Document:

exv10w4

 

Exhibit 10.4

Silicon Valley Bank

Amendment to Loan Agreement

	 	 	 
	Borrower:

	 	Volcano Corporation
	 
	 	 
	Address:

	 	2870 Kilgore Road
	 

	 	Rancho Cordova, California 95670
	 
	 	 
	Dated as of:

	 	April ___, 2006

     THIS AMENDMENT TO LOAN AGREEMENT is entered into between Silicon Valley Bank (“Bank”) and
the borrower named above (“Borrower”).

     The Parties agree to amend, effective as of the date hereof, the Loan and Security Agreement
between them, dated July 18, 2003, as amended by that certain Amendment to Loan Documents dated
December 31, 2003, as amended by that certain Amendment to Loan Documents dated July 18, 2004, as
amended by that certain Amendment to Loan Documents dated January 24, 2005 and as amended by that
certain Amendment to Loan Agreement dated as of July 16, 2005 (as so amended and as otherwise
amended from time to time being referred to herein as the “Loan Agreement”), as follows.
(Capitalized terms used but not defined in this Amendment, shall have the meanings set forth in the
Loan Agreement.)

     1. Revised Schedule 2 to Loan Agreement. Schedule 2 to the Loan Agreement is hereby amended
to read as the Schedule 2 to Loan Agreement attached hereto.

     2. Revised Exhibit E to Loan Agreement. Exhibit E to the Loan Agreement is hereby amended to
read as the Exhibit E attached hereto.

     3. Revised Section 6.2 of Loan Agreement. Section 6.2 of the Loan Agreement is hereby amended
to read as follows:

“6.2 Financial Statements, Reports, Certificates.

WHILE THE ASSET BASED TERMS ARE NOT IN EFFECT THE FOLLOWING SHALL APPLY:

(a) Borrower will deliver to Bank: (i) as soon as available, but no later
than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower’s
consolidated operations during the period certified by a Responsible Officer
and in a form acceptable to Bank; (ii) [reserved]; (iii) as soon as
available, but no later than 180 days after the last day of Borrower’s
fiscal year, audited consolidated financial statements prepared under GAAP,

 

 

			
	 	 	 
	                         Silicon Valley Bank
	 	Amendment to Loan Agreement

consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm reasonably
acceptable to Bank; (iii) a prompt report of any legal actions pending or
threatened against Borrower or any Subsidiary that could result in damages
or costs to Borrower or any Subsidiary of $100,000 or more, or in which an
adverse decision could reasonably be expected to cause a Material Adverse
Change; (iv) budgets, sales projections, operating plans or other financial
information Bank reasonably requests; and (v) prompt notice of any material
change in the composition of the Intellectual Property, including any
subsequent ownership right of Borrower in or to any copyright, patent or
trademark not shown in any intellectual property security agreement between
Borrower and Bank or knowledge of an event that materially adversely affects
the value of the Intellectual Property.

(b) Within 20 days after the last day of each month when any Credit
Extensions are outstanding or at the time of request for a Credit Extension
when no other Credit Extensions are then outstanding, Borrower will deliver
to Bank a Borrowing Base Certificate signed by a Responsible Officer in the
form of Exhibit C, with aged listings (by invoice date) of accounts
receivable and accounts payable.

(c) Within 30 days after the last day of each month, Borrower will deliver
to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit D.

(d) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such
audits will be conducted no more often than every 6 months, unless an Event
of Default or an event which, with notice or passage of time or both would
constitute an Event of Default, has occurred and is continuing.

WHILE THE ASSET BASED TERMS ARE IN EFFECT THE FOLLOWING SHALL APPLY:

Borrower shall provide Bank with the following:

(i) weekly, a transaction report in form and substance acceptable to Bank
(such a report being a “Transaction Report) and upon the request for an
Advance;

(ii) within 15 days after the end of each month, (A) monthly accounts
receivable agings as to domestic and foreign accounts, aged by invoice date,
(B) monthly accounts payable agings, aged by invoice date, and outstanding
or held check registers, if any; and (C) monthly reconciliations of accounts
receivable agings (aged by invoice date), transaction reports, and general
ledger;

(iii) as soon as available, and in any event within thirty (30) days after
the end of each month, monthly unaudited financial statements;

(iv) within thirty (30) days after the end of each month a monthly
Compliance Certificate signed by a Responsible Officer, certifying that as
of the end of such month, Borrower was in full compliance with all of the
terms and conditions of this Agreement, and setting forth calculations
showing compliance with the financial covenants set forth in this

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	                         Silicon Valley Bank
	 	Amendment to Loan Agreement

Agreement and such other information as Bank shall reasonably request, including,
without limitation, a statement that at the end of such month there were no
held checks;

(v) as soon as available, and, and in any event within 180 days following
the end of Borrower’s fiscal year, annual financial statements certified by,
and with an unqualified opinion of, independent certified public accountants
acceptable to Bank; and

(vi) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such
audits will be conducted generally no more often than every 3 months, unless
conditions warrant a greater frequency as Bank may determine in its good
faith business judgment, unless an Event of Default or an event which, with
notice or passage of time or both would constitute an Event of Default, has
occurred and is continuing.”

     4. Modified Certificates; Reporting. Bank will provide to Borrower a modified Borrowing Base
Certificate and Compliance Certificate, in each case reflecting the changes to the applicable Loan
Agreement provisions arising from this Amendment, and such revised certificates shall be deemed to
replace the current versions thereof and are to be used in complying with the pertinent reporting
provisions of the Loan Agreement.

     5. Fee. Borrower shall pay to Bank an amendment fee of $85,000 in connection herewith, which
fee is not refundable, and which is in addition to interest, costs and all other fees and amounts
payable under the Loan Agreement.

     6. Limitation of Amendments.

     A. The amendments set forth herein are effective for the purposes set forth herein and shall
be limited precisely as written and shall not be deemed to (a) be a consent to any amendment,
waiver or modification of any other term or condition of any Loan Document, or (b) otherwise
prejudice any right or remedy which Bank may now have or may have in the future under or in
connection with any Loan Document.

     B. This Amendment shall be construed in connection with and as part of the Loan Documents and
all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full
force and effect.

     7. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower
hereby represents and warrants to Bank as follows:

     A. Immediately after giving effect to this Amendment (a) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material respects as of the
date hereof (except to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Default or Event of Default has
occurred and is continuing;

     B. Borrower has the power and authority to execute and deliver this Amendment and to perform
its obligations under the Loan Agreement, as amended by this Amendment;

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	                         Silicon Valley Bank
	 	Amendment to Loan Agreement

     C. The organizational documents of Borrower delivered to Bank in connection with the original
execution of the Loan Agreement remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;

     D. The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Agreement, as amended by this Amendment, have been duly
authorized;

     E. The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not
contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d)
the organizational documents of Borrower;

     F. The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Agreement, as amended by this Amendment, do not require any
order, consent, approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or made; and

     G. This Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such
enforceability may be limited under law by bankruptcy, insolvency, reorganization, liquidation,
moratorium or other similar laws of general application and equitable principles relating to or
affecting creditors’ rights.

     8. Other General Provisions. This Amendment, the Loan Agreement, any prior written
amendments thereto signed by Bank and the Borrower, and the other written documents and agreements
between Bank and the Borrower set forth in full all of the representations and agreements of the
parties with respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect to the subject
hereof.

     9. Counterparts. This Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.

     10. Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and
delivery to Bank of this Amendment by each party hereto; and (b) Borrower’s payment of the fee set
forth herein plus all Bank Expenses incurred in connection herewith.

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	                         Silicon Valley Bank
	 	Amendment to Loan Agreement

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

	 	 	 	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	Bank:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	VOLCANO CORPORATION	 	 	 	SILICON VALLEY BANK	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	By	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	     President or Vice President
	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

-5-

 

CONSENT

     The undersigned acknowledges that its consent to the foregoing Agreement is not required, but
the undersigned nevertheless does hereby consent to the foregoing Agreement and to the documents
and agreements referred to therein and to all future modifications and amendments thereto, and any
termination thereof, and to any and all other present and future documents and agreements between
or among the foregoing parties. Nothing herein shall in any way limit any of the terms or
provisions of the applicable Continuing Guaranty of the undersigned, all of which are hereby
ratified and affirmed.

	 	 	 	 	 	 	 
	 	 	Volcano Europe SA/NV (formerly known as Volcano Therapeutics Europe SA/NV)	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title	 	 	 	 
	 

	 	 	 	 	 	 

 

 

CONSENT AND ACKNOWLEDGMENT

     Reference is made to the Intercreditor and Subordination Agreement dated as of December 9,
2003, among FFC PARTNERS II, L.P., a Delaware limited partnership, FFC EXECUTIVE PARTNERS II, L.P.,
a Delaware limited partnership., SILICON VALLEY BANK, a California banking corporation and Borrower
(the “Intercreditor Agreement”).

     Each of the undersigned hereby consents and agrees to the terms and conditions of the
foregoing Amendment and agrees, among other things, that the term “Senior Obligations” (as defined
in the Intercreditor Agreement) shall be deemed to include all loans, advances and all other
Obligations under the revised terms and conditions regarding the Loan Agreement as are set forth in
the above Amendment without regard to any of the limitations set forth in the Intercreditor
Agreement. The undersigned agree that the terms and conditions of the Intercreditor Agreement, as
modified hereby, shall continue in full force and effect.

     Further, each of the undersigned represents and warrants that all actions on its part
necessary for the authorization of the Intercreditor Agreement, as modified, and the performance of
all obligations by each of the undersigned thereunder have been taken, and the performance by each
of the undersigned of the obligations under the Intercreditor Agreement will not result in any
material violation or default of any term of such party’s limited partnership agreement, or any
other formation or organizational documents.

	 	 	 	 	 	 	 	 	 	 	 
	FFC PARTNERS II, L.P.	 	 	 	FFC EXECUTIVE PARTNERS II, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: FFC GP II, LLC, its general partner	 	 	 	By:	 	FFC Executive GP II, LLC, its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	By	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:           Member	 	 	 	Title:      Member	 	 

 

 

Schedule 2 to

Loan and Security Agreement

	 	 	 
	Borrower:

	 	Volcano Corporation
	 
	 	 
	Date:

	 	April ___, 2006

This Schedule forms an integral part of the Loan and Security Agreement (the “Loan Agreement”)
between Silicon Valley Bank (“Bank”) and the above-borrower (the “Borrower”) of even date
herewith. (Capitalized terms used herein, which are not defined, shall have the meanings set forth
in the Loan Agreement.)

	 	 	 
	 
	 
	 	 
	1. CREDIT LIMIT
	 	 
	          (Section 2.1.1):
	 	 
	 
	 	 
	WHILE THE ASSET BASED TERMS ARE NOT IN EFFECT THE FOLLOWING CREDIT
LIMIT SECTION SHALL APPLY:
	 
	 	 
	 

	 	An amount not to exceed (A) or (B), whichever is less, minus (C),
in each case with respect to the provisions below:
	 
	 	 
	 

	 	A) Ten Million Dollars ( $10,000,000) at any one time outstanding
(the “Committed Revolving Line”); or
	 
	 	 
	 

	 	(B) The sum of (1) and (2) (the “Borrowing Base”):
	 
	 	 
	 

	 	          (1) Up to 80% of the amount of Borrower’s Eligible
Accounts; plus
	 
	 	 
	 

	 	          (2) Up to Three Million Dollars ($3,000,000).
	 
	 	 
	 

	 	MINUS
	 
	 	 
	 

	 	(C) (1) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit); (2) the FX
Reserve; and (3) the aggregate amount of Cash Management Services
utilizations.
	 
	 	 
	Letter of Credit Sublimit
	 	 
	(Section 2.1.2):

	 	$1,000,000 
	 
	 	 
	 

	 	Bank will issue or have issued Letters of Credit for Borrower’s
account not exceeding (i) the lesser of the Committed Revolving
Line or the Borrowing Base, minus (ii) the outstanding principal
balance of the Advances, minus (iii) the applicable FX Reserve and
minus (iv) the aggregate amount of Cash Management Services
utilizations; provided, however, the face amount of outstanding
Letters of Credit

 

 

	 	 	 
	 

	 	(including drawn but unreimbursed Letters of
Credit) may not exceed the Letter of Credit Sublimit set forth
above.
	 
	 	 
	Foreign Exchange Sublimit
	 	 
	(Section 2.1.3):
	 	 
	 
	 	 
	 

	 	$1,000,000, subject to the provisions set forth in Section 2.1.3
of the Loan Agreement
	 
	 	 
	Cash Management Services Sublimit
	(Section 2.1.4):
	 	 
	 
	 	 
	 

	 	$500,000, subject to the provisions set forth in Section 2.1.4 of
the Loan Agreement.
	 
	 	 
	WHILE THE ASSET BASED TERMS ARE IN EFFECT THE FOLLOWING CREDIT
LIMIT SECTION SHALL APPLY:
	 
	 	 
	 

	 	An amount not to exceed (A) or (B), whichever is less, minus (C),
in each case with respect to the provisions below corresponding
the indicated letter:
	 
	 	 
	 

	 	A) Ten Million Dollars ( $10,000,000) at any one time outstanding
(the “Committed Revolving Line”); or
	 
	 	 
	 

	 	(B) The sum of (1) and (2) (the “Borrowing Base”):
	 
	 	 
	 

	 	          (1) Up to 80% of the amount of Borrower’s Eligible Accounts; plus
	 
	 	 
	 

	 	          (2) Up to the lesser of Five Million Dollars ($5,000,000) or
50% of Eligible Foreign Accounts (as defined below).
	 
	 	 
	 

	 	MINUS
	 
	 	 
	 

	 	(C) (1) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit); (2) the FX
Reserve; and (3) the aggregate amount of Cash Management Services
utilizations.
	 
	 	 
	Letter of Credit Sublimit
(Section 2.1.2):

	 	$1,000,000 
	 
	 	 
	 

	 	Bank will issue or have issued Letters of Credit for Borrower’s
account not exceeding (i) the lesser of the Committed Revolving
Line or the Borrowing Base, minus (ii) the outstanding principal
balance of the Advances, minus (iii) the applicable FX Reserve and
minus (iv) the aggregate amount of Cash Management Services
utilizations; provided, however, the face amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of
Credit) may not exceed the Letter of Credit Sublimit set forth
above.

2

 

	 	 	 
	Foreign Exchange Sublimit
	 	 
	(Section 2.1.3):
	 	 
	 
	 	 
	 

	 	$1,000,000, subject to the provisions set forth in Section 2.1.3
of the Loan Agreement
	 
	 	 
	Cash Management Services Sublimit
	(Section 2.1.4):
	 	 
	 
	 	 
	 

	 	$500,000, subject to the provisions set forth in Section 2.1.4 of
the Loan Agreement.
	 
	 	 
	 

	 	As used herein the term “Eligible Foreign Accounts” shall
mean and refer to the following: (A) Accounts that would
otherwise constitute Eligible Accounts under the Loan Agreement
other than for the fact that the account debtor does not have its
principal place of business in the United States, and other than
that the concentration limitations otherwise applicable to each of
Fukuda Denshi Co., Ltd. and Goodman Co., Ltd. under the definition
of Eligible Accounts shall not apply to such account debtors while
the Asset Based Terms are in effect, together with (B) accounts
receivable of Volcano Europe SA/NV and Volcano Japan K.K.,
subsidiaries of Borrower, and in each of (A) and (B) that Bank
determines, in its discretion, shall be eligible for purposes of
making Advances hereunder.
	 
	 	 
	 

	 	Advances hereunder based domestic Accounts shall be referred to as
the “Domestic Advances” and Advances hereunder based on
foreign Accounts and foreign account debtors of foreign
subsidiaries of Borrower shall be referred to as “Foreign
Advances.”
	 
	 	 
	 
	 
	 	 
	2. INTEREST.
	 	 
	 
	 	 
	          Interest Rate
	 	 
	          (Section 2.3(a)):

	 	WHILE THE ASSET BASED TERMS ARE NOT IN EFFECT:
	 
	 	 
	 

	 	A rate equal to the “Prime Rate” in effect from time to
time, plus the Applicable Margin per annum.
	 
	 	 
	 

	 	As used herein the “Applicable Margin” shall mean (A)
one percentage point (1.00%) when the last reported
Quick Ratio is less than 1.00 to 1.00 and (B) one half
of one percentage point (0.50%) when the last reported
Quick Ratio is greater than 1.00 to 1.00.
	 
	 	 
	 

	 	WHILE THE ASSET BASED TERMS ARE IN EFFECT:
	 
	 	 
	 

	 	A rate equal to the “Prime Rate” in effect from time to
time, plus the Applicable Margin per annum.

3

 

	 	 	 
	 

	 	As used herein the
“Applicable Margin” shall mean (A)
one and one-half percentage points (1.50%) as to
Domestic Advances and (B) two percentage points (2.00%)
as to Foreign Advances.
	 
	 	 
	 
	 
	 	 
	3. FEES (Section 2.4(a)):
	 	 
	 
	 	 
	Facility
Fee:       

	 	See Amendment to Loan Agreement of even date herewith.
	 
	 	 
	Asset Based Fee:

	 	Upon conversion to the Asset Based Terms facility
described herein Borrower shall pay to Bank a fee of
$90,000 concurrently therewith, which shall be in
addition to interest and to all other fees and amounts
payable under the Loan Agreement.
	 
