higher than the Per-Unit Price for such Fiscal Year set forth in the Minimum Purchase Quantity Table of Article 2.2.1, the Per-Unit Price of Committed Products for such Fiscal Year shall become the Per-Unit Price determined by applying the Volume Pricing Table of Article 2.2.3 to the decreased Minimum Purchase Quantity.
		
	2.5
	Cancellation of Minimum Purchase Quantity for Fiscal Year 2015.  Customer may cancel its commitment to purchase the Minimum Purchase Quantity for Fiscal Year 2015 under Article 2.2.1 if a valid and enforceable court order prohibits or delays Customer from selling its OCT systems and Customer provides a written cancellation notice to Supplier. Terms and conditions for such cancellation shall be as follows:

9         ***Confidential Treatment Requested

		
	(i)
	If the cancellation notice is received by Supplier no later than September 30, 2014, Customer may cancel the Minimum Purchase Quantity for Fiscal Year 2015 without any cancellation fees;

		
	(ii)
	If the cancellation notice is received by Supplier during the period of October 2014 through March 2015, Customer may cancel the Minimum Purchase Quantity for Fiscal Year 2015 by paying [...***...]% of the price for such cancelled Minimum Purchase Quantity to Supplier as cancellation fees; provided that and, if cancellation notice is received by Supplier after the placement of the Annual Blanket Order for Fiscal Year 2015, Customer may cancel the Annual Blanket Order for Fiscal Year 2015 (and the Minimum Purchase Quantity for Fiscal Year 2015 satisfied by such Annual Blanket Order) by paying [...***...]% of the price for such cancelled Annual Blanket Order to Supplier as cancellation fees; or

		
	(iii)
	If the cancellation notice is received by Supplier after April 2015, Customer may cancel the remaining balance of the Annual Blanket Order for Fiscal Year 2015 that has not yet been delivered (and the Minimum Purchase Quantity for Fiscal Year 2015 satisfied by such Annual Blanket Order), by paying the total of (a) [...***...]% of the prices for Products to be delivered in the month during which the cancellation notice is received under the then-current Delivery Schedule Table and (b) [...***...]% of the prices for those to be delivered thereafter as cancellation fees.

		
	2.6
	Any provisions in this Agreement concerning terms and conditions of sale and purchase of Products (including warranty) and miscellaneous provisions in Article 13 of this Agreement shall be incorporated into each Individual Contract. Any general terms or standard terms stated on the order sheet, acceptance sheet or any other transaction documents shall be excluded and deemed null and void unless explicitly agreed otherwise in a written instrument executed by the both parties.

		
	2.7
	Supplier will notify Customer of any of its products that are new versions of the Products or have similar functionality as they become available. Customer shall have the option of adding such other products and new versions of Products as Products to this Agreement, 

10         ***Confidential Treatment Requested

subject to the parties agreeing on pricing and purchase commitments therefor, which terms will be negotiated in good faith.
		
	2.8
	For avoidance of doubt, Supplier shall have no obligation to exclusively supply Products to Customer. Until and unless the accumulated total of Products purchased by Customer reaches [...***...] units, Customer shall not purchase from any third parties other than Supplier any lasers for commercial sales as part of any Customer Products.

Article 3.    Payment Terms
		
	3.1
	Except for the price of the Initial Products that shall be prepaid under Article 2.1, the price for each Product shall be paid within 45 days from the delivery of such Product to Customer via wire-transfer to the bank account designated by Supplier.

		
	3.2
	If Customer fails to pay any amount when due, Customer shall pay to Supplier delinquent charge on overdue amount at the rate of [...***...]% per annum.

Article 4.    Delivery of Products
		
	4.1
	Delivery of Initial Products. The Initial Products shall be delivered in accordance with the following schedule:

		
	4.1.1
	Customer acknowledges that Customer has already received [...***...] units of the Initial Products as of the Effective Date.

		
	4.1.2
	Supplier shall deliver [...***...] additional units of the Initial Products by January 31, 2013.

		
	4.1.3
	Supplier shall deliver [...***...] additional units of the Initial Products by February 28, 2013.

		
	4.1.4
	Supplier shall deliver [...***...] additional units of the Initial Products by March 31, 2013.

		
	4.1.5
	[...***...] units of the Initial Products shall be delivered during the period from April 2013 through September 2013 in accordance with the Delivery Schedule Table for Fiscal Year 2013 (as may be revised in accordance with Article 4.2).

		
	4.2
	Delivery of Committed Products; Delivery Schedule Table.

11         ***Confidential Treatment Requested

		
	4.2.1
	Committed Products and the last [...***...] units of the Initial Products (referred in Article 4.1.3) shall be delivered in accordance with the then-current Delivery Schedule Table.

		
	4.2.2
	Customer shall submit to Supplier, on or prior to December 31 of each Fiscal Year, the first Delivery Schedule Table for such Fiscal Year. Customer shall submit an updated Delivery Schedule Table by the last day of each Fiscal Quarter. If Customer does not submit an updated Delivery Schedule Table in a certain Fiscal Quarter, Customer shall be deemed to have submitted the same Delivery Schedule as the then-latest Delivery Schedule Table on the last day of such Fiscal Quarter for the purpose of proviso of Article 4.2.3 below.

		
	4.2.3
	Customer may change delivery schedules of Committed Products when Customer submits an updated Delivery Schedule Table in accordance with Article 4.2.2 above; provided that Customer may not change the delivery schedule for the Fiscal Quarter immediately following the date of submission of the Delivery Schedule Table from the delivery schedule for the same Fiscal Quarter set forth in the previous Delivery Schedule Table. (In other words, the delivery schedule for the two Fiscal Quarters immediately following the date of submission of an updated Delivery Schedule Table shall be binding and may not be changed.) For example, the delivery schedule for the second Fiscal Quarter of Fiscal Year 2014 set forth in the Delivery Schedule Table submitted on March 31, 2014 shall be treated as binding so that Customer may not change the delivery schedule of such Fiscal Quarter by the next Delivery Schedule Table to be submitted on or prior to June 30, 2014.

		
	4.2.4
	Each Delivery Schedule Table shall satisfy the following conditions:

		
	(i)
	The total delivery quantity for each Fiscal Year scheduled in such Delivery Schedule Table shall be equal to the quantity of the Committed Products that have been ordered for such Fiscal Year under the Annual Blanket Order and Qualified Additional Orders as of the submission date of such Delivery Schedule Table; and

		
	(ii)
	Quantity of each delivery of the Committed Products scheduled in such Delivery Schedule Table shall be no less than the Minimum Delivery Quantity.