	 	 
	Termination:        

	 	Borrower shall have the right to terminate the
Committed Revolving Line prior to the Revolving
Maturity Date, effective three Business Days after
written notice of termination is given to Bank, in
which event Borrower shall pay in full all Obligations
on the effective date of termination. While the
Asset Based Terms are in effect, Borrower shall pay to
Bank a prepayment fee of one percent (1.00%) of the
Committed Revolving Line unless the credit facility
hereunder is transferred to another division of Bank.
	 
	 	 
	Unused Line Fee

	 	While the Asset Based Terms are in effect, Borrower
shall pay Bank a fee (the “Unused Revolving Line
Facility Fee”), which fee shall be paid monthly, in
arrears, on a calendar year basis, in an amount equal
to one-half of one percentage point (0.50%) per annum
of the average unused portion of the Committed
Revolving Line for Advances thereunder, as determined
by Bank. Borrower shall not be entitled to any
credit, rebate or repayment of any Unused Revolving
Line Facility Fee previously earned by Bank pursuant
to this Section notwithstanding any termination of the
within Agreement, or suspension or termination of
Bank’s obligation to make loans and advances
hereunder.
	 
	 	 
	Collateral Handling
	 	 
	Fee:       

	 	While the Asset Based Terms are in effect, a monthly
collateral monitoring fee of $2,000, payable in
arrears on the last day of each month (prorated for
any partial month).
	 
	 	 
	 
	 
	 	 
	4.  REVOLVING MATURITY
	 	 
	     DATE
	 	 
	     (Section 13.1):

	 	April ___, 2007.
	 
	 	 
	 
	 
	 	 
	5.   FINANCIAL COVENANTS
	 	 
	     (Section 6.7):
	 	 
	 
	 	 
	   WHILE THE ASSET BASED TERMS ARE NOT IN EFFECT:

4

 

	 	 	 
	 

	 	Borrower shall comply with each of the following
covenants. Compliance shall be determined on a
consolidated basis as of the end of each month,
except as specifically otherwise provided below:
	 
	 	 
	Quick Ratio:

	 	Borrower shall maintain a ratio of
	 
	 	 
	 

	 	(i)   the total of unrestricted cash, cash equivalents and net trade accounts receivable,

	 
	 	 
	 

	 	                    TO
	 
	 	 
	 

	 	(ii)  the total of current liabilities,

	 
	 	 
	 

	 	of not less than (A) 0.75 to 1.00
through and including the period
ending July 31, 2006; and (B) 1.00 to 1.00 thereafter.
	 
	 	 
	Profitability/Loss:

	 	Borrower shall not incur an Adjusted Net Loss (as defined
below) in excess of (A) $5,500,000 for the fiscal quarter ending March 31, 2006;
and (E) $4,500,000 for the fiscal quarter ending June 30, 2006. Thereafter,
Borrower shall attain Adjusted Net Profits in each fiscal quarter.
	 
	 	 
	 

	 	As used herein, the term “Adjusted Net Loss” or
“Adjusted Net Profit” shall mean with respect to any
Person as to a specified period, the net loss or net profit, as
applicable, determined in accordance with GAAP, excluding,
however, the effects of the following: non-cash charges relating
to depreciation and amortization, together with charges
attributable to stock-based compensation.
	 
	 	 
	     Definitions.

	 	For purposes of this Agreement, the following term shall have the
following meaning:
	 
	 	 
	 

	 	“Current assets”, “current liabilities” and “liabilities” shall
have the meaning ascribed thereto by GAAP.
	 
	 	 
	WHILE THE ASSET BASED TERMS ARE IN EFFECT:
	 
	 	 
	 

	 	Borrower shall comply with each of the following
covenants. Compliance shall be determined on a
consolidated basis as of the end of each month,
except as specifically otherwise provided below:
	 
	 	 
	Quick Ratio:

	 	Borrower shall maintain a ratio of
	 
	 	 
	 

	 	(i)    the total of unrestricted cash, cash equivalents and net trade accounts receivable,

	 
	 	 
	 

	 	                    TO
	 
	 	 
	 

	 	(ii)    the total of current liabilities,

	 
	 	 
	 

	 	of not less than (A) 0.75 to 1.00.

5

 

	 	 	 
	Tangible Net Worth:

	 	Borrower shall maintain a Tangible Net Worth of not less
than $15,000,000, plus (i) 50% of all consideration received after the date
hereof for equity securities of the Borrower, plus (ii) 50% of the
Borrower’s net income in each fiscal quarter after the date hereof.
	 
	 	 
	 

	 	Increases in the Tangible Net Worth Covenant based on
consideration received for equity securities and subordinated debt
of the Borrower shall be effective as of the end of the month in
which such consideration is received, and shall continue effective
thereafter. Increases in the Tangible Net Worth covenant based on
net income shall be effective on the last day of the fiscal
quarter in which said net income is realized, and shall continue
effective thereafter. In no event shall the minimum Tangible Net
Worth covenant be decreased.
	 
	 	 
	 
	 
	 	 
	6. ASSET BASED TERMS
	 	 
	 
	 	 
	 

	 	(iii)      “Asset Based Terms”. As used herein, “Asset Based Terms” means the
terms set forth on Exhibit E to the Loan Agreement. Terms of
this Agreement without the Asset Based Terms are referred to
as the “Non-Asset Based Terms”.

	 
	 	 
	 

	 	(iv)      Financial Covenant Breach. Without limiting any of the other terms or
provisions hereof, if there is breach of the financial
covenant set forth in Section 5 above for those financial
covenants in effect while the Asset Based Terms are NOT
applicable, the Asset Based Terms shall be deemed effective
upon written notice from the Bank to the Borrower and the
Event of Default arising from any such breach shall no longer
be deemed to be in effect as long as Borrower complies with
all of the terms and conditions applicable to the Asset Based
Terms credit facility provisions as set forth herein. A
breach of any of the financial covenants in effect while the
Asset Based Term are applicable shall nonetheless constitute
an immediate Event of Default under the Loan Agreement.

	 
	 	 
	 
	 
	 	 
	7. ADDITIONAL PROVISIONS.
	 
	 	 
	 

	 	7.1  Warrant to Purchase Stock. Borrower shall maintain in effect the Warrant to
Purchase Stock that was executed and delivered to Bank in
connection with the execution and delivery of the original
Loan Agreement.

6

 

     IN WITNESS WHEREOF, the parties hereto have executed this Schedule as of the date first
written above.

	 	 	 	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	Bank:	 	 
	     VOLCANO CORPORATION	 	 	 	SILICON VALLEY BANK	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	By 

	 	 	 	 	By	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	     President or Vice President
	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

7

 

EXHIBIT E

ASSET BASED TERMS

The following are the “Asset Based Terms”:

     (1) Schedules and Documents relating to Accounts. Borrower shall deliver to Bank transaction
reports, Advance requests, schedules of Accounts, and schedules of collections, all on Bank’s
standard forms; provided, however, that Borrower’s failure to execute and deliver the same shall
not affect or limit Bank’s security interest and other rights in all of Borrower’s Accounts. If
requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of
all contracts, orders, invoices, and other similar documents, and all shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Accounts, and Borrower warrants the genuineness of all of
the foregoing. Borrower shall also furnish to Bank an aged accounts receivable trial balance in
such form and at such intervals as Bank shall request. In addition, Borrower shall deliver to
Bank the originals of all instruments, chattel paper, security agreements, guarantees and other
documents and property evidencing or securing any Accounts, immediately upon receipt thereof and in
the same form as received, with all necessary endorsements, all of which shall be with recourse.
Borrower shall also provide Bank with copies of all credit memos from time to time on request by
Bank.

     (2) Collection of Accounts. Subject to the final sentence of this paragraph, Borrower shall
hold all payments on, and proceeds of, Accounts and all other Collateral in trust for Bank, and
Borrower shall immediately deliver all such payments and proceeds to Bank in their original form,
duly endorsed, to be applied to the Obligations in such order as Bank shall determine. Borrower
agrees that it will not commingle such payments and proceeds with any of Borrower’s other funds or
property, but will hold such payments and proceeds separate and apart from such other funds and
property and in an express trust for Bank. Bank shall require that all proceeds of Collateral be
deposited by Borrower into a lockbox account, or such other “blocked account” as Bank may specify,
pursuant to a blocked account agreement in such form as Bank may specify. Bank or its designee
may, at any time, notify Account Debtors that the Accounts have been assigned to Bank and do
verifications of Accounts and all receivables against which Advances are made in accordance with
Bank’s standard procedures. Nothing in this Exhibit limits the restrictions on Transfers of
Collateral set forth elsewhere in this Agreement. The provisions of the Asset Based Terms at this
time do not require the application of collection of proceeds from subsidiaries of Borrower to be
applied to the loan account of Borrower. Further, only while Borrower has availability for
Advances hereunder in the minimum amount of $5,000,000 (as determined by the Borrower’s most recent
Transaction Report delivered to and approved by Bank), collections received by Bank shall not be
applied to reduce Borrower’s loan account with Borrower’s deposit account with Bank for Borrower’s
use.

     (3) Interest Computation. In computing interest on the Obligations, all checks, wire
transfers and other items of payment received by Silicon (including proceeds of Accounts shall be
deemed applied by Silicon on account of the Obligations two Business Days after receipt by Silicon
of immediately available funds, and, for purposes of the foregoing, any such funds received after
12:00 Noon on any day shall be deemed received on the next Business Day. Silicon shall not,
however, be required to credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Silicon in its good faith business judgment, and Silicon may charge Borrower’s
loan account for the amount of any item of payment which is returned to Silicon unpaid.

     (4) Loan Requests. Without limiting the right of Bank to cease making Advances on an Event of
Default, requests for Advances shall be in writing and shall be accompanied by a current
Transaction Report on Bank’s standard form.

     (5) Reserves. Without limiting the right of Bank to cease making Advances on an Event of
Default, Bank shall have the right, from time to time, to establish and deduct the following
reserves from

 

 

the amount of Advances, Letters of Credit and other financial accommodations under
the lending formula(s) provided in Schedule 2: (a) reserves to reflect events, conditions,
contingencies or risks which, as determined by Bank in good faith, do or may affect adversely (i)
the Collateral or any other property which is security for the Obligations or its value (including
without limitation any increase in delinquencies of Accounts), (ii) the assets, business or
prospects of Borrower, or (iii) the security interests and other rights of Bank in the Collateral
(including the enforceability, perfection and priority thereof); and (b) reserves to reflect Bank’s
good faith belief that any collateral report or financial information furnished by or on behalf of
Borrower to Bank is or may have been incomplete, inaccurate or misleading in any material respect.

     (6) Cure Periods. The cure periods set forth in the Loan Agreement shall be modified as
follows: the cure period in Section 8.3 of the Loan Agreement shall be five Business Days rather
than 30 days and there shall be no cure period in Section 8.1 of the Loan Agreement.

2

 

Silicon Valley Bank

Continuing Guaranty

	 	 	 
	Borrower:

	 	Volcano Corporation
	 
	 	 
	Guarantors:

	 	Volcano Europe SA/NV
	 

	 	Volcano Japan K.K.
	 
	 	 
	Date:

	 	April ___, 2006

     This Continuing Guaranty is executed by the above-named guarantors (jointly and severally
referred to herein as the “Guarantor”), as of the above date, in favor of SILICON VALLEY BANK
(“Silicon”), whose address is 3003 Tasman Drive, Santa Clara, California 95054, with respect to
the Indebtedness of the above-named borrower (“Borrower”).

     1. Continuing Guaranty. Guarantor hereby unconditionally guarantees and promises to
pay on demand to Silicon, at the address indicated above, or at such other address as Silicon may
direct, in lawful money of the United States, and to perform for the benefit of Silicon, all
Indebtedness of Borrower now or hereafter owing to or held by Silicon. As used herein, the term
“Indebtedness” is used in its most comprehensive sense and shall mean and include without
limitation: (a) any and all debts, duties, obligations, liabilities, representations, warranties
and guaranties of Borrower or any one or more of them, heretofore, now, or hereafter made,
incurred, or created pursuant to that certain Loan and Security Agreement dated July 18, 2003, by
and between Borrower and Silicon, as amended or otherwise modified from time to time (the “Loan
Agreement”), whether voluntary or involuntary, due or not due, absolute or contingent, liquidated
or unliquidated, certain or uncertain, determined or undetermined, monetary or nonmonetary, written
or oral, and whether Borrower may be liable individually or jointly with others, and regardless of
whether recovery thereon may be or hereafter become barred by any statute of limitations,
discharged or uncollectible in any bankruptcy, insolvency or other proceeding, or otherwise
unenforceable; and (b) any and all amendments, modifications, renewals and extensions of any or all
of the foregoing, including without limitation amendments, modifications, renewals and extensions
which are evidenced by any new or additional instrument, document or agreement; and (c) any and all
attorneys’ fees, court costs, and collection charges incurred in endeavoring to collect or enforce
any of the foregoing against Borrower or Guarantor (whether or not suit be brought) and any other
expenses of, for or incidental to collection thereof. As used herein, the term “Borrower” shall
include any successor to the business and assets of Borrower if any portion of the Indebtedness
remains outstanding, and shall also include Borrower in its capacity as a debtor or debtor in
possession under the federal Bankruptcy Code, and any trustee, custodian or receiver for Borrower
or any of its assets, should Borrower hereafter become the subject of any bankruptcy or insolvency
proceeding, voluntary or involuntary This Guaranty is given in consideration for credit and other
financial accommodations given by Silicon to Borrower pursuant to the terms of the Loan Agreement.
All sums due under this Guaranty shall bear interest from the date due until the date paid at the
highest rate charged with respect to any of the Indebtedness.

     2. Waivers. Guarantor hereby waives: (a) presentment for payment, notice of dishonor,
demand, protest, and notice thereof as to any instrument, and all other notices and demands to
which Guarantor might be entitled, including without limitation notice of all of the following:
the acceptance hereof; the creation, existence, or acquisition of any Indebtedness; the amount of
the Indebtedness from time to time outstanding; any foreclosure sale or other disposition of any
property which secures any or all of the Indebtedness or which secures the obligations of any other
guarantor of any or all of the Indebtedness; any adverse change in Borrower’s financial position;
any other fact which might increase Guarantor’s risk; any default, partial payment or non-payment
of all or any part of the Indebtedness; the occurrence of any other Event of Default (as
hereinafter defined); any and all agreements and arrangements between Silicon and Borrower and any
changes, modifications, or extensions thereof, and any revocation, modification or release of any
guaranty of any or all of the Indebtedness by any person (including without limitation any other
person signing this Guaranty); (b) any right to require Silicon to institute suit against, or to
exhaust its rights and remedies against, Borrower or any other person, or to proceed against any
property of any kind which secures all or any part of the Indebtedness, or to exercise any right of
offset or other right with respect to any reserves, credits or deposit accounts held by or
maintained with Silicon or any indebtedness of Silicon to Borrower, or to exercise any other right
or power, or pur-

-1-

 

			
	 	 	 
	                         Silicon Valley Bank
	 	Continuing Guaranty

sue any other remedy Silicon may have; (c) any defense arising by reason of any
disability or other defense of Borrower or any other guarantor or any endorser, co-maker or other
person, or by reason of the cessation from any cause whatsoever of any liability of Borrower or any
other guarantor or any endorser, co-maker or other person, with respect to all or any part of the
Indebtedness, or by reason of any act or omission of Silicon or others which directly or indirectly
results in the discharge or release of Borrower or any other guarantor or any other person or any
Indebtedness or any security therefor, whether by operation of law or otherwise; (d) any defense
arising by reason of any failure of Silicon to obtain, perfect, maintain or keep in force any
security interest in, or lien or encumbrance upon, any property of Borrower or any other person;
(e) any defense based upon any failure of Silicon to give Guarantor notice of any sale or other
disposition of any property securing any or all of the Indebtedness, or any defects in any such
notice that may be given, or any failure of Silicon to comply with any provision of applicable law
in enforcing any security interest in or lien upon any property securing any or all of the
Indebtedness including, but not limited to, any failure by Silicon to dispose of any property
securing any or all of the Indebtedness in a commercially reasonable manner; (f) any defense based
upon or arising out of any bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, liquidation or dissolution proceeding commenced by or against Borrower or any other guarantor
or any endorser, co-maker or other person, including without limitation any discharge of, or bar
against collecting, any of the Indebtedness (including without limitation any interest thereon), in
or as a result of any such proceeding; and (g) the benefit of any and all statutes of limitation
with respect to any action based upon, arising out of or related to this Guaranty. Until all of
the Indebtedness has been paid, performed, and discharged in full, nothing shall discharge or
satisfy the liability of Guarantor hereunder except the full performance and payment of all of the
Indebtedness. If any claim is ever made upon Silicon for repayment or recovery of any amount or
amounts received by Silicon in payment of or on account of any of the Indebtedness, because of any
claim that any such payment constituted a preferential transfer or fraudulent conveyance, or for
any other reason whatsoever, and Silicon repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having jurisdiction over Silicon or
any of its property, or by reason of any settlement or compromise of any such claim effected by
Silicon with any such claimant (including without limitation the Borrower), then and in any such
event, Guarantor agrees that any such judgment, decree, order, settlement and compromise shall be
binding upon Guarantor, notwithstanding any revocation or release of this Guaranty or the
cancellation of any note or other instrument evidencing any of the Indebtedness, or any release of
any of the Indebtedness, and the Guarantor shall be and remain liable to Silicon under this
Guaranty for the amount so repaid or recovered, to the same extent as if such amount had never
originally been received by Silicon, and the provisions of this sentence shall survive, and
continue in effect, notwithstanding any revocation or release of this Guaranty. Until all of the
Indebtedness has been irrevocably paid and performed in full, Guarantor hereby expressly and
unconditionally waives all rights of subrogation, reimbursement and indemnity of every kind against
Borrower, and all rights of recourse to any assets or property of Borrower, and all rights to any
collateral or security held for the payment and performance of any Indebtedness, including (but not
limited to) any of the for
egoing rights which Guarantor may have under any present or future
document or agreement with any Borrower or other person, and including (but not limited to) any of
the foregoing rights which Guarantor may have under any equitable doctrine of subrogation, implied
contract, or unjust enrichment, or any other equitable or legal doctrine. Neither Silicon, nor any
of its directors, officers, employees, agents, attorneys or any other person affiliated with or
representing Silicon shall be liable for any claims, demands, losses or damages, of any kind
whatsoever, made, claimed, incurred or suffered by Guarantor or any other party through the
ordinary negligence of Silicon, or any of its directors, officers, employees, agents, attorneys or
any other person affiliated with or representing Silicon.

     3. Consents. Guarantor hereby consents and agrees that, without notice to or by Guarantor and
without affecting or impairing in any way the obligations or liability of Guarantor hereunder,
Silicon may, from time to time before or after revocation of this Guaranty, do any one or more of
the following in Silicon’s sole and absolute discretion: (a) accelerate, accept partial payments
of, compromise or settle, renew, extend the time for the payment, discharge, or performance of,
refuse to enforce, and release all or any parties to, any or all of the Indebtedness; (b) grant any
other indulgence to Borrower or any other person in respect of any or all of the Indebtedness or
any other matter; (c) accept, release, waive, surrender, enforce, exchange, modify, impair, or
extend the time for the performance, discharge, or payment of, any and all property of any kind
securing any or all of the Indebtedness or any guaranty of any or all of the Indebtedness, or on
which Silicon at any time may have a lien, or refuse to enforce its rights or make any compromise
or settlement or agreement therefor in respect of any or all of such property; (d) substitute or
add, or take any action or omit to take any action which results in the release of, any one or more
endorsers or guarantors of all or any part of the Indebtedness, including, without limitation one
or more parties to this Guaranty, regardless of any destruction or impairment of any right of
contribution or other right of Guarantor; (e) amend, alter or change in any respect whatsoever any
term or provision relating to any or all of the Indebtedness, including the rate of interest
thereon; (f) apply any sums received from Borrower, any other guarantor, endorser, or co-signer, or
from the disposition of any collateral or security, to any indebtedness whatsoever owing from such
person or secured by such collateral or security, in such manner and order as Silicon determines in
its sole discretion, and regardless of whether such indebtedness is part of the Indebtedness, is
secured, or is due and payable; (g) apply

-2-

 

			
	 	 	 
	                         Silicon Valley Bank
	 	Continuing Guaranty

any sums received from Guarantor or from the disposition
of any collateral or security securing the obligations of Guarantor, to any of the Indebtedness in
such manner and order as Silicon determines in its sole discretion, regardless of whether or not
such Indebtedness is secured or is due and payable. Guarantor consents and agrees that Silicon
shall be under no obligation to marshal any assets in favor of Guarantor, or against or in payment
of any or all of the Indebtedness. Guarantor further consents and agrees that Silicon shall have
no duties or responsibilities whatsoever with respect to any property securing any or all of the
Indebtedness. Without limiting the generality of the foregoing, Silicon shall have no obligation
to monitor, verify, audit, examine, or obtain or maintain any insurance with respect to, any
property securing any or all of the Indebtedness.

     4. Account Stated. Silicon’s books and records showing the account between it and the
Borrower shall be admissible in evidence in any action or proceeding as prima facie proof of the
items therein set forth. Silicon’s monthly statements rendered to the Borrower shall be binding
upon the Guarantor (whether or not the Guarantor receives copies thereof), and shall constitute an
account stated between Silicon and the Borrower, unless Silicon receives a written statement of the
Borrower’s exceptions within 30 days after the statement was mailed to the Borrower. The Guarantor
assumes full responsibility for obtaining copies of such monthly statements from the Borrower, if
the Guarantor desires such copies.

     5. Exercise of Rights and Remedies; Foreclosure of Trust Deeds. Guarantor consents and agrees
that, without notice to or by Guarantor and without affecting or impairing in any way the
obligations or liability of Guarantor hereunder, Silicon may, from time to time, before or after
revocation of this Guaranty, exercise any right or remedy it may have with respect to any or all of
the Indebtedness or any property securing any or all of the Indebtedness or any guaranty thereof,
including without limitation judicial foreclosure, nonjudicial foreclosure, exercise of a power of
sale, and taking a deed, assignment or transfer in lieu of foreclosure as to any such property, and
Guarantor expressly waives any defense based upon the exercise of any such right or remedy,
notwithstanding the effect thereof upon any of Guarantor’s rights, including without limitation,
any destruction of Guarantor’s right of subrogation against Borrower and any destruction of
Guarantor’s right of contribution or other right against any other guarantor of any or all of the
Indebtedness or against any other person, whether by operation of Sections 580a, 580d or 726 of the
California Code of Civil Procedure, or any comparable provisions of the laws of any other
jurisdiction, or any other statutes or rules of law now or hereafter in effect, or otherwise.
Without limiting the generality of the foregoing, (a) The guarantor waives all rights and defenses
that the Guarantor may have because the Indebtedness is secured by real property. This means,
among other things: (1) Silicon may collect from the Guarantor without first foreclosing on any
real or personal property collateral pledged by the Borrower. (2) If Silicon forecloses on any
real property collateral pledged by the Borrower: (A) The amount of the Indebtedness may be
reduced only by the price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price. (B) Silicon may collect from the Guarantor even if
Silicon, by foreclosing on the real property collateral, has destroyed any right the Guarantor may
have to collect from the Borrower. This is an unconditional and irrevocable waiver of any rights
and defenses the Guarantor may have because the Indebtedness is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses based upon Section
580a, 580b, 580d, or 726 of the Code of Civil Procedure. (b) The guarantor waives all rights and
defenses that the Guarantor may have because the guaranty of another guarantor is secured by real
property. This means, among other things: (1) Silicon may collect from the Guarantor without first
foreclosing on any real or personal property collateral pledged by the other guarantor. (2) If
Silicon forecloses on any real property collateral pledged by the other guarantor: (A) The amount
of the Indebtedness may be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price. (B) Silicon may
collect from the Guarantor even if Silicon, by foreclosing on the real property collateral, has
destroyed any right the Guarantor may have to obtain contribution from the other guarantor. This
is an unconditional and irrevocable waiver of any rights and defenses the Guarantor may have
because the obligations of the other guarantor are secured by real property. These rights and
defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b,
580d, or 726 of the Code of Civil Procedure.

     6. Acceleration. Notwithstanding the terms of all or any part of the Indebtedness, the
obligations of the Guarantor hereunder to pay and perform all of the Indebtedness shall, at the
option of Silicon, immediately become due and payable, without notice, and without regard to the
expressed maturity of any of the Indebtedness (a) upon the occurrence and during the continuation
of any Event of Default (as defined in the Loan Agreement), (b) if any material warranty,
representation, statement, report, or certificate made or delivered to Silicon by Guarantor, or any
of its respective officers, partners,employees, or agents, is incorrect, false, untrue, or
misleading when given in any material respect; or (c) if Guarantor shall fail to pay or perform
when due all or any part of the Indebtedness when due; or (d) Guarantor shall fail to pay or
perform when due any indebtedness or obligation of Guarantor to Silicon under this Guaranty or any
other instrument, document, or agreement relating thereto; or (e) Guarantor shall revoke this
Guaranty or contest or deny liability under this Guaranty. All of the foregoing are hereinafter
referred to as “Events of Default”.

     7. [Reserved]

-3-

 

			
	 	 	 
	                         Silicon Valley Bank
	 	Continuing Guaranty

     8. Indemnity. Guarantor hereby agrees to indemnify Silicon and hold Silicon harmless from and
against any and all claims, debts, liabilities, demands, obligations, actions, causes of action,
penalties, costs and expenses (including without limitation attorneys’ fees but excluding any
claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs or
expenses claimed by Borrower against Silicon), of every nature, character and description, which
Silicon may sustain or incur based upon or arising out of any of the Indebtedness, any actual or
alleged failure to collect and pay over any withholding or other tax relating to Borrower or its
employees, any relationship or agreement between Silicon and Borrower, any actual or alleged
failure of Silicon to comply with any writ of attachment or other legal process relating to
Borrower or any of its property, or any other matter, cause or thing whatsoever occurred, done,
omitted or suffered to be done by Silicon relating in any way to Borrower or the Indebtedness
(except any such amounts sustained or incurred as the result of the gross negligence or willful
misconduct of Silicon or any of its directors, officers, employees, agents, attorneys, or any other
person affiliated with or representing Silicon). Notwithstanding any provision in this Guaranty to
the contrary, the indemnity agreement set forth in this Section shall survive any termination or
revocation of this Guaranty and shall for all purposes continue in full force and effect.

     9. Subordination. Any and all rights of Guarantor under any and all debts, liabilities and
obligations owing from Borrower to Guarantor, including any security for and guaranties of any such
obligations, whether now existing or hereafter arising, are hereby subordinated in right of payment
to the prior payment in full of all of the Indebtedness. No payment in respect of any such
subordinated obligations shall at any time be made to or accepted by Guarantor if at the time of
such payment any Indebtedness is outstanding, other than, as long as no Event of Default is then
occurring and continuing, Guarantor may receive payments in the ordinary course of business. If
any Event of Default has occurred, Borrower and any assignee, trustee in bankruptcy, receiver, or
any other person having custody or control over any or all of Borrower’s property are hereby
authorized and directed to pay to Silicon the entire unpaid balance of the Indebtedness before
making any payments whatsoever to Guarantor, whether as a creditor, shareholder, or otherwise; and
insofar as may be necessary for that purpose. Any amounts received by Guarantor in violation of
the foregoing provisions shall be received and held as trustee for the benefit of Silicon and shall
forthwith be paid over to Silicon to be applied to the Indebtedness to accrued, unpaid interest,
fees and expenses under the Loan Agreement and then to outstanding principal and then to any
remaining Indebtedness in such order and sequence as Silicon shall in its sole discretion
determine, without limiting or affecting any other right or remedy which Silicon may have hereunder
or otherwise and without otherwise affecting the liability of Guarantor hereunder. Guarantor
hereby expressly waives any right to set-off or assert any counterclaim against Borrower until the
Indebtedness is indefeasibly paid in full.

     10. Revocation. This is a Continuing Guaranty relating to all of the Indebtedness, including
Indebtedness arising under successive transactions which from time to time continue the
Indebtedness or renew it after it has been satisfied. Guarantor waives all benefits of California
Civil Code Section 2815, and agrees that the obligations of Guarantor hereunder may not be
terminated or revoked in any manner except by giving 90 days’ advance written notice of revocation
to Silicon at its address above by registered first-class U.S. mail, postage prepaid, return
receipt requested, and only as to new loans and any new advances made and any Indebtedness relating
to such loans and advances made by Silicon to Borrower more than 90 days after actual receipt of
such written notice by Silicon. No termination or revocation of this Guaranty shall be effective
until 90 days following the date of actual receipt of said written notice of revocation by Silicon.
Notwithstanding such written notice of revocation or any other act of Guarantor or any other event
or circumstance, Guarantor agrees that this Guaranty and all consents, waivers and other provisions
hereof shall continue in full force and effect as to any and all Indebtedness which is outstanding
on or before the 90th day following actual receipt of said written notice of revocation by Silicon,
and all extensions, renewals and modifications of said Indebtedness (including without limitation
amendments, extensions, renewals and modifications which are evidenced by new or additional
instruments, documents or agreements executed before or after expiration of said 90-day period),
and all interest thereon, accruing before or after expiration of said 90-day period, and all
attorneys’ fees, court costs and collection charges, incurred before or after expiration of said
90-day period, in endeavoring to collect or enforce any of the foregoing against Borrower,
Guarantor or any other person liable thereon (whether or not suit be brought) and any other
expenses of, for or incidental to collection thereof.

     11. Independent Liability. Guarantor hereby agrees that one or more successive or concurrent
actions may be brought hereon against Guarantor, in the same action in which Borrower may be sued
or in separate actions, as often as deemed advisable by Silicon. The liability of Guarantor
hereunder is exclusive and independent of any other guaranty of any or all of the Indebtedness
whether executed by Guarantor or by any other guarantor (including without limitation any other
persons signing this Guaranty). The liability of Guarantor hereunder shall not be affected,
revoked, impaired, or reduced by any one or more of the following: (a) the fact that the
Indebtedness exceeds the maximum amount of Guarantor’s liability, if any, specified herein or
elsewhere (and no agreement specifying a maximum amount of Guarantor’s liability shall be
enforceable unless set forth in a writing signed by Silicon or set forth in this Guaranty); or (b)
any direction as to the application of payment by Borrower or by any other party; or (c) any other
continuing or restrictive guaranty or

-4-

 

			
	 	 	 
	                         Silicon Valley Bank
	 	Continuing Guaranty

undertaking or any limitation on the liability of any other
guarantor (whether under this Guaranty or under any other agreement); or (d) any payment on or
reduction of any such other guaranty or undertaking; or (e) any revocation, amendment, modification
or release of any such other guaranty or undertaking; or (f) any dissolution or termination of, or
increase, decrease, or change in membership of any Guarantor which is a partnership. Guarantor
hereby expressly represents that it was not induced to give this Guaranty by the fact that there
are or may be other guarantors either under this Guaranty or otherwise, and Guarantor agrees that
any release of any one or more of such other guarantors shall not release Guarantor from its
obligations hereunder either in full or to any lesser extent.

     12. Financial Condition of Borrower. Guarantor is fully aware of the financial condition of
Borrower and is executing and delivering this Guaranty at Borrower’s request and based solely upon
its own independent investigation of all matters pertinent hereto, and Guarantor is not relying in
any manner upon any representation or statement of Silicon with respect thereto. Guarantor
represents and warrants that it is in a position to obtain, and Guarantor hereby assumes full
responsibility for obtaining, any additional information concerning Borrower’s financial condition
and any other matter pertinent hereto as Guarantor may desire, and Guarantor is not relying upon or
expecting Silicon to furnish to it any information now or hereafter in Silicon’s possession
concerning the same or any other matter. By executing this Guaranty, Guarantor knowingly accepts
the full range of risks encompassed within a contract of continuing guaranty, which risks Guarantor
acknowledges include without limitation the possibility that Borrower will incur additional
Indebtedness for which Guarantor will be liable hereunder after Borrower’s financial condition or
ability to pay such Indebtedness has deteriorated and/or after bankruptcy or insolvency proceedings
have been commenced by or against Borrower. Guarantor shall have no right to require Silicon to
obtain or disclose any information with respect to the Indebtedness, the financial condition or
character of Borrower, the existence of any collateral or security for any or all of the
Indebtedness, the filing by or against Borrower of any bankruptcy or insolvency proceeding, the
existence of any other guaranties of all or any part of the Indebtedness, any action or non-action
on the part of Silicon, Borrower, or any other person, or any other matter, fact, or occurrence.

     13. Reports and Financial Statements of Guarantor. Guarantor shall, at its sole cost and
expense, at any time and from time to time, prepare or cause to be prepared, and provide to Silicon
upon Silicon’s request (i) such financial statements and reports concerning Guarantor for such
periods of time as Silicon may designate (but not with any greater frequency as is required of the
Borrower under the Loan Agreement), (ii) any other information concerning Guarantor’s business,
financial condition or affairs as Silicon may request, and (iii) copies of any and all foreign,
federal, state and local tax returns and reports of or relating to Guarantor as Silicon may from
time to time request. Guarantor hereby intentionally and knowingly waives any and all rights and
privileges it may have not to divulge or deliver said tax returns, reports and other information
which are requested by Silicon hereunder or in any litigation in which Silicon may be involved
relating directly or indirectly to Borrower or to Guarantor. Guarantor further agrees immediately
to give written notice to Silicon of any material adverse change in Guarantor’s financial condition
and of any condition or event which constitutes an Event of Default under this Guaranty. All
reports and information furnished to Silicon hereunder shall be complete, accurate and correct in
all respects. Whenever requested in connection with any foregoing financial information, Guarantor
shall further deliver to Silicon a certificate signed by Guarantor (and, if Guarantor is a
partnership, by all general partners of Guarantor, in their individual capacities, and, if
Guarantor is a corporation, by the president and secretary of Guarantor, in their individual
capacities) warranting and representing that all reports, financial statements and other documents
and information delivered or caused to be delivered to Silicon under this Guaranty, are complete,
correct and thoroughly and accurately present the financial condition of Guarantor, and that there
exists on the date of delivery of said certificate to Silicon no condition or event which
constitutes an Event of Default under this Guaranty.