		
	4.2.5
	Supplier shall deliver Committed Products in accordance with the then-current Delivery Schedule Table on the condition that Customer submits and updates the Delivery Schedule Table in accordance with this Article 4.2.

12         ***Confidential Treatment Requested

		
	4.3
	Delivery of Spot Products.

Supplier shall deliver Spot Products in accordance with the delivery schedule to be agreed in accordance with Article 2.3.
		
	4.4
	Delivery Terms.

		
	4.4.1
	 Delivery terms of Products shall be FCA Santec’s Komaki Factory (as defined in Incoterms 2010). Together with shipment of Products, Supplier shall provide to Customer unit test reports showing the results of testing to confirm that such Products were manufactured in accordance with the Product Warranty.

Article 5.    Manufacture
		
	5.1
	Materials; Inventory.  Supplier shall be responsible for obtaining, and shall store at no cost to Customer, any and all raw materials and inventory reasonably required for the manufacture of Products in quantities and timing consistent with the order quantities and delivery schedules herein. Without excusing any breaches by Supplier or limiting any remedies of Customer for breach by Supplier, Supplier shall provide Customer with as much notice as possible if Supplier anticipates or has reason to believe that Supplier’s output of Products will not be sufficient to meet the order quantities and delivery schedules therefor.

		
	5.2
	Manufacture.  Supplier shall manufacture and supply Products in accordance with the Quality Standards and all applicable laws. Within sixty (60) days of the Effective Date, Supplier and Customer shall jointly develop and enter into a written quality plan by which they will agree on specific mechanisms and procedures to implement, monitor and communicate with respect to quality standards under this Agreement. In the event Customer notifies Supplier of any new manufacturing requirements or appropriate specifications required by any regulatory agency, or of any other new legal requirements, the parties shall promptly confer with each other with respect to the best means to comply with such requirements and allocate any costs of implementing such changes on an equitable basis. Supplier represents and warrants to Customer that it has, and will maintain during the term of this Agreement, all government permits, including, without limitation, health, safety and environmental permits, necessary for the conduct of the actions and procedures that it 

13    
 

undertakes pursuant to this Agreement. Supplier shall be responsible for all acts and omissions of any of its subcontractors and shall ensure that its subcontractors comply with all of the terms of this Agreement. Supplier shall immediately notify Customer of any change in the manufacturing process or the equipment, facility or materials used in the manufacture of Product.
		
	5.3
	Specification.  In the event Customer notifies Supplier of its desire to make changes to the Specification, Supplier and Customer shall discuss such changes in good faith. No changes to the Specification shall be effective unless such changes are mutually agreed upon by the parties.

		
	5.4
	Testing.  Supplier shall perform design verification, design validation, quality control testing and quality oversight on Products to be delivered to Customer or its designee hereunder in accordance with the Specification and any Quality Standards.

		
	5.5
	Non-U.S. Shipment.  If Supplier is directed to ship Products directly to Customer’s facilities outside of the United States (e.g., Costa Rica), Supplier covenants and agrees that it shall comply with all applicable import-export laws, rules and regulations, including, without limitation, provision of Harmonized Tariff Schedule (HTS) codes and Export Control Classification Number (ECCN) codes for all Products so shipped.

		
	5.6
	Regulatory Support.  As between the parties, Customer shall have sole control and authority over preparation and submission of filings for approval to market Customer Products. Supplier agrees to promptly provide to Customer such information relating to the Products or the manufacture thereof as may be necessary or useful in connection therewith.

		
	5.7
	QA Audits.  Upon Customer’s written notice to Supplier (at least 30 days in advance, except in the event that Customer requests an audit in response to an adverse event, complaint or other regulatory action in which case such notice period shall be at least one business day), Customer shall have the right to have its relevant quality assurance representatives visit the Supplier’s manufacturing facility to review Supplier’s manufacturing operations related to Products and assess its compliance with Quality Standards and to discuss any related issues with Supplier’s manufacturing and management personnel subject to the confidentiality 

14    
 

obligations as provided in Article 11 with respect to information obtained in the course of such audit; provided that Supplier may limit access by quality assurance representatives of Customer from Supplier’s design history files for the Products (the “Design Files”). Quality assurance representatives of Customer shall not take any records of such audit except for recording of status of compliance with, or deviation from, Quality Standards, and submit to Supplier any and all records taken in the course of such audit. Each such audit shall be conducted during normal business hours. In the event that the audit by Customer reveals any noncompliance issues, Supplier will use diligent and good faith efforts to promptly correct them, which efforts shall include promptly developing a correction plan (including timelines for corrections), working with Customer in good faith to agree upon the correction plan, and complying with said plan; provided that such correction efforts shall not waive any rights or remedies of Customer with respect to such noncompliance.
		
	5.8
	Records.  Supplier shall keep and maintain complete and adequate records pertaining to the methods, facilities and materials (including the sources of such materials) used by it for the manufacture, testing, packaging, labelling and distribution of Products in accordance with the Quality Standards and applicable laws and otherwise as necessary to satisfy its obligations under this Agreement. Designated representatives of Customer shall, upon reasonable notice to Supplier, have access to and shall be permitted to review all such records during the term of this Agreement and during the applicable retention period specified below, including, without limitation, for purposes of assessing Supplier’s compliance with subsection (a) of Annex 3. Upon Customer’s request, Supplier will provide to Customer an inventory of records pertaining to its activities under this Article 5, Article 8 and Annex 3, and upon request, a copy of any or all such records. Supplier shall maintain all records relating to the performance of its obligations under this Agreement until the later of: (a) 10 years after expiration or termination of this Agreement; and (b) expiration of the minimum retention period required by applicable laws, rules and regulations. Supplier shall not destroy any such records unless and until it has obtained Customer’s prior written permission to do so. At Customer’s written request, Supplier shall continue to maintain any such records beyond the applicable period specified above, subject to payment by Customer of reasonable storage fees, or shall transfer such records to Customer or its designee at Customer’s expense. 

15    
 

Such records (including copies thereof) shall be considered the Confidential Information of Supplier.
		
	5.9
	Conflict Mineral. Supplier represents and warrants that it complies with, and shall continue to comply with, the terms of Annex 3 (Conflict Minerals).