     14. Representations and Warranties. Guarantor hereby represents and warrants that (i) it is
in Guarantor’s direct interest to assist Borrower in procuring credit, because Borrower is an
affiliate of Guarantor, furnishes goods or services to Guarantor, purchases or acquires goods or
services from Guarantor, and/or otherwise has a direct or indirect corporate or business
relationship with Guarantor, (ii) this Guaranty has been duly and validly authorized, executed and
delivered and constitutes the valid and binding obligation of Guarantor, enforceable in accordance
with its terms, and (iii) the execution and delivery of this Guaranty does not violate or
constitute a default under (with or without the giving of notice, the passage of time, or both) any
order, judgment, decree, instrument or agreement to which Guarantor is a party or by which it or
its assets are affected or bound.

     15. Costs. Whether or not suit be instituted, except as may be otherwise provided herein
Guarantor agrees to reimburse Silicon on demand for all reasonable attorneys’ fees and all other
reasonable costs and expenses incurred by Silicon in enforcing this Guaranty, or arising out of or
relating in any way to this Guaranty, or in enforcing any of the Indebtedness against Borrower,
Guarantor, or any other person, or in connection with any property of any kind securing all or any
part of the Indebtedness. Without limiting the generality of the foregoing, and in addition
thereto, Guarantor shall reimburse Silicon on demand for all reasonable attorneys’ fees and costs
Silicon incurs in any way relating to Guarantor, Borrower or the Indebtedness, in order to: obtain
legal advice; enforce or seek to enforce any of its rights; commence, intervene in, respond to, or
defend any action or proceeding; file, prosecute or defend any claim

-5-

 

			
	 	 	 
	                         Silicon Valley Bank
	 	Continuing Guaranty

or cause of action in any
action or proceeding (including without limitation any probate claim, bankruptcy claim, third-party
claim, secured creditor claim, reclamation complaint, and complaint for relief from any stay under
the Bankruptcy Code or otherwise); protect, obtain possession of, sell, lease, dispose of or
otherwise enforce any security interest in or lien on any property of any kind securing any or all
of the Indebtedness; or represent Silicon in any litigation with respect to Borrower’s or
Guarantor’s affairs. In the event either Silicon or Guarantor files any lawsuit against the other
predicated on a breach of this Guaranty, the prevailing party in such action shall be entitled to
recover its attorneys’ fees and costs of suit from the non-prevailing party.

     16. Notices. Any notice which a party shall be required or shall desire to give to the other
hereunder (except for notice of revocation, which shall be governed by Section 10 of this Guaranty)
shall be given by personal delivery or by telecopier or by depositing the same in the United States
mail, first class postage pre-paid, addressed to Silicon at its address set forth in the heading of
this Guaranty and to Guarantor at his address set forth under his signature hereon, and such
notices shall be deemed duly given on the date of personal delivery or one day after the date
telecopied or 3 business days after the date of mailing as aforesaid. Silicon and Guarantor may
change their address for purposes of receiving notices hereunder by giving written notice thereof
to the other party in accordance herewith. Guarantor shall give Silicon immediate written notice
of any change in his address.

     17. Construction; Severability. If more than one person has executed this Guaranty, the term
“Guarantor” as used herein shall be deemed to refer to all and any one or more such persons and
their obligations hereunder shall be joint and several. Without limiting the generality of the
foregoing, if more than one person has executed this Guaranty, this Guaranty shall in all respects
be interpreted as though each person signing this Guaranty had signed a separate Guaranty, and
references herein to “other guarantors” or words of similar effect shall include without limitation
other persons signing this Guaranty. As used in this Guaranty, the term “property” is used in its
most comprehensive sense and shall mean all property of every kind and nature whatsoever, including
without limitation real property, personal property, mixed property, tangible property and
intangible property. Words used herein in the masculine gender shall include the neuter and
feminine gender, words used herein in the neuter gender shall include the masculine and feminine,
words used herein in the singular shall include the plural and words used in the plural shall
include the singular, wherever the context so reasonably requires. If any provision of this
Guaranty or the application thereof to any party or circumstance is held invalid, void, inoperative
or unenforceable, the remainder of this Guaranty and the application of such provision to other
parties or circumstances shall not be affected thereby, the provisions of this Guaranty being
severable in any such instance.

     18. General Provisions. Silicon shall have the right to seek recourse against Guarantor to
the full extent provided for herein and in any other instrument or agreement evidencing obligations
of Guarantor to Silicon, and against Borrower to the full extent of the Indebtedness. No election
in one form of action or proceeding, or against any party, or on any obligation, shall constitute a
waiver of Silicon’s right to proceed in any other form of action or proceeding or against any other
party. The failure of Silicon to enforce any of the provisions of this Guaranty at any time or for
any period of time shall not be construed to be a waiver of any such provision or the right
thereafter to enforce the same. All remedies hereunder shall be cumulative and shall be in
addition to all rights, powers and remedies given to Silicon by law or under any other instrument
or agreement. Time is of the essence in the performance by Guarantor of each and every obligation
under this Guaranty. If Borrower is a corporation, partnership or other entity, Guarantor hereby
agrees that Silicon shall have no obligation to inquire into the power or authority of Borrower or
any of its officers, directors, partners, or agents acting or purporting to act on its behalf, and
any Indebtedness made or created in reliance upon the professed exercise of any such power or
authority shall be included in the Indebtedness guaranteed hereby. This Guaranty is the entire and
only agreement between Guarantor and Silicon with respect to the guaranty of the Indebtedness of
Borrower by Guarantor, and all representations, warranties, agreements, or undertakings heretofore
or contemporaneously made, which are not set forth herein, are superseded hereby. No course of
dealings between the parties, no usage of the trade, and no parol or extrinsic evidence of any
nature shall be used or be relevant to supplement or explain or modify any term or provision of
this Guaranty. There are no conditions to the full effectiveness of this Guaranty. The terms and
provisions hereof may not be waived, altered, modified, or amended except in a writing executed by
Guarantor and a duly authorized officer of Silicon. All rights, benefits and privileges hereunder
shall inure to the benefit of and be enforceable by Silicon and its successors and assigns and
shall be binding upon Guarantor and his heirs, executors, administrators, personal representatives,
successors and assigns. Section headings are used herein for convenience only. Guarantor
acknowledges that the same may not describe completely the subject matter of the applicable
Section, and the same shall not be used in any manner to construe, limit, define or interpret any
term or provision hereof.

     19. Governing Law; Venue and Jurisdiction. This instrument and all acts and transactions
pursuant or relating hereto and all rights and obligations of the parties hereto shall be governed,
construed, and interpreted in accordance with the internal laws of the State of California. In
order to induce Silicon to accept this Guaranty, and as a material part of the consideration
therefor, Guarantor (i) agrees that all

-6-

 

			
	 	 	 
	                         Silicon Valley Bank
	 	Continuing Guaranty

actions or proceedings relating directly or indirectly
hereto shall, at the option of Silicon, be litigated in courts located within Orange County,
California, (ii) consents to the jurisdiction of any such court and consents to the service of
process in any such action or proceeding by personal delivery or any other method permitted by law;
and (iii) waives any and all rights Guarantor may have to transfer or change the venue of any such
action or proceeding.

     20. Mutual Waiver of Right to Jury Trial. SILICON AND GUARANTOR HEREBY WAIVE THE RIGHT TO
TRIAL BY JURY IN ANY ACTION, CLAIM, LAWSUIT OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO: (i) THIS GUARANTEE OR ANY SUPPLEMENT OR AMENDMENT THERETO; OR (ii) ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND GUARANTOR ; OR (iii) ANY BREACH, CONDUCT,
ACTS OR OMISSIONS OF SILICON OR GUARANTOR OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSON AFFILIATED WITH OR REPRESENTING SILICON OR
GUARANTOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

     22. Receipt of Copy. Guarantor acknowledges receipt of a copy of this Guaranty.

	 	 	 	 	 	 	 
	VOLCANO EUROPE SA/NV	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	VOLCANO JAPAN K.K.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 

-7-

 

Exhibit 10.4

Loan and Security Agreement

     This LOAN AND SECURITY AGREEMENT dated the Effective Date between SILICON VALLEY BANK
(“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California 95054 and VOLCANO
THERAPEUTICS, INC., a Delaware corporation (“Borrower”), whose address is 26061 Merit Circle,
Suite 103, Laguna Hills, California 92653, provides the terms on which Bank will lend to Borrower
and Borrower will repay Bank. The parties agree as follows:

1. ACCOUNTING AND OTHER TERMS.

     Accounting terms not defined in this Agreement will be construed following GAAP.
Calculations and determinations must be made following GAAP. The term “financial statements”
includes the notes and schedules. The terms “including” and “includes” always mean “including (or
includes) without limitation,” in this or any Loan Document.

2. LOAN AND TERMS OF PAYMENT.

2.1. Promise to Pay.

     Borrower promises to pay Bank the unpaid principal amount of all Credit Extensions and
interest on the unpaid principal amount of the Credit Extensions.

2.1.1. Revolving Advances.

     (a) Bank will make Advances not exceeding the Credit Limit shown on Schedule 1. Amounts
borrowed under this Section may be repaid and reborrowed during the term of this Agreement.

     (b) To obtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00
p.m. Pacific time on the Business Day the Advance is to be made. Borrower must promptly confirm the
notification by delivering to Bank the Payment/Advance Form attached as Exhibit B. Bank will credit
Advances to Borrower’s deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without instructions if the
Advances are necessary to meet Obligations which have become due. Bank may rely on any telephone
notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will
indemnify Bank for any loss Bank suffers due to such reliance.

     (c) The Committed Revolving Line terminates on the Revolving Maturity Date, when all Advances
are immediately payable.

2.1.2. Letters of Credit Sublimit.

     Bank will issue or have issued letters of credit (the “Letters of Credit”) for Borrower’s
account not exceeding the amount shown on Schedule 2. Borrower shall secure all of Borrower’s
reimbursement obligations relating to all outstanding Letters of Credit by unencumbered cash on
terms acceptable to Bank on or before the Revolving Maturity Date if the term of this Agreement
is not extended by Bank. Borrower agrees to execute any further documentation in connection with
the Letters of Credit as Bank may reasonably request.

2.1.3. Foreign Exchange Sublimit.

     If there is availability under the Committed Revolving Line and the Borrowing Base for the
making of an Advance in the amount of the applicable FX Reserve relating to the proposed FX Forward
Contract, then Borrower may enter into foreign exchange forward contracts with the Bank under which
Borrower commits to purchase from or sell to Bank a set amount of foreign currency more than one
business day

 

 

after the contract date (the “FX Forward Contract”). Bank will subtract 10% of each outstanding FX
Forward Contract from the foreign exchange sublimit which is set forth in Schedule 2 (the “FX
Reserve”). The total FX Forward Contracts at any one time may not exceed 10 times the amount of the
FX Reserve. Bank may terminate the FX Forward Contracts if an Event of Default occurs.

2.1.4 Cash Management Services Sublimit.

     Borrower may use up to the amount shown on Schedule 2 (the “Cash Management Services
Sublimit”) for Bank’s cash management services, which may include merchant services,
direct deposit of payroll, business credit card, and check cashing services identified in
various cash management services agreements related to such services (the “Cash Management
Services”). The aggregate amounts utilized under the Cash Management Services Sublimit
will at all times reduce the amount otherwise available to be borrowed under the Committed
Revolving Line and new Cash Management Services may be extended only if the amount of such
proposed new extension of such services would otherwise be available for the making of an
Advance in such amount. Any amounts Bank pays on behalf of Borrower or any amounts that
are not paid by Borrower for any Cash Management Services will be treated as Advances
under the Committed Revolving Line and will accrue interest at the rate for Advances.

2.2. Overadvances.

     If Borrower’s Obligations under Section 2.1.1, 2.1.2, 2.1.3 or 2.1.4 exceed the applicable
lending limitations set forth above whether with respect to any specific sublimit provisions or
otherwise in the aggregate, Borrower must immediately pay Bank any such excess.

2.3. Interest Rate, Payments.

     (a) Interest Rate. Advances accrue interest on the outstanding principal balance at
the interest rate set forth on Schedule 2. After an Event of Default, Obligations accrue
interest at 5 percent above the rate effective immediately before the Event of Default. The
interest rate increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed.

     (b) Payments. Interest due on the Committed Revolving Line is payable on the first day
of each month. Bank may debit any of Borrower’s deposit accounts maintained with Bank,
including the Accounts shown on Schedule 1 for principal and interest payments owing or any
amounts Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower’s
accounts. These debits are not a set-off. Payments received after 12:00 noon Pacific time
are considered received at the opening of business on the next Business Day. When a payment
is due on a day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue.

2.4. Fees.

     Borrower will pay:

     (a) Facility Fee. A fully earned, non refundable Facility Fee in the amount shown on
Schedule 2, which shall be due on the Closing Date; and

     (b) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
reasonable expenses) incurred through and after the date of this Agreement, are payable when
due.

3. CONDITIONS OF LOANS.

3.1. Conditions Precedent to Initial Credit Extension.

2

 

     Bank’s obligation to make the initial Credit Extension is subject to the condition precedent
that it receive the agreements, documents and fees it re quires in order to effectuate the
purposes of this Agreement and related transactions and such other items as the Bank may
reasonably determine are necessary or advisable in connection herewith.

3.2. Conditions Precedent to all Credit Extensions.

     Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is
subject to the following:

     (a) Timely receipt of any Payment/Advance Form; and

     (b) The representations and warranties in Section 5 must be true (subject to the materiality
provisions in Section 5) on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default may have occurred and be continuing, or result from the
Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that
the representations and warranties of Section 5 remain true.

4. CREATION OF SECURITY INTEREST.

4.1. Grant of Security Interest.

     Borrower grants Bank a continuing security interest in all presently existing and later
acquired Collateral to secure all Obligations and performance of each of Borrower’s duties under
the Loan Documents, Except for Permitted Liens, the Bank will, at all times, have a first-priority
security interest in all of the Collateral. Bank’s lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations, and all obligations of the Bank to
make Advances or otherwise extend credit accommodations have terminated.

4.2. Authorization to File Financing Statements.

     Borrower authorizes Bank to file financing statements without notice to Borrower, with all
appropriate jurisdictions, as Bank deems appropriate, in order to perfect or protect Bank’s
interest in the Collateral.

5. REPRESENTATIONS AND WARRANTIES.

     Borrower represents and warrants that the following statements are true and correct on
the date hereof and Borrower covenants that the following statements will continue to be true and
correct throughout the term of this Agreement and so long as any Obligations are outstanding:

5.1. Due Organization and Authorization.

     Borrower and each of its Subsidiaries is duly existing and in good standing in its state of
formation and qualified and licensed to do business in, and in good standing in, any state in
which the conduct of its business or its ownership of property requires that it be qualified,
except where the failure to do so could not reasonably be expected to cause a Material Adverse
Change. Borrower has not changed its state of formation or its organizational structure or type or
any organizational number (if any) assigned by its jurisdiction of formation.

     The execution, delivery and performance of the Loan Documents have been duly authorized, and
do not conflict with Borrower’s formation documents, nor constitute an event of default under any
material agreement by which Borrower is bound. Borrower is not in default under any agreement to
which it is a

3

 

party or by which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change.

5.2. Collateral.

     Borrower has good title to the Collateral and the Intellectual Property, free of Liens
except Permitted Liens and the pledge of specific patents of the Borrower (having registered
patent numbers in the United States Patent and Trademark Office of 5,871,449; 5,924,997;
6,245,026; and 6,536,949) in connection with the Guaranty dated July 3, 2003 by Borrower given to
Philips Electronics N.V. relating to indebtedness of Pacific Rim Medical Ventures Corp. owing to
Philips Electronics N.V. (such Lien being referred to herein as the “Philips Lien” and
such guaranty being the “Philips Guaranty”) Borrower has no other deposit account, other than the
deposit accounts described on Schedule 1. Each Account with respect to which Advances are
requested by Borrower shall, on the date each Advance is requested and made, represent an
undisputed bona fide existing unconditional obligation of the account debtor created by the sale,
delivery, and acceptance of goods or the rendition of services in the ordinary course of
Borrower’s business. The Collateral is not in the possession of any third party bailee (such as
at a warehouse). In the event that Borrower, after the date hereof, intends to store or otherwise
deliver the Collateral to such a bailee, then Borrower will receive the prior written consent of
Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for
the benefit of Bank. Borrower has no notice of any actual or imminent Insolvency Proceeding of
any account debtor whose accounts are an Eligible Account in any Borrowing Base Certificate. All
Inventory is in all material respects of good and marketable quality, free from material defects.
Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses
granted to its customers in the ordinary course of business. Each Patent is, to the best of
Borrower’s knowledge, valid and enforceable and no part of the Intellectual Property has been
judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party, except to the extent such claim
could not reasonably be expected to cause a Material Adverse Change.

5.3. Litigation.

     Except as shown in Schedule 1 hereto, there are no actions or proceedings pending or, to the
knowledge of Borrower’s Responsible Officers and legal counsel, threatened by or against Borrower
or any Subsidiary, which could result in damages or costs to Borrower or any Subsidiary of
$100,000 or more, or in which an adverse decision could reasonably be expected to cause a Material
Adverse Change.

5.4. No Material Adverse Change in Financial Statements.

     All consolidated financial statements for Borrower, and any Subsidiary, delivered to Bank
fairly present in all material respects Borrower’s consolidated financial condition and
Borrower’s consolidated results of operations. There has not been any material deterioration in
Borrower’s consolidated financial condition since the date of the most recent financial
statements submitted to Bank.