		
	5.10
	REACH Directive.  Supplier shall provide to Customer within 60 days from the Effective Date information concerning the weights of materials and substances used in Products in order to assist Customer in complying with the REACH Directive (2002/95/EC). Supplier shall make the best efforts to obtain such information from its suppliers. To the extent that such information is not available from its said suppliers with respect to certain parts of Products (“Unaccounted Parts”), Supplier shall utilize a combination of physical composition analysis with qualified test equipment or by a duly certified laboratory, typical compositions of materials (e.g. plastics, resins, metals and alloys) obtained from reputable sources of such information to identify substances used in Unaccounted Parts; provided that Supplier may utilize worst-case analysis in lieu of such physical composition analysis and analysis based on typical compositions of materials with respect to small Unaccounted Parts, so long as the aggregated total of the weights of Unaccounted Parts plus the weights of any known Substances of Very High Concern (SVHC) is [...***...]% or less of the total weight of Products. As and when this list of SVHCs may be updated from time to time by the European Union, Supplier shall provide to Customer within 30 days of such updates any new information which may assist the Customer in maintaining compliance with the REACH Directive.

Article 6.    Warranty
		
	6.1
	Each party represents and warrants that (a) such party is duly organized, validly existing, and in good standing under the laws of the place of its establishment or incorporation, (b) such party has taken all action necessary to authorize it to enter into this Agreement and perform its obligations under this Agreement, (c) this Agreement will constitute the legal, valid and binding obligation of such party, and (d) neither the execution of this Agreement nor the performance of such party’s obligations hereunder will conflict with, result in a breach of, or constitute a default under any provision of the organizational documents of 

such party, or of any law, rule, regulation, authorization or approval of any government entity, or of any agreement to which it is a party or by which it is bound.
		
	6.2
	Supplier has not received any written communication from any entity alleging that the manufacture, use or sale of Products infringes or misappropriates the intellectual property rights of such entity, and Supplier is not aware of any intellectual property rights of an entity that would be infringed or misappropriated by the manufacture, use, import, offer for sale or sale of Products.

		
	6.3
	Supplier hereby warrants that each Product shall (i) meet the Specifications in effect at the time of delivery, (ii) be free from material defects in its materials and workmanship, (iii) meet and have been manufactured in accordance with the Quality Standards and (iv) its labelling will not be false or misleading (the “Product Warranty”). The duration of the foregoing warranty shall be 1 year from the date the Customer Product with the Product is shipped to the end user, but in no event more than eighteen (18) months after shipment of the Product by Supplier to Customer. Notwithstanding the foregoing, the terms of Annex 5 shall apply to certain of the Initial Products as set forth therein. In the event that the Specifications contain any Product warranty provisions that conflict with any terms of this Article 6.3, the terms of this Article 6.3 shall prevail.

		
	6.4
	Customer shall, within 30 days from the receipt of such Products from the carrier, conduct incoming inspection on received Products as described in this Article 6.4. With respect to the first [...***...] units of Initial Products, Customer shall assess shipment packaging condition, review packing list/manifest for consistency with units included in the shipment, review of Certificate of Analysis, review of test data report for each unit and assess each unit’s physical condition and integrity. With respect to units of Products received thereafter Customer will conduct the foregoing process and also conduct basic functional testing.

		
	6.5
	Supplier shall replace the Products not conforming to the warranty at the costs of Supplier or refund the price thereof at the choice of Customer. If Customer chooses to receive replacement Products, Supplier will supply, within thirty (30) days of notice of rejection, [...***...] units of replacements Products (or, if less, the number requested by Customer),

16         ***Confidential Treatment Requested

and will make best efforts to supply the remainder of replacement Products requested as soon as possible from the notice of rejection. Within 3 days after receiving any notice of rejection from Customer, Supplier will respond stating whether (a) it accepts the rejection or (b) it disputes the rejection, in which case the parties will refer such dispute to a mutually acceptable independent third party with the appropriate expertise to assess the conformity or nonconformity of the rejected Product to the Product Warranty. Such independent third party will examine or test the applicable Product and determine whether such Product conformed or did not conform to the Product Warranty. The parties agree that such third party’s determination shall be final and binding upon the parties. The party against whom the independent third party rules shall bear the costs of testing by such independent third party, and if such third party determines that Customer’s rejection of the Product was incorrect, Customer will purchase and pay for both the initially rejected Product and the replacement Product. If the parties cannot agree on the determination of such independent third party, either party may refer to the arbitration under Article 13.7 solely the issue of promptly appointing an independent third party under this Section 6.5, and the parties will cooperate in good faith to expedite such matter.
		
	6.6
	Samples and prototypes shall carry no warranties.

		
	6.7
	Supplier represents and warrants to Customer that the Products were developed by Supplier and have not been developed, manufactured or assembled with any advice, assistance, information, technology, parts or other participation directly or indirectly from Axsun Technologies, Inc.

		
	6.8
	THIS ARTICLE 6 SETS FORTH THE EXCLUSIVE WARRANTY, EXCLUSIVE LIABILITIES AND EXCLUSIVE OBLIGATIONS OF SUPPLIER AND THE EXCLUSIVE REMEDIES AVAILABLE TO CUSTOMER WITH RESPECT TO ANY BREACH OF ARTICLE 6.3 THE WARRANTIES IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

17    
 

		
	6.9
	EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. FOR CLARITY, CUSTOMER MAKES NO WARRANTIES TO SUPPLIER WITH RESPECT TO THE CUSTOMER PRODUCT.

Article 7.    Taxes
		
	7.1
	Customer shall make all payments to Supplier under this Agreement without deduction or withholding except to the extent that any such deduction or withholding is required by applicable laws to be made on account of taxes, which deduction or withholding shall promptly be paid by Customer on behalf of Supplier to the appropriate governmental authority, and Customer will furnish Supplier with proof of payment of such taxes. Supplier shall not invoice Customer for any value-added tax incurred by Supplier in performing the obligations under this Agreement unless approved in advance in writing by Customer.

		
	7.2
	Except for withholding taxes provided in the preceding Article, Customer shall bear any and all Taxes imposed by the governmental authorities in its home country (other than Taxes imposed on the income of Supplier) on the transactions contemplated under this Agreement.

Article 8.    Regulatory
		
	8.1
	Complaints.  Customer shall be responsible for all complaint handling and associated reporting to regulatory authorities of Medical Device Reports (MDR) associated with the use of any Customer Product. Customer shall advise Supplier promptly after Customer becomes aware of any complaints associated with Product. If Supplier becomes aware of any Latent Defects or adverse events associated with the use of Product, it shall report all information in its possession regarding such event to Customer as soon as practicable after becoming aware of such information, and shall cooperate with Customer as necessary to report such event to regulatory authorities.

		
	8.2
	Regulatory Compliance.  Supplier shall comply with all regulatory requirements with respect to Product imposed by applicable law upon Supplier as the manufacturer of Product. Customer shall comply with all regulatory requirements with respect to Customer Products 

18    
 

that are imposed by applicable law upon Customer as the manufacturer of Customer Products or as the holder of any regulatory approval for Customer Products. Supplier shall, on a timely basis, provide Customer with information in Supplier’s possession relevant to its role as the manufacturer of Product that is reasonably necessary for and relevant to Customer’s obligations hereunder in complying with such regulatory requirements. Supplier will provide to Customer such documentation, data and other information relating to Product as Customer may require for submission to governmental authorities.
		
	8.3
	Recalls.  In the event Customer shall be required or requested by any governmental authority (or shall voluntarily decide in good faith) to recall any Product that is used with or incorporated in a Customer Product, Customer shall coordinate such recall. Supplier shall use best efforts to timely cooperate with Customer in the investigation and conduct of such recall. If a recall arises primarily out of a Latent Defect in a Product during the warranty period of such Product or due to Supplier’s willful misconduct or breach of this Agreement, Supplier shall bear costs for such recall as detailed in the following:

		
	(i)
	In case where such defective Product is repairable, Supplier and Customer shall discuss and agree a suitable measure to repair such defective Product. Supplier shall provide repair parts to repair such defective Product and bear out-of-pocket expenses actually incurred by Customer for repair to be made in accordance with such agreed measure. If it is difficult to replace such defective component on site, an example of suitable measures for repair is that (a) Supplier provides a Product as a replacement of the defective Product, (b) a service engineer retained by Customer or its distributor replaces the defective Product with such replacement Product on site at the costs of Supplier, (c) the replaced defective Product is returned to Supplier for repair at the costs of Supplier, and (d) Supplier repairs the defective Product and uses such repaired Product as a replacement of another defective Product. Supplier shall provide to Customer a timetable for repair or replacement in accordance with this paragraph. If Supplier cannot agree to repair or replacement for any portion of the defective Products within thirty (30) days of notice of defects from Customer, then 

19    
 

Customer may, at its option, choose to have Supplier reimburse Customer for the price of such Products.
		
	(ii)
	In case where such defective Product is not repairable, Supplier shall (a) provide to Customer a replacement of such defective Product and (b) reimburse Customer’s out-of-pocket expenses actually incurred by Customer in connection with the replacement of such defective Product (such as fees of a service engineer retained by Customer or its distributor for replacement of Product on site); provided that Customer shall return such replaced defective Product to Supplier at the costs of Supplier if so requested by Supplier.

Notwithstanding the foregoing, the cumulative total of Supplier’s liabilities (including costs incurred by Supplier to comply with the obligations under this Section 8.3 such as supply of replacement Products and replacement parts) for all the recalls with respect to Products supplied under this Agreement shall not exceed the cumulative total of amounts received by Supplier from Customer under this Agreement.
		
	8.4
	Regulatory Inspections.  Supplier agrees to inform Customer within 2 business day of notification of any regulatory inquiry, communication or inspection, which directly or indirectly relates to the manufacture of Product. In the event Supplier receives a notice of inspection or an inspection visit by any governmental authority which involves Product or could impact Supplier’s ability to produce Product, Supplier shall notify Customer within 2 business day of notification by such governmental authority. To the extent permitted by the governmental authority and applicable laws, Supplier shall provide information about development and outcome of such inspection or inspection visit to Customer and consider Customer’s comments in good faith. Customer, at its option, shall have the right to have its representatives present at any such inspection by a governmental authority; provided, however, that Supplier shall have no obligation to provide Customer’s representatives with access to the Design Files.

		
	8.5
	Incidents or Accidents.  Supplier shall promptly notify Customer in writing of any incident or accident experienced by Supplier that Supplier, in its reasonable judgment, believes may

20    
 

affect the quality of the Product that Supplier is obligated to deliver hereunder or its ability to meet delivery date obligations hereunder. Supplier shall promptly investigate such incident or accident and provide a written report within five (5) business days of the results of the investigation of such incidence or accident to Customer.
Article 9.    Term and Termination
		
	9.1
	Term of this Agreement.  This Agreement shall become effective on the date first above written and shall be in force and effect through March 31, 2016.

		
	9.2
	Termination for Repeated Failures of Supply.  In the event that (i) Customer properly rejects 25% or more of initially-delivered (i.e., not replacement) Products in two consecutive quarters, or (ii) Customer properly rejects 10% or more of an order of Products and replacements more than two times (e.g., Customer orders [...***...] units, Customer properly rejects [...***...] units of such initial delivery, Customer properly rejects [...***...] units of replacements, and Customer properly rejects such [...***...] units of replacements again), Customer may terminate this Agreement effective immediately upon receipt of notice.

		
	9.3
	Termination due to breach.  Either party may, by written notice, immediately terminate this Agreement and any of the outstanding Individual Contracts if the other party fails to perform its obligation under this Agreement or any of Individual Contracts, and such non-performance is not cured within sixty (60) days after receiving written demand for performance from the non-breaching party; provided, however, if such non-performance is related to failure to timely deliver Product in accordance with the delivery schedule agreed to by the parties, Volcano may terminate this Agreement if the non-performance is not cured within forty five (45) days after receiving such written demand. Non-breaching party may claim damages for such breach and resulting termination against the breaching party.

		
	9.4
	Termination due to insolvency.  Either party may, by written notice, immediately terminate this Agreement and any of the outstanding Individual Contracts without prior notice, if:

		
	(i)
	The other party ceases doing business as a going concern;

21         ***Confidential Treatment Requested

		
	(ii)
	The other party suspends all or substantially all of its business operations;

		
	(iii)
	The other party makes an assignment for the benefit of creditors;

		
	(iv)
	The other party becomes insolvent, i.e., the other party hereto generally does not pay its debts as they become due, or admits in writing its inability to pay its debts;

		
	(v)
	The other party (a) petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets, (b) commences any legal proceeding such as bankruptcy, reorganization, readjustment of debt, dissolution, or liquidation available for the relief of financially distressed debtors; or (c) becomes the object of any such proceeding (which is not dismissed within 90 days); or

		
	(vi)
	Any writ of attachment or execution or any similar process (including procedures for collection of tax delinquency) is issued or levied against the other party in an amount equal to or greater than 10 million U.S. dollar, and the same remains undischarged, undismissed, and unstayed for a period of 60 days.