5.5. Regulatory Compliance.

     Borrower is not an “investment company” or a company “controlled” by an “investment company”
under the Investment Company Act. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of
Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards
Act. Borrower has not violated any laws, ordinances or rules, the violation of which could
reasonably be expected to cause a Material Adverse Change. None of Borrower’s or any Subsidiary’s
properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally. Borrower and each Subsidiary has timely filed all
required tax returns and paid, or made

4

 

adequate provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under GAAP and which do not result in any tax lien on any of the Collateral
or the Intellectual Property. Borrower and each Subsidiary have obtained all consents, approvals
and authorizations of, made all declarations or filings with, and given all notices to, all
government authorities that are necessary to continue its business as currently conducted, except
where the failure to do so could not reasonably be expected to cause a Material Adverse Change.

5.6. Subsidiaries.

     Borrower does not own any stock, partnership interest or other equity securities except for
Permitted Investments.

5.7. Representations; Full Disclosure.

     The information in the Representations previously submitted to Bank continues to be true and
correct as of the date hereof. No written representation, warranty or other statement of Borrower
in any certificate or written statement given to Bank (taken together with all such written
certificates and written statements to Bank) contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained in the certificates or
statements not misleading.

6. AFFIRMATIVE COVENANTS.

     Borrower will do all of the following for so long as Bank has an obligation to lend, or
there are outstanding Obligations:

6.1. Government Compliance.

     Borrower will maintain its and all Subsidiaries’ legal existence and good standing in its
jurisdiction of formation and maintain qualification in each jurisdiction in which the failure to
so qualify would reasonably be expected to cause a material adverse effect on Borrower’s business
or operations. Borrower will comply, and have each Subsidiary comply, with all laws, ordinances
and regulations to which it is subject, noncompliance with which could have a material adverse
effect on Borrower’s business or operations or would reasonably be expected to cause a Material
Adverse Change.

6.2. Financial Statements, Reports, Certificates.

     (a) Borrower will deliver to Bank: (i) as soon as available, but no later than 30 days after
the last day of each month, a company prepared consolidated balance sheet and income statement
covering Borrower’s consolidated operations during the period certified by a Responsible Officer
and in a form acceptable to Bank; (ii) as soon as available, but no later than 30 days after the
last day of each quarter, a company prepared consolidating balance sheet covering Borrower’s
operations during such period and certified by a Responsible Officer and otherwise in a form
acceptable to Bank; (iii) as soon as available, but no later than 120 days after the last day of
Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Bank; (iii) a prompt report
of any legal actions pending or threatened against Borrower or any Subsidiary that could result in
damages or costs to Borrower or any Subsidiary of $100,000 or more, or in which an adverse
decision could reasonably be expected to cause a Material Adverse Change; (iv) budgets, sales
projections, operating plans or other financial information Bank reasonably requests; and (v)
prompt notice of any material change in the composition of the Intellectual Property, including
any subsequent ownership right of Borrower in or to any copyright, patent or trademark not shown
in any intellectual property security agreement between Borrower and Bank or knowledge of an event
that materially adversely affects the value of the Intellectual Property.

5

 

     (b) Within 20 days after the last day of each month when any Credit Extensions are outstanding or
at the time of request for a Credit Extension when no other Credit Extensions are then outstanding,
Borrower will deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in the
form of Exhibit C, with aged listings (by invoice date) of accounts receivable and accounts
payable.

     (c) Within 30 days after the last day of each month, Borrower will deliver to Bank with the
monthly financial statements a Compliance Certificate signed by a Responsible Officer in the form
of Exhibit D.

     (d) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits will be
conducted no more often than every 6 months, unless an Event of Default or an event which, with
notice or passage of time or both would constitute an Event of Default, has occurred and is
continuing.

6.3. Inventory; Returns.

     Borrower will keep all Inventory in good and marketable condition, free from material defects.
Returns and allowances between Borrower and its account debtors will follow Borrower’s customary
practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims, that involve more than $50,000.

6.4. Taxes.

     Borrower will make, and cause each Subsidiary to make, timely payment of all material
federal, state, and local taxes or assessments (except for taxes or assessments being contested in
good faith with adequate reserves under GAAP and which do not result in any tax lien on any of the
Collateral) and will deliver to Bank, on demand, appropriate certificates attesting to the
payment.

6.5. Insurance.

     Borrower will keep its business, the Collateral and the Intellectual Property insured for
risks, and in amounts, as Bank may reasonably request. Insurance policies will be in a form, with
companies, and in amounts that are satisfactory to Bank in Bank’s reasonable discretion and is
customary for the industry in which Borrower operates where commercial lenders have extended
secured credit facilities. All property policies will have a lender’s loss payable endorsement
showing Bank as an additional loss payee, to the extent of its insurable interest therein, and all
liability policies will show the Bank as an additional insured and provide that the insurer must
give Bank at least 20 days notice before canceling its policy. At Bank’s request, Borrower will
deliver certified copies of policies and evidence of all premium payments. Proceeds payable under
any policy will, at Bank’s option and to the extent of Bank’s insurable interest, be payable to
Bank on account of the Obligations.

6.6. Primary Accounts.

     Borrower will maintain its primary depository and investment accounts with Bank, which
relationship shall include Borrower maintaining account balances in any accounts at or through
Bank representing at least 70% of all account balances of Borrower at any financial institution.
Within 60 days of the date hereof, Borrower will cause the institutions where any Deposit Accounts
outside of the Bank are maintained to execute and deliver to Bank control agreements in form
sufficient to perfect Silicon’s security interest in the Deposit Accounts and which are otherwise
satisfactory to Bank in its good faith business judgment. Further, Borrower will give Bank five
Business Days advance written notice before establishing any new Deposit Account and will cause
the institution where any such new Deposit Account is maintained to execute and deliver to Bank a
control agreement in form sufficient to perfect Bank’s security interest therein and which is
otherwise satisfactory to Silicon in its good faith business judgment.

6

 

6.7. Financial Covenants.

     Borrower will comply with the financial covenants set forth on Schedule 2.

6.8. Registration of Intellectual Property Rights/Proceeds Resulting In Collateral.

     Borrower has no present maskworks, software, computer programs and other works of authorship
registered with the United States Copyright Office, and Borrower shall not hereafter register any
maskworks, software, computer programs or other works of authorship subject to United States
copyright protection with the United States Copyright Office that result in Collateral, either
directly or as proceeds thereof, without first complying with the following: (i) providing Bank
with at least 15 days prior written notice thereof, (ii) providing Bank with a copy of the
application for any such registration and (iii) executing and filing such other instruments, and
taking such further actions as Bank may reasonably request from time to time to perfect or continue
the perfection of Bank’s interest in the Collateral, including without limitation the filing with
the United States Copyright Office of a security agreement with respect to proceeds of Intellectual
Property, simultaneously with the filing by Borrower of the application for any such registration,
of a copy of this Agreement or a Supplement hereto in form acceptable to Bank identifying the
maskworks, software, computer programs or other works of authorship being registered and confirming
the grant of a security interest therein in favor of Bank.

     Further, Borrower shall inform Bank promptly of any registration of its Intellectual Property
assets in the United States Patent and Trademark Office and take such actions and execute such
documentation as Bank may deem necessary or advisable relating thereto in order for Bank to
protect its interest the Collateral that may arise as proceeds of any such Intellectual Property
items.

     Borrower will (i) protect, defend and maintain the validity and enforceability of the
Intellectual Property and promptly advise Bank in writing of material infringements and (ii) not
allow any Intellectual Property to be abandoned, forfeited or dedicated to the public without
Bank’s written consent.

6.9. Further Assurances.

     Borrower will execute any further instruments and take further action as Bank reasonably
requests to perfect or continue Bank’s security interest in the Collateral or to effect the
purposes of this Agreement.

7. NEGATIVE COVENANTS.

     Borrower will not do any of the following without Bank’s prior written consent, which
will not be unreasonably withheld, for so long as Bank has an obligation to lend and there are any
outstanding Obligations:

7.1. Dispositions.

     Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit
any of its Subsidiaries to Transfer, all or any part of its business or property or any
Collateral, except for Transfers (i) of Inventory in the ordinary course of business; (ii) of
non-exclusive licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; or (iii) of worn out or obsolete Equipment.

7.2. Changes in Business, Non-Ordinary Course Transactions, Ownership, Management or Locations of
Collateral.

     Engage in or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto, or enter into any
transaction outside the ordinary course of business, or permit there to be a change in the
record or beneficial ownership of an aggregate of more than 30% of the outstanding shares of stock
of Borrower, in one or more transactions,

7

 

compared to the ownership of outstanding shares of stock of Borrower in effect on the date
hereof (other than by the sale of Borrower’s equity securities in a public offering or to venture
capital investors so long as Borrower identifies to the Bank, in writing, the venture capital
investors prior to the closing of the investment). Borrower will not, without at least 30 days
prior written notice to the Bank, relocate its chief executive office, change its state of
formation (including reincorporation), change its organizational number or name or add any new
offices or business locations (including warehouses) in which Borrower maintains or stores over
$5,000 in Collateral.

7.3. Mergers or Acquisitions.

     Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any
other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of
the capital stock or property of another Person, except a Subsidiary may merge or consolidate into
another Subsidiary or into Borrower if no Default or Event of Default has occurred and is
continuing or would result from such action.

7.4. Indebtedness.

     Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so,
other than Permitted Indebtedness.

7.5. Encumbrance.

     Create, incur, or allow any Lien on any of its property, or assign or convey any right to
receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so,
except for Permitted Liens, or permit any Collateral not to be subject to the first priority
security interest granted here, subject to Permitted Liens.

7.6. Distributions; Investments.

     Directly or indirectly acquire or own any Person, or make any Investment in any Person, other
than Permitted Investments, or permit any of its Subsidiaries to do so. Pay any dividends (other
than dividends payable solely in stock of the Borrower) or make any distribution or payment or
redeem, retire or purchase any capital stock, except for the repurchase of stock from employees,
consultants and like Persons pursuant to company-approved repurchase agreements provided that the
aggregate amount allowed to be repurchased in any fiscal year shall not exceed $75,000 and no such
repurchase shall be permitted to be effected in any event while any Default or Event of Default is
then outstanding.

7.7. Transactions with Affiliates.

     Directly or indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower except for transactions that are in the ordinary course of Borrower’s
business, upon fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a nonaffiliated Person.

7.8. Subordinated Debt.

     Make or permit any payment on any Subordinated Debt, except under the terms of the
Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt
without Bank’s prior written consent.

7.9 No Further Negative Pledge Agreements. Without limitation of any other term or condition set
forth herein or in any other Loan Document, Borrower shall not enter into any agreements or
transactions

8

 

in which, or otherwise with respect to which, Borrower agrees not to encumber or create a Lien
regarding its Intellectual Property assets.

7.10 Compliance.

     Become an “investment company” or a company controlled by an “investment company,” under the
Investment Company Act of 1940 or undertake as one of its important activities extending credit to
purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards
Act or violate any other law or regulation, if the violation could reasonably be expected to have a
material adverse effect on Borrower’s business or operations or would reasonably be expected to
cause a Material Adverse Change, or permit any of its Subsidiaries to do so.

8. EVENTS OF DEFAULT.

     Any one of the following is an Event of Default:

8.1. Payment Default.

     If Borrower fails to pay any of the Obligations within 3 days after their due date.

8.2. Certain Defaults.

     If Borrower (i) fails to provide the financial statements called for by Section 6.2 hereof or
by any other provisions of this Agreement, within the time therein provided; or (ii) Borrower
breaches any of the financial covenants set forth in Section 6.7
of this Agreement; or (iii) fails
to perform or comply with any other term, condition or covenant in any other agreement between
Borrower and Bank which is not cured within any cure period provided in such agreement.

8.3. Other Defaults.

     If Borrower fails to perform or comply with any other term, condition or covenant in this
Agreement (other than as set forth in Section 8.1 or 8.2 above), and such failure is not cured
within 30 days after the date it occurs

8.4. Material Adverse Change.

     A Material Adverse Change occurs.

8.5. Attachment.

     If any of Borrower’s assets having a value in the aggregate of more than $50,000 is attached,
seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure
or levy is not removed in 10 days, or if Borrower is enjoined, restrained, or prevented by court
order from conducting a material part of its business or if a judgment or other claim becomes a
Lien on a material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is
filed against any of Borrower’s assets by any government agency and not paid within 10 days after
Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower;

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8.6.
Insolvency

     If Borrower fails to pay its debts generally as they mature, or if Borrower begins an
Insolvency Proceeding, or if an Insolvency Proceeding is begun against Borrower and not dismissed
or stayed within 30 days;

8.7. Other Agreements.

     If there is a default in any agreement between Borrower and a third party that gives the
third party the right to accelerate any Indebtedness exceeding $100,000 or that could cause a
Material Adverse Change;

8.8 Judgments.

     If a money judgment(s) in the aggregate of at least $50,000 is rendered against Borrower and
is unsatisfied and unstayed for 10 days;

8.9. Misrepresentations.

     If Borrower or any Person acting for Borrower makes any material misrepresentation or material
misstatement now or later in any warranty or representation in this Agreement or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan Document; or

8.10. Guaranty.

     Any guaranty of any Obligations ceases for any reason to be in full force or any Guarantor
does not perform any obligation under any guaranty of any of the Obligations, or any material
misrepresentation or material misstatement exists now or later in any
warranty or representation in any guaranty of the Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.5, 6 or 8 occurs to any Guarantor.

     No Credit Extensions will be made during any of the cure periods set forth in Sections
8.1-8.10 above.

9. BANK’S RIGHTS AND REMEDIES.

9.1. Rights and Remedies.

     When an Event of Default occurs and continues Bank may, without notice or demand, do any or
all of the following:

     (a) Declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.6 occurs all Obligations are immediately due and payable without any action by Bank);

     (b) Stop advancing money or extending credit for Borrower’s benefit under this Agreement or
under any other agreement between Borrower and Bank and terminate the Committed Revolving Line;

     (c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms
and in any order that Bank considers advisable;

     (d) Make any payments and do any acts it considers necessary or reasonable to protect its
security interest in the Collateral. Borrower will assemble the Collateral if Bank requires and
make it available as Bank designates. Bank may enter premises where the Collateral is located,
take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or
compromise any Lien which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower

10

 

grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of
Bank’s rights or remedies;

     (e) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;

     (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right
to use, without charge, Borrower’s labels, Intellectual Property, and advertising matter, and any
similar property as it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this
Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;
and

     (g) Dispose of the Collateral according to the Code.

9.2. Power of Attorney.

     Effective only when an Event of Default occurs and continues, Borrower irrevocably appoints
Bank as its lawful attorney to: (i) endorse Borrower’s name on any checks or other forms of
payment or security; (ii) sign Borrower’s name on any invoice or bill of lading for any Account
or drafts against account debtors, (iii) make, settle, and adjust all claims under Borrower’s
insurance policies; (iv) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; and (v) transfer the
Collateral into the name of Bank or a third party as the Code permits. Bank may exercise the
power of attorney to sign Borrower’s name on any documents necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default has occurred.
Bank’s appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, are
coupled with an interest, are irrevocable until all Obligations have been fully repaid and
performed and Bank’s obligation to provide Credit Extensions terminates.

9.3. Accounts Collection.

     When an Event of Default occurs and continues, Bank may notify any Person owing Borrower
money of Bank’s security interest in the funds and demand payment of, and collect any Accounts,
general intangibles and other Collateral, and, in connection therewith, Borrower irrevocably
authorizes Bank to endorse or sign Borrower’s name on all collections, receipts, instruments and
other documents, and, in Bank’s good faith business judgment, to grant extensions of time to pay,
compromise claims and settle Accounts and general intangibles for less than face value. When an
Event of Default occurs and continues, Borrower shall collect all payments in trust for Bank and,
if requested by Bank, immediately deliver the payments to Bank in the form received from the
account debtor, with proper endorsements for deposit.

9.4. Bank Expenses.

     If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay any
premium thereon or fails to pay any other amount, which Borrower is obligated to pay under this
Agreement or any other Loan Document, Bank may obtain such insurance or make such payment, and
all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest
at the then applicable rate and secured by the Collateral. No payments by Bank shall be deemed an
agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

9.5. Bank’s Liability for Collateral.

     If Bank complies with reasonable banking practices and Section 9207 of the Code, it is not
liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c)
any diminution in

11

 

the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Borrower bears all risk of loss, damage or destruction of the Collateral.

9.6. Remedies Cumulative.

     Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements
are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity.
Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of
Default is not a continuing waiver. Bank’s delay is not a waiver; election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the specific instance and
purpose for which it was given.

9.7. Demand Waiver.

     Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.

9.8. Asset Based Terms.

     Without limiting Bank’s other rights and remedies, if an Event of Default under Section
8.2(ii) occurs, the provisions of Exhibit E hereto (the “Asset Based Terms”) shall be effective
upon written notice by Bank to the Borrower.

10. NOTICES.

     All notices or demands by any party about this Agreement or any other related agreement must
be in writing and be personally delivered or sent by an overnight delivery service, by certified
mail, postage prepaid, return receipt requested, or by fax to the addresses set forth at the
beginning of this Agreement and, in the case of notices by fax, to the latest fax number a party
has for the other party. A party may change its notice address by giving the other party written
notice.