The party terminating this Agreement under this Article may claim damages for such termination against the party which falls under any of the foregoing Items (i) through (vi).
		
	9.5
	Treatment of Outstanding Sale and Purchase in case of Termination or Expiration. 

		
	9.5.1
	In Case of Expiration.  Outstanding Individual Contracts shall survive the expiration of this Agreement. The provisions of this Agreement shall be applied to such Outstanding Sale and Purchase even after expiration of this Agreement.

		
	9.5.2
	In Case of Termination.  If this Agreement is terminated under Articles 9.2, 9.3 or 9.4, all the outstanding Individual Contracts shall be deemed terminated upon the termination of this Agreement.

Article 10.    Survival
The provisions of Articles 1, 5.8 and 6 through 13 shall survive the termination or expiration of this Agreement. In addition, any monetary claims and liabilities accrued under this 

22    
 

Agreement prior to the termination or expiration of this Agreement survive the termination or expiration of this Agreement.
Article 11.    Confidentiality
		
	11.1
	Receiving Party (including its Related Parties) shall use Confidential Information solely for the purposes of this Agreement. Without limiting the generality of the foregoing, except for development of Customer Products incorporating Products (specifically excluding development of laser modules) as contemplated by this Agreement, Customer (including its Related Parties) shall not use any Confidential Information of Supplier for development or manufacturing of any products.

		
	11.2
	Any Confidential Information shall be treated as confidential by Receiving Party and may be disclosed to Related Parties of Receiving Party only to the extent necessary for achievement of the purposes of disclosure; provided, however, that Receiving Party shall cause such Related Parties to be bound by substantially the same confidentiality obligations as those provided hereunder, and shall be held liable for breach of confidentiality obligations by such Related Parties.

		
	11.3
	The terms of this Agreement shall be treated as Confidential Information; provided, however, that: (i) nothing in this Agreement shall preclude a Party from publicly disclosing the existence of the Agreement or the fact that it involves the purchase of 100kHz Scanning Lasers by Customer from Supplier; (ii) Customer may file a copy of this Agreement (with appropriate redactions) in litigation currently pending in Delaware Chancery Court, Civil Action Nos. 5250-CS and/or No. 6517-CS, provided that the Agreement is designated HIGHLY CONFIDENTIAL – ATTORNEYS EYES’ ONLY and filed under seal pursuant to the Stipulation and Order Governing the Production and Exchange of Confidential Information in effect in those actions; and (iii) a Party may disclose this Agreement to banks, acquirers, potential acquirers, investors, potential investors, lenders, potential lenders and other financing sources, and their advisors, in connection with an actual or prospective financing, merger, acquisition or similar transaction, provided that such entities have entered 

23    
 

into a written agreement with the Receiving Party to keep such information confidential in a manner consistent with this Agreement.
		
	11.4
	If any Confidential Information is disclosed by Receiving Party pursuant to a requirement or request of a governmental or judicial agency of appropriate jurisdiction or if the disclosure is required by operation of law, such disclosure will not constitute a breach of this Agreement, provided that Receiving Party shall promptly notify Disclosing Party of such fact, and upon request of Disclosing Party, shall seek a protective order with respect to the Confidential Information disclosed hereunder to the extent available under applicable law or assist Disclosing Party in seeking such order.

		
	11.5
	If either party breaches any of the provisions of this Article, then the non-breaching party shall have, in addition to any other remedy, the right to injunctive relief.

		
	11.6
	In the event of any termination or expiration of this Agreement, each party shall return to the other party all Confidential Information of the other party (including all copies thereof) in such party’s possession; provided, however, that, each party may retain one copy of the other party’s Confidential Information in such party’s legal archives for the sole purpose of ensuring compliance with its obligations hereunder and complying with applicable laws and regulations.

		
	11.7
	Notwithstanding anything else, Customer shall maintain a complete separation of Supplier’s Confidential Information and any and all personnel of Axsun Technologies, Inc.

		
	11.8
	Customer shall not intentionally open, unseal or otherwise break hermetic seal package of any Product.

		
	11.9
	Confidentiality obligations under this Article 11 shall remain valid and outstanding for the period of five (5) years from the termination or expiration of this Agreement.

		
	11.10
	Each party shall deliver to the other party a copy of any press release related to this Agreement at least ten (10) business days prior to its release.

Article 12.    Indemnification; Insurance.

24    
 

		
	12.1
	Indemnification by Customer.  Customer hereby agrees to save, defend, indemnify and hold harmless Supplier and its officers, directors, employees, consultants and agents (“Supplier Indemnitees”) from and against any and all losses, damages, settlements, liabilities, expenses and costs, including reasonable legal expense and attorneys’ fees (“Losses”), to which any such Supplier Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any third party to the extent such Losses arise out of: (a) the gross negligence or willful misconduct of any of the Customer Indemnitees (as defined below); or (b) the development, manufacture, use, handling, storage, sale or other disposition by or on behalf of Customer of Customer Products; except, in each case, to the extent such Losses result from (i) the material breach by Supplier of any representation, warranty, covenant or agreement made by it under this Agreement, (ii) design defects of the Products, (iii) the gross negligence or willful misconduct of any Supplier Indemnitee, or (iv) any claim by a third party that the manufacture, use, importation, or sale of any Product infringes or misappropriates any patents or other intellectual property rights of such third party.

		
	12.2
	Indemnification by Supplier.  Supplier hereby agrees to save, defend, indemnify and hold harmless Customer and its officers, directors, employees, consultants, contractors and agents (“Customer Indemnitees”) from and against any and all Losses to which any such Customer Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any third party to the extent such Losses arise out of: (a) the gross negligence or willful misconduct of any Supplier Indemnitee; (b) any design defects of the Products; or (c) any claim by a third party that the manufacture, use, importation, or sale of any Product infringes or misappropriates any patents or other intellectual property rights of such third party; except, in each case, to the extent such Losses result from the material breach by Customer of any representation, warranty, covenant or agreement made by it under this Agreement or the gross negligence or willful misconduct of any Customer Indemnitee.

		
	12.3
	General Conditions of Indemnification.  Each party’s agreement to indemnify, defend and hold the other party harmless is conditioned on the indemnified party (a) providing written notice to the indemnifying party of any claim for which it is seeking indemnification 

25    
 

hereunder promptly after the indemnified party has knowledge of such claim; (b) permitting the indemnifying party to assume full responsibility to investigate, prepare for and defend against any such claim or demand; (c) assisting the indemnifying party, at the indemnifying party’s reasonable expense, in the investigation of, preparation for and defense of any such claim or demand; and (d) not compromising or settling such claim or demand without the indemnifying party’s written consent.
		