11.
CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER.

     California law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in
Orange County, California.

     BORROWER AND BANK EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN BANK AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF
BANK OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER
PERSONS AFFILIATED WITH BANK OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO
THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12. GENERAL PROVISIONS

12.1. Successors and Assigns.

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     This Agreement binds and is for the benefit of the successors and permitted assigns of
each party. Borrower may not assign this Agreement or any rights under it without Bank’s prior
written consent which may be granted or withheld in Bank’s discretion. Bank has the right, without
the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights and benefits under this Agreement.

12.2. Indemnification.

     Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents
against: (a) all obligations, demands, claims, and liabilities asserted by any other Person in
connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank
Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank
and Borrower (including reasonable attorneys fees and expenses), except for losses caused by Bank’s
gross negligence or willful misconduct.

12.3. Time of Essence.

     Time is of the essence for the performance of all obligations in this Agreement.

12.4. Severability of Provision.

     Each provision of this Agreement is severable from every other provision in determining the
enforceability of any provision.

12.5. Amendments in Writing, Integration.

     All amendments to this Agreement must be in writing and signed by Borrower and Bank. This
Agreement represents the entire agreement about this subject matter, and supersedes prior
negotiations or agreements. All prior agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.

12.6. Counterparts.

     This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, are an original, and all taken
together, constitute one Agreement.

12.7. Survival.

     All covenants, representations and warranties made in this Agreement continue in full force
while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify
Bank will survive until all statutes of limitations for actions that may be brought against Bank
have run.

12.8. Confidentiality.

     In handling any confidential information, Bank will exercise the same degree of care that it
exercises for its own proprietary information, but disclosure of information may be made (i) to
Bank’s subsidiaries or affiliates in connection with their business with Borrower, (ii) to
prospective transferees or purchasers of any interest in the loans (provided, however, Bank shall
use commercially reasonable efforts in obtaining such prospective transferee or purchasers
agreement of the terms of this provision), (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Bank’s examination or audit and (v) as Bank
considers appropriate exercising remedies under this Agreement. Confidential information does not
include information that either: (a) is in the public domain in Bank’s

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possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank;
or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.

12.9. Attorneys’ Fees, Costs and Expenses.

     In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the
prevailing party will be entitled to recover its reasonable attorneys’ fees and other reasonable
costs and expenses incurred, in addition to any other relief to which it may be entitled.

12.9. Conflict With Other Agreements.

     In the event of a conflict between any provision of this Agreement and any provision of the
any of the Existing Loan Agreements or any other document, instrument or agreement between
Borrower, on the one hand, and Bank or any other division or affiliate of Bank on the other hand,
Bank shall determine in its sole discretion which provision shall apply.

13. DEFINITIONS.

13.1. Definitions.

     In this Agreement:

     “Accounts” is defined on Exhibit A hereto.

     “Advance” or “Advances” is a loan advance (or advances) under the Committed Revolving Line.

     “Affiliate” means (I) any of Borrower’s officers or directors, and if Borrower is a limited
liability company, Borrower’s managers and members, and if Borrower is a partnership, Borrower’s
general and limited partners; (ii) a Person that, directly or indirectly, owns or controls, is
controlled by or is under common control with Borrower, and any of such person’s officers or
directors, and if such person is a limited liability company, such person’s managers and members,
and if such person is a partnership, such person’s general and limited partners.

     “Bank Expenses” are all audit fees and expenses and reasonable costs and expenses (including
reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and
enforcing the Loan Documents (including appeals or Insolvency Proceedings), or otherwise relating
to Borrower or the Loan Documents, including, but not limited to, any reasonable attorneys’ fees
and costs Bank incurs in order to do the following: obtain legal advice in connection with this
Agreement or Borrower; enforce, or seek to enforce, any of Bank’s rights; prosecute actions
against, or defend actions by, account debtors; commence, intervene in, or defend any action or
proceeding; initiate any complaint to be relieved of the automatic stay in bankruptcy; file or
prosecute any bankruptcy claim, third-party claim, or other claim; protect, obtain possession of,
lease, dispose of, or otherwise enforce Bank’s security interest in, the Collateral; and otherwise
represent Bank in any litigation relating to Borrower.

     “Borrower’s Books” are all Borrower’s books and records including ledgers, records regarding
Borrower’s assets or liabilities, the Collateral, business operations or financial condition and
all computer programs or discs or any equipment containing the information.

     “Borrowing Base” is as set forth in Schedule 2.

     “Business Day” is any day that is not a Saturday, Sunday or a day on which the Bank is
closed.

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     “Cash Management Services Sublimit” shall have the meaning set forth in Section 2.1.4
hereof.

     “Cash Management Services” shall have the meaning set forth in Section 2.1.4 hereof.

     “Closing Date” is the date of this Agreement.

     “Code” is the California Uniform Commercial Code, in effect from time to time.

     “Collateral” is the property described on Exhibit A.

     “Committed Revolving Line” is defined in Schedule 2.

     “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed, co made, discounted
or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

     “Credit Extension” is each Advance, Letter of Credit, FX Forward Contracts, Cash Management
Services utilization and each any other extension of credit by Bank for Borrower’s benefit under
and relating to this Agreement.

     “Current Liabilities” are the aggregate amount of Borrower’s Total Liabilities which mature
within one (1) year.

     “Effective Date” is the date that Bank executes this Agreement.

     “Eligible Accounts” are Accounts in the ordinary course of Borrower’s business that meet all
Borrower’s representations and warranties in Section 5; but Bank may change eligibility standards
by giving Borrower notice. Unless Bank agrees otherwise in writing, Eligible Accounts will not
include:

     (a) Accounts that the account debtor has not paid within 90 days of invoice date;

     (b) Accounts for an account debtor, 50% or more of whose Accounts have not been paid within 90
days of invoice date;

     (c) Credit balances over 90 days from invoice date;

     (d) Accounts for an account debtor, including Affiliates, whose total obligations to Borrower
exceed 25% of all Accounts, for the amounts that exceed that percentage;

     (e) Accounts for which the account debtor does not have its principal place of business in the
United States, other than for the account debtors of Fukuda Intervention Systems and Goodman
Company Ltd.

15

 

     (f) Accounts for which the account debtor is a federal, state or local government entity or any
department, agency, or instrumentality (unless there has been compliance, to Silicon’s
satisfaction, with the United States Assignment of Claims Act),;

     (g) Accounts for which Borrower owes the account debtor, but only up to the amount owed
(sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

     (h) Accounts for demonstration or promotional equipment, or in which goods are consigned,
sales guaranteed, sale or return, sale on approval, bill and hold, or other terms if account
debtor’s payment may be conditional;

     (i) Accounts for which the account debtor is Borrower’s Affiliate, officer,
employee, or agent;

     (j) Accounts in which the account debtor disputes liability or makes any claim or Bank
believes there may be a basis for dispute (but only up to the disputed or claimed amount), or if
the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of
business;

     (k) Accounts for which Bank reasonably determines collection to be doubtful.

     “Eligible Inventory” shall mean inventory consisting of finished goods and raw materials
which are deemed acceptable to Bank, for Advance purposes, in Bank’s sole discretion.

     “Equipment” is defined on Exhibit A hereto.

     “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations.

     “Existing Loan Agreements” shall mean that certain Loan and Security Agreement entered into by
and between Bank and Borrower dated August 27, 2001, as amended from time to time, with respect to
an equipment financing facility, as amended or otherwise modified from time to time.

     “FX Forward Contract” is defined in Section 2.1.3.

     “FX Reserve” is defined in Section 2.1.3.

     “GAAP” is generally accepted accounting principles.

     “Guarantor” is any present or future guarantor of any of the Obligations.

     “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations and (d) Contingent Obligations.

     “Insolvency Proceeding” are proceedings by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

     “Intellectual Property” is defined on Exhibit A hereto

     “Inventory” is defined on Exhibit A hereto.

     “Investment” is any beneficial ownership of (including stock, partnership interest or other
securities) any Person, or any loan, advance or capital contribution to any Person.

16

 

     “Letter of Credit” is defined in Section 2.1.2.

     “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.

     “Loan Documents” are, collectively, this Agreement, any note, or notes or guaranties executed
by Borrower or Guarantor, and any other present or future agreement between Borrower and/or for
the benefit of Bank in connection with this Agreement, all as amended, extended or restated.

     “Material Adverse Change” is any of the following: (i) a material adverse change in the
business, operations, or condition (financial or otherwise) of the Borrower, or (ii) a material
impairment of the prospect of repayment of any portion of the Obligations; or (iii) a material
impairment of the value or priority of Bank’s security interests in the Collateral.

     “Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes
Bank now or later, including cash management services, letters of credit and foreign exchange
contracts, if any and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank.

     “Patents” are patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions and continuations in part of the same.

     “Permitted Indebtedness” is:

     (a) Borrower’s indebtedness to Bank under this Agreement, any other Loan Document or under the
Existing Loan Agreements;

     (b) Indebtedness existing on the Closing Date and shown on Schedule 1;

     (c) Subordinated Debt;

     (d) Indebtedness to trade creditors incurred in the ordinary course of business;

     (e) Indebtedness secured by Permitted Liens;

     (f) Indebtedness incurred by Subsidiaries of Borrower organized and doing business in Europe
in an aggregate amount not to exceed $500,000 in the aggregate or an equivalent amount in the
applicable local monetary unit;

     (g) A guaranty by the Borrower of the Indebtedness described in clause (f) above and limited,
in any event, to an aggregate amount of no more than $500,000 or an equivalent amount in the
applicable local monetary unit where the underlying Indebtedness is incurred;

     (h) The indebtedness represented by the Philips Guaranty.

     “Permitted Investments” are:

     (a) Investments shown on Schedule 1 and existing on the Closing Date; and

     (b) (i) marketable direct obligations issued or unconditionally guaranteed by the United
States or its agency or any State maturing within 1 year from its acquisition, (ii) commercial
paper maturing no more than 1 year after its creation and having the highest rating from either
Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of
deposit issued maturing no more than 1 year after issue.

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     “Permitted Liens” are:

     (a) Liens existing on the Closing Date and shown on Schedule 1 or arising under this Agreement
or other Loan Documents;

     (b) Liens for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains adequate reserves on
its Books, if they have no priority over any of Bank’s security interests;

     (c) Purchase money Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries
incurred for financing the acquisition of the Equipment, or (ii) existing on equipment when
acquired, if the Lien is confined to the property and improvements and the proceeds of the
equipment;

     (d) Nonexclusive licenses and non-exclusive sublicenses granted by Borrower in the ordinary
course of its business including in connection with joint venture enterprises of Borrower;

     (e) Leases or subleases granted in the ordinary course of Borrower’s business, including in
connection with Borrower’s leased premises or leased property;

     (f) Liens given by Subsidiaries of Borrower organized and doing business in Europe with
respect to the permitted amount of indebtedness as set forth in clause (f) of the category of
Permitted Indebtedness above;

     (g) The Philips Lien; and

     (h) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited
to the property encumbered by the existing Lien and the principal amount of the indebtedness may
not increase.

     “Person” is any individual, sole proprietorship, partnership, limited liability company,
joint venture, company association, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate, entity or government
agency.

     “Philips Guaranty” shall have the meaning ascribed to such term in Section 5.2 hereof.

     “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s
lowest rate.

     “Quick Assets” is, on any date, the Borrower’s consolidated, unrestricted cash, cash
equivalents, net billed accounts receivable and investments with maturities of fewer than 12
months determined according to GAAP.

     “Representations” are the written Representations and Warranties of Borrower delivered via
email to the Bank on July 15, 2003.

     “Responsible Officer” is each of the Chief Executive Officer, the President, the Chief
Financial Officer and the Controller of Borrower.

     “Revolving Maturity Date” is set forth on Schedule 2.

     “Schedule 1” is Schedule 1 to this Agreement.

     “Schedule 2” is Schedule 2 to this Agreement.

18

 

     “Subordinated Debt” is debt incurred by
Borrower subordinated to Borrower’s indebtedness
owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank
and approved by Bank in writing.

     “Subsidiary” is for any Person, or any other business entity of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or indirectly, by the
Person or one or more Affiliates of the Person.

     “Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its
Subsidiaries minus, (i) any amounts attributable to (a) goodwill, (b) intangible items such as
unamortized debt discount and expense, Patents, trade and service marks and names, copyrights and
research and development expenses except prepaid expenses, and (c) reserves not already deducted
from assets, and (ii) Total Liabilities.

     “Total Liabilities” is on any day, obligations that should, under GAAP, be classified as
liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current
portion Subordinated Debt allowed to be paid, but excluding all other Subordinated Debt.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	VOLCANO THERAPEUTICS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Scott Huennekens
 

	 	 
	 	 	Name Scott Huennekens	 	 
	 	 	Title   Pres. & CEO	 	 
	 
	 	 	 	 	 	 
	 	 	BANK:	 	 
	 
	 	 	 	 	 	 
	 	 	SILICON VALLEY BANK	 	 
	 
	 

	 	By
	 	/s/ Richard Shuttleworth	 	 
	 

	 	 	 	 	 	 
	 	 	Title Senior Vice President	 	 

Effective Date: July 18, 2003

Version:
—1 dated 7/23/02

19

 

EXHIBIT A 

Collateral

     “Collateral” means of all of Borrower’s right, title and interest in and to the
following whether owned now or hereafter acquired or arising, and wherever located: all
Accounts; all Inventory; all Equipment; all Deposit Accounts; all General Intangibles; all
Investment Property; all Other Property; and any and all claims, rights and interests in any
of the foregoing, and all guaranties and security for any of the foregoing, and all
substitutions and replacements for, additions, accessions, attachments, accessories, and
improvements to, and proceeds (including proceeds of any insurance policies, proceeds of
proceeds and claims against third parties) of, all of the foregoing, and all Borrower’s books
relating to any of the foregoing; provided, however, the Collateral shall not include
Intellectual Property, provided, further, notwithstanding the exclusion of the
Intellectual Property from the scope of the definition of Collateral hereunder, any and all
proceeds of the Intellectual Property (regardless of form but not including proceeds in the
direct form of Intellectual Property itself) shall be specifically included in the definition
of Collateral hereunder, provided, further, that if a judicial authority (including a
U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property
is necessary to have a security interest in such items that are proceeds of the Intellectual
Property including, without limitation, proceeds consisting of payment intangibles, accounts,
license revenues, or general intangibles relating to rights to payment arising therefrom or
relating thereto, then in such circumstance, the Collateral shall automatically, and effective
as of the date hereof, include the Intellectual Property only to the extent necessary to
permit perfection of Bank’s security interest in such proceeds, including, without limitation,
in proceeds consisting of payment intangibles, accounts, license revenues, or general
intangibles relating to rights to payment.

As used in this Agreement and in this Exhibit, the following terms have the following meanings:

“Accounts” means all present and future “accounts” as defined in the Code in effect on
the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all accounts receivable and other sums owing to Borrower.

“Deposit Accounts” means all present and future “deposit accounts” as defined in the
Code in effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation all general and special bank accounts, demand
accounts, checking accounts, savings accounts and certificates of deposit, whether
maintained with Bank or other institutions

“Equipment” means all present and future “equipment” as defined in the Code in effect
on the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all machinery, fixtures, goods, vehicles (including motor
vehicles and trailers), and any interest in any of the foregoing.

“General Intangibles” means all present and future “general intangibles” as defined in
the Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer lists,
route lists, telephone numbers, domain names, claims, income tax refunds, security and
other deposits, options to purchase or sell real or personal property, rights in all
litigation presently or hereafter pending (whether in contract, tort or otherwise),
insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any
kind.

“Inventory” means all present and future “inventory” as defined in the Code in effect on
the date hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and shipping
materials, work in process

 

 

and finished products, including without limitation such inventory as is out of Borrower’s
custody or possession or in transit and including any returned goods and any documents of title
representing any of the above.

“Intellectual Property” means all present and future (a) copyrights, copyright rights, copyright
applications, copyright registrations and like protections in each work of authorship and
derivative work thereof, whether published or unpublished, (b) trade secret rights, including all
rights to unpatented inventions and know how, and confidential information; (c) mask work or
similar rights available for the protection of semiconductor chips; (d) patents, patent
applications and like protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the same; (e)
trademarks, servicemarks, trade styles, and trade names, whether or not any of the foregoing are
registered, and all applications to register and registrations of the same and like protections,
and the entire goodwill of the business of Borrower connected with and symbolized by any such
trademarks; (f) computer software and computer software products; (g) designs and design rights;
and (h) all licenses or other rights to use any property or rights of a type described above.

“Investment Property” means all present and future investment property, securities, stocks, bonds,
debentures, debt securities, partnership interests, limited liability company interests, options,
security entitlements, securities accounts, commodity contracts, commodity accounts, and all
financial assets held in any securities account or otherwise, wherever located, and all other
securities of every kind, whether certificated or uncertificated,

“Other Property” means (i) the following as defined in the Code in effect on the date hereof with
such additions to such term as may hereafter be made, and all rights relating thereto: all present
and future “commercial tort claims”, “documents”, “instruments”, “promissory notes”, “chattel
paper”, “letters of credit”, “letter-of-credit rights”, “fixtures”, “farm products” and “money”;
and (ii) all other goods and personal property of every kind, tangible and intangible, whether or
not governed by the Code.

21

 

EXHIBIT B

LOAN PAYMENT/ADVANCE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T.

Fax To:                             
                                

                     
                   
Date:   
                     
                      
               

o LOAN PAYMENT:
                                                                      
                    
           Client Name (Borrower)

From Account #           
                                                                       To Account #                                        

                      
        (Deposit Account #)            
                      
                      
                (Loan Account #)

Principal $           
          
and/or Interest $          
                      
         

All Borrower’s representation and warranties in the Loan and Security Agreement are true,
correct and complete in all material respects to on the date of the telephone transfer request
for and advance, but those representations and warranties expressly referring to another date
shall be true, correct and complete in all material respects as of the date:

Authorized Signature:          
                     
                  
   Phone Number:                  
                     
  

o LOAN ADVANCE:

Complete Outgoing Wire Request section below if all or a portion of the funds from this loan
advance are for an outgoing wire.

From Account #           
                      
                       
                       
   To Account #                 
                      
  

                       
       (Loan Account
#)                 
                       
                       
               (Deposit Account #)

Amount of
Advance $          
                     
          

All Borrower’s representation and warranties in the Loan and Security Agreement are true,
correct and complete in all material respects to on the date of the telephone transfer request
for and advance, but those representations and warranties expressly referring to another date
shall be true, correct and complete in all material respects as of the date:

Authorized
Signature:                                         
          
Phone Number:         
                                

OUTGOING WIRE REQUEST

Complete only if all or a portion of funds from the loan advance above are to be wired.

Deadline for same day processing is 12:00 p.m., P.S.T.

Beneficiary
Name:       
                      
                        
       Amount of Wire: $              
                     
      

Beneficiary Bank:                 
                    
                   
    Account Number:                  
                            

City and Sate:                                              

Beneficiary Bank Transit (ABA) #:                  
                      
 

Beneficiary
Bank Code (Swift, Sort, Chip, etc.):                                         

(For International Wire Only)

Intermediary
Bank:           
                      
                       
      Transit (ABA) #:               
                      
    

For Further Credit to:                    
                                      
                      
                      
                      
             

Special Instruction:                    
                                          
                      
                      
                                   

By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be
processed in accordance with and subject to the terms and conditions set forth in the
agreements(s) covering funds transfer service(s), which agreements(s) were previously
received and executed by me (us).

	 	 	 	 	 	 	 	 	 
	Authorized Signature:

	 	 	 	 	 	2nd Signature (If Required):	 	 
	 Print
Name/Title:

	 	 

	 	 	 	Print Name/Title:
	 	 
 
	 Telephone
#

	 	 

	 	 	 	Telephone #
	 	 
 
	 

	 	 

	 	 	 	 	 	 
 

 

 

Schedule 1 to Loan and Security Agreement

The exact correct corporate name of Borrower is (attach a copy of the formation documents, e.g.,
articles, partnership agreement): See Representations

Borrower’s State of formation: See Representations

Borrower has operated under only the following other names (if none, so
state): See Representations

All other address at which the Borrower does business are as follows (attach additional sheets if
necessary and include all warehouse addresses):

See Representations

Borrower has deposit accounts and/or investment accounts located only at the following
institutions:

See Representations

List Acct. Numbers: See Representations

Liens existing on the Closing Date and disclosed to and accepted by Bank in
writing:

Permitted Liens are set forth in the Loan Agreement

Subordinated
Debt:

Indebtedness on the Closing Date and disclosed to and consented to by Bank in writing:

Indebtedness outstanding in favor of DP V Associates LP and Domain Partners V LP in the
approximate
aggregate amount of $2,000.000

The following is a list of the Borrower’s copyrights (including copyrights of software) which are
registered with the United States Copyright Office. (Please include name of the copyright and
registration number and attach a copy of the registration:

See Representations

The following is list of all software which the Borrower sells, distributes or licenses to others,
which is not registered with the United States Copyright Office. (Please include versions
which are not registered:

See Representations

The following is a list of all of the Borrower’s patents which are registered with the United
States Patent
Office. (Please include name of the patent and registration number and attach a copy of the
registration.):

See Representations

The following is a list of all of the Borrower’s patents which are pending with the United States
Patent Office. (Please include name of the patent and a copy of the application):
 See
Representations

The following is a list of all of the Borrower’s registered trademarks. (Please include name of
the trademark and a copy of the registration.):

See Representations

Borrower is not subject to litigation which would have a material adverse effect on the Borrower’s
financial
condition, except the following (attach additional comments, if needed):

None

Tax ID Number: 33-0928885

Organizational
Number, if any:                     

 

 

EXHIBIT C

BORROWING BASE CERTIFICATE

	 	 	 
	Borrower: VOLCANO THERAPEUTICS, INC.

	 	Bank: Silicon Valley Bank
	 

	 	3003 Tasman Drive
	 

	 	Santa Clara, CA 95054

Commitment Amount: $6,000,000

	 	 	 	 	 	 	 
	ACCOUNTS RECEIVABLE	 	 	 	 
	1.

	 	Accounts Receivable Book Value as of
	 	 	 	$          
	 

	 	 	 	 	 	 
	2.

	 	Additions (please explain on reverse)
	 	 	 	$          
	 

	 	 	 	 	 	 
	3.

	 	TOTAL ACCOUNTS RECEIVABLE
	 	 	 	$          
	 

	 	 	 	 	 	 
	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)	 	 	 	 
	4.

	 	Amounts over 90 days from invoice date
	 	$          
	 	 
	 

	 	 	 	 	 	 
	5.

	 	Balance of 50% over 90 day accounts
	 	$          	 	 
	 

	 	 	 	 	 	 
	6.

	 	Credit balances over 90 days
	 	$          	 	 
	 

	 	 	 	 	 	 
	7.

	 	Concentration Limits*
	 	$          	 	 
	 

	 	 	 	 	 	 
	8.

	 	Foreign Accounts
	 	$          	 	 
	 

	 	 	 	 	 	 
	9.

	 	Governmental Accounts
	 	$          	 	 
	 

	 	 	 	 	 	 
	10.

	 	Contra Accounts
	 	$          	 	 
	 

	 	 	 	 	 	 
	11.

	 	Promotion or Demo Accounts
	 	$          	 	 
	 

	 	 	 	 	 	 
	12.

	 	Intercompany/Employee Accounts
	 	$          	 	 
	 

	 	 	 	 	 	 
	13.

	 	Other (please explain on reverse)
	 	$          	 	 
	 

	 	 	 	 	 	 
	14.

	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	 	 	 	$          
	 

	 	 	 	 	 	 
	15.

	 	Eligible Accounts (#3 minus #14)
	 	 	 	$          
	 

	 	 	 	 	 	 
	16.

	 	LOAN VALUE OF ACCOUNTS (80% of #15)
	 	 	 	$          
	 

	 	 	 	 	 	 
	16a.

	 	Eligible Inventory
	 	 	 	$          
	 

	 	 	 	 	 	 
	16b.

	 	LOAN VALUE OF ELIGIBLE INVENTORY
(lesser of 20% of 16a)
or ($1,250,000)
	 	 	 	$          
	 

	 	 	 	 	 	 
	16c.

	 	Allowed Overadvance Facility Amount
	 	 	 	$          
	 

	 	 	 	 	 	 
	 
	BALANCES	 	 	 	 
	17.

	 	Maximum Loan Amount
	 	 	 	$          
	 

	 	 	 	 	 	 
	18.

	 	Total Funds Available [Lesser of #17 or (#16 plus #16b plus 16c)]
	 	 	 	$          
	 

	 	 	 	 	 	 
	19.

	 	Present balance owing on Line of Credit
	 	 	 	$          
	 

	 	 	 	 	 	 
	20.

	 	Outstanding under Sublimits (LC, FX and Cash Mgmt)
	 	 	 	$          
	 

	 	 	 	 	 	 
	21.

	 	RESERVE POSITION (#18 minus #19 and #20)
	 	 	 	$          
	 

	 	 	 	 	 	 

The undersigned represents and warrants that this is true, complete and correct, and that the
information in this Borrowing Base Certificate complies with the representations and warranties in
the Loan and Security Agreement between the undersigned and Silicon Valley Bank.

	 	 	 	 	 	 	 
	COMMENTS:	 	BANK USE ONLY
	 

	 	 	 	Rec’d By:	 	 
	 

	 	 	 	 	 	 
	VOLCANO THERAPEUTICS, INC.

	 	 	 	Auth. Signer 
	 

	 	 	 	Date:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Verified:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Auth. Signer
	 

	 	 	 	Date:	 	 
	 

	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Authorized Signer	 	 	 	 

 

 

EXHIBIT D 

COMPLIANCE CERTIFICATE

			
	TO:	 	SILICON VALLEY BANK

 3003 Tasman Drive

Santa Clara, CA 95054

FROM:
VOLCANO THERAPEUTICS, INC.

     The undersigned authorized officer of VOLCANO THERAPEUTICS, INC. (“Borrower”)
certifies that under the terms and conditions of the Loan and Security Agreement between Borrower
and Bank
(the “Agreement”), (i) Borrower is in complete
compliance for the period ending _____ with
        all
required covenants except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached are the required
documents supporting the certification. The Officer certifies that these are prepared in accordance
with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the
next except as explained in an accompanying letter or footnotes. The Officer acknowledges that no
borrowings may be requested at any time or date of determination that Borrower is not in compliance
with any of the terms of the Agreement, and that compliance is determined not just at the date this
certificate is delivered.

     Please
indicate compliance status by circling Yes/No under
“Complies” column.

	 	 	 	 	 	 	 
	Reporting
Covenant	 	Required	 	Complies
	Monthly financial
statements + CC

	 	Monthly within 30 days
	 	Yes
	 	No
	Quarterly Consolidating
financial statements

	 	Qrterly within 30 days
	 	Yes
	 	No
	Annual (Audited)

	 	FYE within 120 days
	 	Yes
	 	No
	A/R & A/P Agings

	 	Monthly within 20 days,

when borrowing
	 	Yes
	 	No
	 
	A/R Audit

	 	Initial and Semi-Annual
	 	Yes
	 	No
	Borrowing Base
Certificate

	 	Monthly within 20 days,
when borrowing
	 	Yes
	 	No

	 	 	 	 	 	 	 	 	 
	Financial
Covenant	 	Required	 	Actual	 	Complies
	Maintain on a Monthly

Basis:
	 	 	 	 	 	 	 	 
	Minimum Quick Ratio

	 	0.90:1.00
	 	___:1.00
	 	Yes
	 	No
	Max Net Loss (qtrly)

	 	($6MM) for 6.30.03
	 	 
	 	Yes
	 	No
	 

	 	($5.5MM) for 9.30.03	 	 	 	 	 	 
	 

	 	($4.6MM) thereafter	 	 	 	 	 	 

Have there been updates to Borrower’s intellectual property that affect the Collateral per the
loan agreement provision? Yes /No

Borrower
only has deposit accounts located at the following institutions: __________.

Comments Regarding Exceptions: See Attached.

	 	 	 	 	 
	Sincerely,

	 	BANK USE ONLY
	 
	 	 	 	 
	VOLCANO THERAPEUTICS, INC.

	 	Rec’d By:	 	 
	 
	 	 

	 

	 	 	 	Auth.
Signer          
	 
	 	Date:	 	 
	 
	 	 

	Signature

	 	Verified:	 	 
	 

	 	 

	 
	 	 	 	Auth. Signer          
	Title

	 	Date:	 	 
	 
	 
	 	 

	Date: 
	 	Compliance Status:                     Yes          No

 

 

EXHIBIT E

ASSET BASED TERMS

The following are the “Asset Based Terms”:

     (1) Schedules
and Documents relating to Accounts.  Borrower shall deliver to Bank transaction
reports, Advance requests, schedules of Accounts, and schedules of collections, all on
Bank’s standard forms; provided, however, that Borrower’s failure to execute and deliver the same
shall not affect or limit Bank’s security interest and other rights in all of Borrower’s Accounts.
If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of
all contracts, orders, invoices, and other similar documents, and all shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Accounts, and Borrower warrants the genuineness of all of the
foregoing. Borrower shall also furnish to Bank an aged accounts receivable trial balance in such
form and at such intervals as Bank shall request. In addition, Borrower shall deliver to Bank the
originals of all instruments, chattel paper, security agreements, guarantees and other documents and
property evidencing or securing any Accounts, immediately upon receipt thereof and in the same form
as received, with all necessary endorsements, all of which shall be with recourse. Borrower shall
also provide Bank with copies of all credit memos from time to time
on request by Bank.

     (2) Collection
of Accounts.  Borrower shall hold all payments on, and proceeds of, Accounts
and all other Collateral in trust for Bank, and Borrower shall immediately deliver all
such payments and proceeds to Bank in their original form, duly endorsed, to be applied to the
Obligations in such order as Bank shall determine. Borrower agrees that it will not commingle such
payments and proceeds with any of Borrower’s other funds or property, but will hold such payments
and proceeds separate and apart from such other funds and property and in an express trust for Bank.
Bank may, in its discretion, require that all proceeds of Collateral be deposited by Borrower into a
lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account
agreement in such form as Bank may specify. Bank or its designee may, at any time, notify Account
Debtors that the Accounts have been assigned to Bank. Nothing in this Exhibit limits the
restrictions on Transfers of Collateral set forth elsewhere in this Agreement.

     (3) Interest
Computation.  In computing interest on the Obligations, all checks, wire
transfers and other items of payment received by Silicon (including proceeds of Accounts shall be
deemed applied by Silicon on account of the Obligations three Business Days after receipt by
Silicon of immediately available funds, and, for purposes of the foregoing, any such funds
received after 12:00 Noon on any day shall be deemed received on the next Business Day. Silicon
shall not, however, be required to credit Borrower’s account for the amount of any item of payment
which is unsatisfactory to Silicon in its good faith business judgment, and Silicon may charge
Borrower’s loan account for the amount of any item of payment which is returned to Silicon unpaid.

     (4) Loan
Requests.  Without limiting the right of Bank to cease making Advances on an Event of
Default, requests for Advances shall be in writing and shall be
accompanied by a current Transaction
Report on Bank’s standard form.

     (5) Reserves.  Without limiting the right of Bank to cease making Advances on an Event
of Default, Bank shall have the right, from time to time, to establish and deduct the following
reserves from the amount of Advances, Letters of Credit and other financial accommodations under the
lending formula(s) provided in Schedule 2: (a) reserves to reflect events, conditions contingencies
or risks which, as determined by Bank in good faith, do or may affect
adversely (1) the Collateral or
any other property which is security for the Obligations or its Value (including without limitation
any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower, or
(iii) the security interests and other rights of Bank in the
(Collateral (including the
enforceability, perfection and priority thereof); and(b)

 

 

reserves to reflect Bank’s good faith belief that any collateral report or financial information
furnished by or on behalf of Borrower to Bank is or may have been incomplete, inaccurate or
misleading in any material respect.

     (6) Cure Periods. The cure periods set forth in the Loan Agreement shall be modified as
follows: the cure period in Section 8.3 of the Loan Agreement shall be five Business Days rather
than 30 days and there shall be no cure period in Section 8.1 of the Loan Agreement.

27

 

Schedule 2 to

Loan and Security Agreement

			
	Borrower:	 	Volcano Therapeutics, Inc.

			
	Date:	 	July 18, 2003

This Schedule forms an integral part of the Loan and Security Agreement (the “Loan
Agreement”) between Silicon Valley Bank (“Bank”) and the above-borrowers (jointly and severally
“Borrower”) of even date herewith. (Capitalized terms used herein, which are not defined, shall
have the meanings set forth in the Loan Agreement.)

 

1. CREDIT LIMIT

    (Section 2.1.1):

An amount not to exceed the lesser of (A) or (B), minus (C):

(A) $6,000,000 at any one time outstanding (the
“Committed Revolving Line”); or

(B) The sum of (1), (2) and (3) (the “Borrowing Base”):

    (1) Up to 80% of the amount of Borrower’s Eligible
Accounts; plus

    (2) Up to the lesser of (x) 20% of the value of the
Eligible Inventory based on the lower of cost or market value;
or (y) $1,250,000; plus

    (3) Up to $1,750,000, provided that Borrower has on
deposit with Bank an amount at least equal to the Advance
proposed to made and all Advances already extended under this
clause (3) and Borrower maintains such aggregate amount in Bank
deposits while any such Advances remain outstanding,
provided, further, that all Advances made under this
clause (3) shall be repaid in their entirety on the earlier to
occur of October 31, 2003 or the satisfaction of the covenant set
forth in Section 7.3 of this Schedule and no further Advances
under this clause (3) shall be made on and after such date;

MINUS

(C) (1) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of credit); (2) the FX
Reserve; and (3) the aggregate amount of Cash Management Services
utilizations.

    Letter of Credit Sublimit

    (Section 2.1.2):                       $1,000,000

 

 

Bank will issue or have issued Letters of Credit for
Borrower’s account not exceeding (i) the lesser of the Committed
Revolving Line or the Borrowing Base, minus (ii) the outstanding
principal balance of the Advances, minus (iii) the applicable FX
Reserve and minus (iv) the aggregate amount of Cash Management
Services utilizations; provided, however, the face amount of
outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) may not exceed the Letter of Credit Sublimit set
forth above.