	12.4
	Insurance. Supplier shall at all times during the term of this Agreement, at its own expense, maintain business automobile liability insurance for owned, scheduled, non-owned and hired automobiles, with a combined single limit of no less than $1,000,000 per accident, workers compensation insurance for all employees as statutorily defined by the applicable law and any other coverage, in type and amount, as are customarily carried by companies engaged in similar business in localities where Supplier operates. Supplier shall provide a certificate of insurance evidencing such coverage to Customer upon request.

Article 13.    Miscellaneous
		
	13.1
	Notice.  Any notices, consents, reports or other communications required or permitted to be given or made under this Agreement by one party to the other party shall be in writing, in the English language, delivered in person or by facsimile, e-mail, registered airmail with advice of delivery, international overnight courier or EMS, and addressed to such other party at its address indicated below, or to such other address as the addressee shall have furnished in writing to the addressor in accordance with this Article, and (except as otherwise provided in this Agreement) shall be effective upon receipt by the addressee.

If to Supplier:    Santec Corporation
Address:  5823 Ohkusa-Nenjozaka, Komaki, Aichi 485-0802 Japan
Attention:  Changho Chong
Telephone:  +81-568-79-1959
Facsimile:  +81-568-79-3896
e-mail:  tei3@santec-net.co.jp

26    
 

If to Customer:    Volcano Corporation
Address:  3661 Valley Centre Drive, Suite 200
San Diego, CA 92130
Attention:  Darin Lippoldt, General Counsel
Telephone:  858-720-4113
Facsimile:  858-720-0325
e-mail:  dlippoldt@volcanocorp.com 
		
	13.2
	Force Majeure.  None of the parties is liable for non-performance of an obligation under this Agreement or any Individual Contract if performance of such obligation is prevented by an Act of God, which shall include fire, epidemic disease, explosion, war, riot, civil war, enactment, governmental ordinance, order or guidance, labour dispute of a third party (other than the parties or their respective Affiliates), unavailability of requisite materials or parts through no fault of Supplier, transport disruption, or such other causes beyond its control. If any of such events prevent performance of an obligation of the affected party, the affected party shall be permitted to defer its performance during the affected period by promptly notifying to the other party (a) details of the event occurred and (b) an estimate of the length of the affected period and (c) using good faith and diligent efforts to remove the condition constituting the force majeure or to avoid its affects so as to remove performance as soon as practicable. Notwithstanding the foregoing, in the event that such event prevents performance of Supplier’s obligations under this Agreement or any Individual Contact for more than 120 days, Customer shall be permitted to terminate this Agreement, including any outstanding Individual Contracts, immediately upon written notice to Supplier.

		
	13.3
	Limitation of Liabilities.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES (INCLUDING WITHOUT LIMITATION LOSS OF USE, LOSS OF OPPORTUNITY, MARKET POTENTIAL, GOODWILL AND/OR LOSS OF REPUTATION AND OTHER SIMILAR ECONOMIC LOSS) ARISING OUT OF THIS AGREEMENT WHETHER BASED ON CONTRACT, TORT, THIRD PARTY CLAIMS OR OTHERWISE, EVEN IF 

27    
 

THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
EXCEPT WITH RESPECT TO WILLFUL MISCONDUCT, THE AGGREGATE AMOUNT OF THE LIABILITIES OF EACH PARTY ARISING UNDER ARTICLES 6, 8 AND 12 SHALL NOT EXCEED THE CUMULATIVE TOTAL OF AMOUNTS RECEIVED BY SUPPLIER FROM CUSTOMER UNDER THIS AGREEMENT.
		
	13.4
	Assignment. The rights and obligations conferred by this Agreement are neither assignable nor transferable (through change of control, reverse triangular merger or otherwise) by any party without first obtaining the written consent of the other party, except that either party may assign this Agreement, without obtaining consent of the other party, to an entity that acquires all or substantially all of its assets or business, whether through merger, reorganization or otherwise; provided, however, if Supplier, or the assets of Supplier required to fulfill its obligations under this Agreement, is acquired by St. Jude Medical, Inc., or any of its affiliates, then Customer shall have the right, but not the obligation, to terminate this Agreement upon 90 days' written notice .

		
	13.5
	Entire Agreement.  This Agreement, together with any Individual Contracts, constitutes the entire agreement between both of the parties and supersedes all prior provisions, negotiations, agreements and commitments in respect thereto. Any amendment or supplement to this Agreement shall be valid only when agreed in writing and signed by duly authorised representatives of both of the parties.

		
	13.6
	Severability.  If a part of this Agreement is shown to be in conflict with the applicable laws, or void for any reason, this shall not impair the validity of the remaining terms and conditions of this Agreement.

		
	13.7
	Arbitration.  Any and all disputes arising out of or in connection with (a) this Agreement or Individual Contracts or (b) any transaction contemplated or conducted under this Agreement or Individual Contracts shall be settled by mutual consultation between the parties in good faith as promptly as possible, but failing an amicable settlement, shall be settled by arbitration. The arbitration shall take place in Los Angeles, California U.S.A. in 

28    
 

accordance with the then-current Rules of Conciliation and Arbitration of the International Chamber of Commerce if initiated by Supplier, or in Tokyo, Japan in accordance with the then-current Commercial Arbitration Rules of Japan Commercial Arbitration Association if initiated by Customer. The award of the arbitration shall be final and binding upon the parties. Judgement upon such award may be entered in any court having jurisdiction thereof. The language to be used in the arbitral proceedings shall be English.
		
	13.8
	Governing Law.  This Agreement shall be governed by and construed in accordance with Delaware law.

		
	13.9
	Export Control.  The parties shall abide by the export control rules and regulations issued by the competent governmental authorities, including the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations. Supplier shall cooperate fully with Customer and provide the necessary information needed by Customer to submit an application for any required export license, if applicable. To the extent previously received by Supplier, Supplier agrees to provide Customer with the Product's most current technology classification as determined by the EAR or, if applicable ITAR.

IN WITNESS THEREOF, the duly authorised representatives of the parties hereto have caused this Agreement to be executed as of the day and year first above written.

Supplier:
By:/s/ Daikou Tei    
Printed Name: Daikou Tei    
Title: President & CEO    
Customer:
By: /s/ John Dahldorf    
Printed Name: John Dahldorf    
Title: CFO    

29    
 

Annex 1
Detailed Specifications

[...***...]

30         ***Confidential Treatment Requested

Annex 2
Quality Standards 

1.REGULATORY AND ACCREDITATION
		
	a)
	Supplier shall maintain accreditation under ISO 9001 with the scope of accreditation covering all activities pertaining to Products.

Supplier must maintain compliance to the relevant aspects of the following international safety and test standards:
		
	•
	IEC 61010-1 

		
	•
	IEC 60825-1 

		
	•
	IEC 60068-2-14, -27 and -64

And all applicable related IEC collateral standards.
Supplier shall maintain compliance with IEC 62304, IEC 12207 or a substantially equivalent set of software development lifecycle processes, unless Supplier declares, and represents and warrants to Customer, that Products contain no software, meaning a set of program instructions intended to be executed by a shared set of interpretation and execution resources including but not limited to embedded software, microprocessor programs and microcontroller programs, regardless of whether:
		
	•
	The processor which executes the program instructions is implemented in an integrated circuit (IC), application-specific IC (ASIC), or programmable logic device such as an FPGA; OR 

		
	•
	The program instructions are embodied in the same chip as the processor or in different chips; OR

31    
 

		
	•
	The program instructions are embodied in a writable memory (e.g. RAM, flash or PROM), in a read-only memory (ROM), or in a RAM or ROM implemented by a programmable logic device such as an FPGA. 

The above definition of software is understood to be distinct from hardware such as analog electronics circuits, digital electronics circuits, or digital or mixed-signal electronics implemented in programmable logic devices such as FPGAs. 
		
	b)
	Material Regulations. Supplier shall maintain compliance to the RoHS directive 2002/95/EC and all future revisions to the regulations. Supplier shall maintain compliance with the Conflict Minerals regulation. 

		
	c)
	General Product Standards. Supplier shall maintain compliance to the relevant sections of the following additional product standards:

		
	•
	EN 61000-4-2 

		
	•
	UL1581 or IEC 60332 

		
	•
	UL94 or IEC 60695

		
	•
	ASTM Standard D4169 DC 13 

		
	•
	IEC 60601-1 ed3.0 Clause 15.3.4.2

And such product standards as may be included in or referenced by the Product specification in Annex 1.
		
	d)
	EMC Standards. The Products shall not perform worse than the EMC Sample Unit with respect to the following EMC standards:

		
	•
	EN 55011 or EN 61000-6-4 

		
	•
	EN 61000-4-2 

		
	•
	EN 61000-4-3                     

32    
 

		
	•
	EN 61000-4-4 

		
	•
	EN 61000-4-6 

		
	•
	EN 61000-4-8 

		
	•
	EN 61000-4-11

The performance of the EMC Sample Unit is set forth in the following reports: 11/11/2012 – EMC Findings for [...***...], Serial Number [...***...], and 11/14/2012 – EMC Immunity Findings for [...***...], Serial Number [...***...]. 
		
	e)
	Supplier shall provide a Certificate of Analysis indicating key parameters certification documentation meets agreed parameters of Product specifications.

2.    AUDIT
Customer shall conduct QA audits in accordance with Section 5.7 of the main body of this Agreement after the execution of this Agreement to check that Supplier has adopted and established a quality management system conforming to ISO 9001 quality management system and appropriate international standards. The first QA audit is estimated to occur in January 2013.
If Customer finds that the activities and documentation of Supplier do not comply with Supplier’s manufacturing processes and quality management system or the provisions of this Agreement (including this Annex), Customer shall communicate such non-compliances to Supplier. Within 15 calendar days of such notice, Supplier shall provide Customer with either (1) objective evidence of having corrected said non-compliances, or (2) a written corrective action plan including a schedule (with reasonable timeframes) to correct said non-compliances as well as objective evidence of controls having been implemented to mitigate the effects of such non-compliances. Customer shall promptly review such objective evidence and plans to determine whether they ensure timely delivery of Products which determinably conform to Supplier’s manufacturing processes, quality management system and this Agreement.    

33    ***Confidential Treatment Requested
 

Customer shall make reasonable good-faith efforts to assist Supplier in solving such non-compliances by providing advice and guidance as appropriate.
Supplier shall comply with the terms and schedules of any corrective action plans agreed as described above, and shall provide status updates to Customer as and when requested. Customer shall promptly review objective evidence provided by Supplier, and if necessary conduct QA Audits in accordance with Section 5.7 of the main body of this Agreement, to verify that Supplier’s manufacturing processes and quality management system address any non-compliances identified as described above.
3.    INTERNAL PROCESSES
		
	a)
	Inspection System Requirement. Supplier shall develop and implement an inspection system capable of inspecting all finished Product dimensions and features to associated tolerances and requirements prior to shipment. Supplier to provide documentation, in the form of a Certificate of Analysis, to Customer certifying that all inspections carried out are in compliance with Product Specification. 

		
	b)
	Record Retention. Supplier must retain all quality records associated with Products for the life of the Product (but a minimum of 15 years beyond the life of the finished device of which the Product is incorporated), unless otherwise specified by Customer, and at Customer’s cost provide copies of all applicable production and quality control related records related to Products upon Customer’s request. Upon or before expiration of such stated shelf-life, Customer shall notify Supplier of such expiration. Supplier will offer to deliver all such records to Customer prior to destruction. 

		
	c)
	Device History Record. Supplier shall create and maintain the device history record and make it available to Customer, upon request. 

		
	d)
	Inspection Sampling Plan. Supplier’s sampling procedures shall be on each individual product, i.e. 100%. 

		
	e)
	Qualification Plan. Supplier shall qualify their manufacturing process(es) including all test equipment in order to assure compliance with product specifications. 

34    
 

		
	f)
	Calibration System. Supplier must maintain a calibration system that is compliant with ANSI/NCSL Z 540-1-1994. If Supplier uses an outside organization for calibration then this entity must be ISO-17025 registered and the items being calibrated must be within the scope of its accreditation. Calibration ranges must extend beyond any measurements made on Product parts or features.

4.    PART/LOT TRACEABILITY
Serial Numbers. Each Product will be marked with a serial number. Supplier’s processing records shall be maintained at all times by serial number. Traceability must be maintained to all raw materials used, testing performed, employee performing activities and dates of performance of activities either on a lot by lot basis or individually with respect to all parts except for minor parts of limited importance listed in Schedule 1 to Annex 2. Supplier must maintain a system to ensure that serial numbers are unique. Supplier must maintain compliance to the Conflict Minerals requirement for these and all other raw materials used. 
		
	a)
	Inspection Data. Verifiable inspection data must be furnished with each Product furnished. The inspection data must be signed for by a member of the Quality Assurance Group at the Supplier facility. This data shall be attached to the Certificate of Analysis.

5.    QUALITY ASSURANCE
		
	a)
	First Article inspection. Supplier to inspect the first three (3) Products produced. First Article inspection data must be submitted to Customer for review and approval prior to continuing with the production run. 

		
	b)
	Certification of Analysis (CoA). A certification of analysis, signed by Supplier’s quality representative (who must have sufficient authority to bind Supplier on such matters), must accompany each shipment of parts to Customer. This CoA is a statement of compliance to all specifications of the order including results as identified and any associated drawings, specifications, or purchase order 

35    
 

requirements. Supplier must similarly obtain and retain CoA from its suppliers for all raw materials used in manufacture of Customer parts.
6.    PROCESS CHANGE CONTROL
All processes used to manufacture Customer parts require process approval and are to remain frozen upon approval. Any change in procedure, equipment, material, tooling, handling, etc. shall require written change approval from Customer prior to further processing.
7.    NONCONFORMING PRODUCT
		
	a)
	Supplier shall notify Customer immediately if Supplier has determined that non-conforming Products may have been shipped. Customer requires direct involvement in the disposition of some non-conforming material decisions affecting a purchase order. These details will be described in the Quality Agreement. Customer reserves the right to refuse all nonconforming Product.

8.    PACKAGING
Finished goods to be individually packaged appropriately and labeled as required and provided in Certification of Analysis.

36    
 

Schedule 1 to Annex 2. 
List of Parts without Traceability
Screws, Spacers, Rubber Clamps.

 

Annex 3
Conflict Minerals
(a)    Supplier shall ensure that all Conflict Minerals used in the Products, if any: (i) originate in countries other than the Covered Countries, (ii) are processed in smelters or refineries that are, as of the date such Conflict Minerals are transferred from such smelter or refinery to Supplier (or to Supplier’s supplier, if applicable), designated as “conflict-free” or a similar designation (A) by a third party recognized in the industry for providing such designations (such as the Electronic Industry Citizenship Coalition and Global e-Sustainability Initiative Conflict Free Smelter Program) or (B) pursuant to an independent third-party audit, the results of which are made publicly available by such smelter or refinery, or (iii) come from Recycled Sources. Within thirty (30) days following the end of each calendar year during the term of this Agreement, Supplier shall provide Customer with a certificate, signed by a responsible officer of Supplier, certifying that either (i) no Conflict Minerals were used in any Products manufactured for Customer during the immediately preceding calendar year or (ii) in the event any Conflict Minerals were used in Products manufactured for Customer during the immediately preceding calendar year, Supplier was, at all times during such calendar year, in full compliance with its obligations set forth in this Annex 3. In addition, Supplier shall, at Customer’s request at any time during the term of this Agreement (but not more than once in any calendar quarter), promptly provide Customer with a certificate, signed by a responsible officer of Supplier, certifying as to Supplier’s then-current compliance with its obligations set forth in this Annex 3. Supplier shall include identical provisions to those set forth in this Annex 3, subsection (a) (including a requirement to provide officers’ certificates as evidence of compliance with such provisions) in any supply agreements pursuant to which Supplier obtains Conflict Minerals, or materials containing Conflict Minerals, that are used in the Products, and Supplier shall diligently monitor its suppliers’ compliance with such provisions (including by obtaining the applicable officers’ certificates when required) and obtain certificates of origin or other written assurances from its suppliers, if applicable, regarding the origin of any Conflict Minerals used in the Products. Supplier shall promptly notify Customer in writing of any breach of 

38    
 

this paragraph (including any failure of Supplier to ensure that all Conflict Minerals used in the Products satisfy at least one of clauses (i), (ii) or (iii) of the first sentence of this paragraph) and shall take all actions reasonably requested by Customer to remedy such breach.
(b)    Schedule 1 to this Annex 3 sets forth, as of the date hereof, all Conflict Minerals that are used in, or that Supplier expects to be used in, the Products and, with respect to each such Conflict Mineral, (i) the facility in which such Conflict Mineral is processed, and whether such facility has been designated as “conflict-free” (and the source of such designation, if any), (ii) whether such Conflict Mineral comes from Recycled Sources and (iii) the country of origin of such Conflict Mineral, if such Conflict Mineral does not come from Recycled Sources. In furtherance and not in limitation of Supplier’s obligations under subsection (a) of this Annex 3 above, Supplier shall not incorporate into a Product any Conflict Minerals from any source other than those set forth in Schedule 1 to this Annex 3 without the prior written approval of Customer. In the event that Supplier becomes aware of any inaccuracy in Schedule 1 to this Annex 3, Supplier shall promptly (but in any event within thirty (30) days of the date that Supplier has knowledge thereof) notify Customer of such inaccuracy and provide Customer with updated information.
(c)    Supplier agrees to promptly provide Customer with such documentation and other information relating to the Products or the manufacture thereof, and to cause its suppliers, if applicable, to provide such documentation or other information (including by exercising any audit or similar rights of Supplier pursuant to its agreements with its suppliers), in each case as Customer may reasonably request in connection with fulfilling its reporting obligations under Section 13(p) of the Securities Exchange Act of 1934, as amended, relating to Conflict Minerals (including any country of origin inquiry or due diligence conducted in connection therewith).

39    
 

Schedule 1 to Annex 3. 
List of Conflict Minerals Used
None.

40    
 

Annex 4
Warranty Exceptions
With respect to up to [...***...] units of the Initial Products, the Specifications for [...***...] shall be relaxed, such that the following shall apply with respect to such specifications solely for such [...***...] units (the “Sub-Spec Units”):
		
	(i)
	[...***...];

		
	(ii)
	[...***...].

For avoidance of doubt, all of the other Specifications shall apply to the Sub-Spec Units to the same extent as they apply to other units of Products.
Supplier shall clearly designate to Customer at the time of delivery each such Sub-Spec Unit. Supplier may not designate as Sub-Spec Units more than 50% of any shipment of Initial Products delivered to Customer (for example, if there is a delivery of [...***...] units, no more than [...***...] may be Sub-Spec Units).

41    ***Confidential Treatment Requested

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00213-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00213-of-00352.parquet"}]]