			
	Foreign Exchange Sublimit
	(Section 2.1.3):	$1,000,000, subject to the provisions set forth in Section 2.1.3 of
the Loan Agreement

 

			
	Cash Management Services Sublimit
	(Section 2.1.4):	$500,000, subject to the provisions set forth in Section 2.1.4 of
the Loan Agreement

			
	2. INTEREST
	 
	    Interest Rate	 	 
	    (Section 2.3(a)):	A rate equal to the “Prime Rate” in effect from time to time, plus 0.75% per annum,
provided that in no event shall the interest rate be less than 4.75% per annum.

			
	3. FEES (Section 2.4(a)):
	 
	    Facility Fee:	$30,000, payable concurrently herewith, and Bank acknowledges that
$ 10,000 of such fee has been received.
	 
	    Termination:	Borrower shall have the right to terminate the Committed Revolving
Line prior to the Revolving Maturity Date, effective three
Business Days after written notice of termination is given to
Bank, in which event Borrower shall pay in full all Obligations on
the effective date of termination.

2

 

4. REVOLVING MATURITY DATE

	 	 	 
	     (Section 13.1):	 	July     , 2004, subject to the required repayment of certain Advances
as set forth in the clause (B)(3) of the Credit Limit
section above.

5.
FINANCIAL COVENANTS

	 	 	 
	     (Section 6.7):	 	Borrower shall comply with each of the following
covenants. Compliance shall be determined on a consolidated
basis as of the end of each month, except as specifically
otherwise provided below:
	 
	Quick Ratio:  	Borrower shall maintain a ratio of
	 
	 	 	(i) the total of unrestricted cash, cash equivalents and
net trade accounts receivable,

TO

	 	 	 
	 	 	(ii) the total of current
liabilities, 

of not less than 0.90 to 1.00.
	 
	Profitability: 	 Borrower shall not incur a net loss (after taxes) in
excess of
(A) $6,000,000 for the fiscal quarter ending June 30,
2003;

(B) $5,500,000 for the fiscal quarter ending September 30, 2003;
and
(C) $4,600,000 for each fiscal quarter thereafter. Further, it
is understood and agreed that cumulative extraordinary non-cash
charges less than or equal to $4,000,000 are to be allowed to be
incurred for the quarter end periods of September 30, 2003 and
December 31, 2003 in the aggregate and the permitted net loss
amounts for such quarters shall be deemed to exclude such
cumulative extraordinary non-cash charges (but only to the extent
of $4,000,000 in the aggregate for both such quarters);
extraordinary non-cash charges in excess of such permitted
aggregate amount for such permitted quarter periods and
any extraordinary non-cash charges in any other quarter end period
shall not be excluded for purposes of determining compliance with
the foregoing maximum loss covenants for such applicable periods.

	Definitions. 
	For purposes of this Agreement, the following term shall have the
following meaning:

“Current assets”, “current liabilities” and “liabilities” shall
have the meaning ascribed thereto by GAAP.

6.
ASSET BASED TERMS

3

 

	 	(iii)	 	“Asset Based Terms”. As used herein, “Asset Based
Terms” means the terms set forth on Exhibit E to the Loan
Agreement. Terms of this Agreement without the Asset Based
Terms are referred to as the “Non-Asset Based Terms”.
	 
	 	(iv)	 	Financial Covenant
Breach. Without limiting any of the other terms or
provisions hereof, if there is breach of the financial
covenant set forth in Section 5 above, the Asset Based Terms
shall be deemed effective upon written notice from the Bank
to the Borrower.

7. ADDITIONAL PROVISIONS.

	 	7.1	 	Warrant to Purchase
Stock. Borrower shall execute and deliver to Bank the
Warrant to Purchase Stock to purchase 40,000 shares
of Borrower’s Series B Preferred Stock on such terms
as are acceptable to Bank.
	 
	 	7.2	 	Close of Initial Series
B Round. Prior to the making of any Advances hereunder,
Borrower shall supply evidence to Bank, in form satisfactory
to Bank, that it has received at least $19,000,000 in net cash
proceeds from its current equity financing
transaction relating to Series B Preferred stock of the
Borrower.
	 
	 	7.3	 	Additional Series B
Proceeds. On or prior to October 31, 2003, Borrower
shall have received additional net cash proceeds from
its Series B Preferred stock offering, apart from the sum
referred to in section 7.2 above, in the minimum amount of
$11,000,000, and Borrower shall supply evidence satisfactory
to Bank thereof. Failure to satisfy the covenant in this
Section 7.3 shall constitute and Event of Default hereunder.

     IN WITNESS WHEREOF, the parties hereto have executed this Schedule as of the date first
written above.

	 	 	 	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	Bank:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	VOLCANO	 	THERAPEUTICS, INC.	 	 	 	SILICON VALLEY BANK	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Scott Huennekens
	 	 	 	By
	 	/s/ Richard Shuttleworth	 	 
	 

	 	 

President or Vice President
	 	 	 	Title
	 	 

Senior Vice President
	 	 
	 

	 	 	 	 	 	 	 	 	 	 

4exv10w20

 

Exhibit
10.20

FIRST AMENDMENT

FIRST AMENDMENT TO STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE-MODIFIED-NET DATED JANUARY 16, 2001, BY
AND BETWEEN 1325 J STREET, L.P., A CALIFORNIA LIMITED
PARTNERSHIP, AND/OR ASSIGNEE (“LESSOR”), AND VOLCANO
CORPORATION, A DELAWARE CORPORATION (“LESSEE”). THIS
AMENDMENT SHALL GOVERN IN THE EVENT OF A CONFLICT BETWEEN
THIS AMENDMENT AND THE LEASE FORM TO WHICH IT IS ATTACHED.
THIS AMENDMENT SUPERSEDES THE ADDENDUM IN THE LEASE.

Section 1.5 Rent. Schedule for monthly rent is as follows:

	 	 	 	 
	1)April 1, 2006 — May 15, 2006
	 		$ 5,261.00 Rent/Month Net + NNN’s ***
	2) May 16, 2006 — March 31, 2007
	 		$ 5,261.00 Rent/Month Net + NNN’s
	3)April 1, 2007 — March 31, 2008
	 		$ 5,471.00 Rent/Month Net + NNN’s
	4) April 1, 2008 — March 31, 2009
	 		$ 5,471.00 Rent/Month Net + NNN’s
	5) April 1, 2009 — October 22, 2009
	 		$ 5,690.00 Rent/Month Net + NNN’s

 

			
	***	 	Lessor to offer Free Rent credit to Lessee in an amount
equal to the exact cost of the Lessee’s proposed lighting
improvements but not to exceed $7,500.00

51. Additional Rents. Lessee shall be responsible for its
pro rata share of any increase to real property taxes and property insurance to the
Premises over the base year, base year being defined as April 1,
2006-March 31, 2007. Lessee, however,
shall not be responsible for any increase to real property taxes caused by additional improvements to
the Premises by other lessees for the exclusive enjoyment of such other lessees.

52. Common Area Operating Expenses. Common Area
Operating Expenses are not included in Monthly Rent and are estimated to be $.12 per square foot
per month.

53. Utilities and Maintenance: The Lessee shall pay
for all building electrical usage, janitorial services and any other costs as stipulated within the Lease,
specific to the Lessee’s Premises.

54. Arbitration.

a. Lessee and Lessor shall have the right to apply
to a court to enjoin any breach of this Lease, and to seek specific performance, and Lessor shall have
the right to institute an unlawful detainer action in court. Excepting the right of Lessee or Lessor
to seek such relief, all claims and matters in question arising out of this Lease or the relationship
between the Parties created by this Lease or otherwise involving the Project, whether sounding in
contract, tort or otherwise, shall be resolved by binding arbitration pursuant to California
law. The arbitration shall be administered by the AAA. There shall be three arbitrators. Each
Party shall designate an arbitrator of its selection within thirty (30) Business Days of receiving
notification of the filing with the AAA of a demand for arbitration. The two arbitrators so
designated shall elect a third arbitrator. If either Party fails to designate an arbitrator within the time
specified or the two Parties’ arbitrators fail to designate a third arbitrator within thirty (30) Business
Days of their appointments, the third arbitrator shall be appointed by the AAA. Arbitration
shall occur in, Sacramento, California or such other location within the State of California, as the
Parties may agree.

b. By initialing in the space below, you are, except as
provided herein, agreeing to have any dispute arising from the matters included in the
“Arbitration” provision decided by neutral arbitration as provided by California law and you are
giving up any rights you might possess to have the dispute litigated in a court or jury trial. By
initialing in the space below, you are giving up your judicial rights to discovery and appeal unless
such rights are specifically included in the “Arbitration” provision. If you refuse to submit to
arbitration after agreement to this provision, you may be compelled to arbitrate under the authority of
the California Code of Civil Procedure. Your agreement to this arbitration provision is voluntary.

c. Any determination or award rendered in an arbitration
conducted under this paragraph shall be implemented in accordance with its terms and may be entered
as a judgment by the Superior Court of Sacramento County, California. All arbitration
determinations or awards are final and may not be challenged in any court with jurisdiction, except on
grounds as provided under the Federal Arbitration Act. The Parties expressly stipulate to the
jurisdiction of the Superior Court of the County of San Francisco for purposes of this Section, and
waive any objection to such court on grounds of improper venue. WE HAVE READ AND UNDERSTAND THE

    JD    

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FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING FROM THE MATTERS INCLUDED IN THE “ARBITRATION” PROVISION TO NEUTRAL ARBITRATION.

55. Lessee’s Use of Space: Lessee may use the Premises for any lawful purpose consistent with the
Sacramento County Zoning Code for Ml (“Light Industrial”)
use.

	 	 	 	 	 	 	 
	 	Lessor:

	 	 	Lessee:	 	 
	 	Initials

	    DB  
	 	Initials
	    JD  	 

56. Occupancy
Type: Should any governmental authority require any additional
improvements, modifications, licenses and/or permits of any kind, including but not limited to, a conditional use
permit due to Lessee’s use and/or occupancy of the Premises, it shall be provided by Lessee, at
Lessee’s sole expense. It is Lessor’s understanding that Lessee will not be using flammable
solvents or utilizing the Premises in any way that would cause Lessee’s occupancy to be considered
anything other than a B-1 or B-2 type occupant.

In the event that Lessee is classified under any other occupancy type (such as an H-2 or H-3 type
for example) which requires any additional improvements to the space (i.e., additional fire
sprinkler drops, ventilation equipment and/or ducting, additional sheetrock, and etc.), or if
Lessee’s use of the Premises, increases the fire insurance premiums on the building, Lessee shall
be responsible to pay for and/or provide the-additional amount.

57. Toxic Materials: Lessee shall not cause or permit to be discharged into the plumbing or sewage
system of the Premises or onto the underlying or adjacent to it, any hazardous, toxic or
radioactive materials, including, but not limited to, those materials identified in Section 6680 or
Title 22 of the California Administrative Code, Division 4, Chapter 30, as amended from time to
time (collectively “Toxic Materials”). Lessee shall, at its sole expense, comply with any and all
rules, regulations, codes, ordinances, statutes, and other requirements of lawful governmental
authority respecting to Toxic Materials, pollution, harmful chemicals, and other materials in
connection with Lessee’s activities on or about the Premises. Lessee specifically agrees to comply
with any such requirements relating to the handling, use, storage, and disposal of Toxic Materials
and other materials, which are considered by any such governmental authorities as harmful,
dangerous, toxic, flammable, or otherwise deserving of special care. Lessee shall pay the full cost
of any clean-up work performed on or about the Industrial Center as required by any governmental
authority in order to remove, neutralize of otherwise treat materials of any type whatsoever
directly or indirectly placed on or about the Premises by Lessee or its agents, employees,
contractors, or invites.

58. Lease Term: The Lease Term is three years (3) years, six (6) months and twenty-two (22) days.

59. Option to Renew:Lessee shall have one (1) option to renew the lease for an additional term of sixty (60)
months. Tenant must provide written notice at least nine (9)
months prior to Lease Expiration Date. The Lease Term and
Monthly Rent Schedule are as follows:

	 	 	 	 	 
	Lease Terms	 	 	 	Monthly Rent
	October 23,
2009 — March 31, 2010

	 	Option Period # 1
	 	$5,690.00/Month Net + NNN’s
	April 1, 2010 March 31, 2011

	 	Option Period # 1
	 	$5,918.00/Month Net + NNN’s
	April 1,
2011 — March31, 2012

	 	Option Period # 1
	 	$5,918.00/Month Net + NNN’s
	April 1,
2012 — March 31, 2013

	 	Option Period # 1
	 	$6,155.00/Month Net + NNN’s
	April 1,
2013 — March 31, 2014

	 	Option Period # 1
	 	$6,155.00/Month Net + NNN’s
	April 1,
2014 — October 22, 2014

	 	Option Period # 1
	 	$6,401.00/Month Net + NNN’s

60. Lease Space Cleaning:Upon termination of the Lease,
Lessee shall surrender the Premises
to Landlord broom clean and in the same condition as received
except for ordinary wear and tear that
Tenant was not otherwise obligated to remedy under any
provision in this Lease.

61. Sublease: Lessor will not unreasonably withhold or delay
its consent to the Lessee’s assignment or subletting the Premises. Lessor and Lessee
shall divide sublease profits (i.e., all rent which Lessee receives in excess of the Rent and Operating
Costs payable to Lessor hereunder for the portion of the Premises and Term covered by the sublease) 50%
to Lessor and 50% to Lessee. Lessee may deduct from the excess all customary expenses
directly incurred by Lessee attributable to the sublease.

62. Leasehold Improvements: Any improvements to the Premises
by Lessee are considered Leasehold Improvements to the Premises. Lessor may request that
Lessee remove new warehouse fluorescent drop lighting at Lessee’s sole cost and expense at the
Expiration Date.

    JD    

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Except as herein specifically provided, the balance of the
terms, covenants and conditions set forth in the Lease shall
remain in full force and effect without modification.

	 	 	 	 	 	 	 
	LESSOR:

	 	D. Benvenuti Holdings, LLC
	 	LESSEE:
	 	Volcano Corporation
	 

	 	A Delaware Limited Liability Company
	 	 	 	A Delaware Corporation
	 

	 	By 1325 J Street	 	 	 	 
	 

	 	A California Limited Partnership	 	 	 	 
	 

	 	Its Sole Member	 	 	 	 
	 

	 	By Tower Development Corp	 	 	 	 
	 

	 	Its General Partner	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By
	 	/s/ Daniel Benvenuti
	 	By
	 	/s/ John Dahldorf
	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	     Daniel Benvenuti, Jr., President
	 	 	 	     John Dahldorf, Chief Financial Officer	 	 
	 	 	Dated: April 6, 2006	 	Dated: April 3, 2006	 	 

3

 

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE-NET

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1. Basic provisions ( “Basic Provisions”)

     1.1
Parties : This Lease (“Lease”) dated for reference purposes
only January 16, 2001, is made by and between 1325 “J” Street L.P., a California
Limited Partnership (“Lessor”) and  Jomed Incorporated (“Lessee”), (collectively the
“Parties”, or individually a “Party”),

     1.2(a)
Premises: That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under the terms of
this Lease, commonly known by the street address of 2751 Mercantile
Drive, Suite 700, located in the City of Rancho Cordova, County
of Sacramento, State of California, with zip code 95742, as outlined on Exhibit A attached
hereto (“ Premises ”) and generally described as (describe briefly the nature of the Premises):
Suite #700, a +/-12, 960 square foot portion of an +/-93,
120 square foot building. In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises (“Building”) or to any other buildings in the
Project. The Premises, the Building, the Common Areas, the land upon which they are located, along with all
other buildings and improvements thereon, are herein collectively
referred to as the “Project.”
(See also Paragraph 2)

     1.2(b)
Parking: Pro-rata share unreserved vehicle parking spaces (“Unreserved Parking
Spaces”); and no reserved vehicle parking spaces
(“Reserved Parking Spaces”), (See also
Paragraph 2.6)

     1.3

Term: 5 [ILLEGIBLE] years and [ILLEGIBLE]                     
                     
                    
months (“Original Term”) commencing April 1, 2001
(“Commencement Date ”) and ending March 31, 2006
(“Expiration Date”). (See also Paragraph 3)

     1.4 Early Possession:
                    
                    
                    
(“Early Possession Date”),

     (See
also Paragraphs 3.2 and 3.3)

     1.5
Base Rent: $4,864,00 per month (“Base Rent”),
payable on the first
day of each month commencing May 1, 2001. (See also Paragraph 4)

R
 If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

     1.6
*Lessee’s Share of Common Area Operating Expenses: thirteen and 92/100’s
percent (13.92%) (“Lessee’s Share”).

          
*Lessee’s share of common area operating expenses
shall not exceed $.08 per square foot.

     1.7
Base Rent and Other Monies Paid Upon Execution:

          (a) Base 
Rent: $4,864.00 for the period April 1 - April 31, 2001.

          (b) 
Common Area Operating Expenses: $
                    
                    
for the period                                         

          (c)
 Security Deposit: $0.00 (“Security Deposit”) (See also Paragraph 5)

          (d) Other:
$                     
                    

for                         
                         
                         
                         
                    

          
(e) Total Due Upon Execution of this Lease: $     
                                                                                               

     1.8
 Agreed Use: Storage, distribution and uses related to storage and
distribution. (See also Paragraph 6)

     1.9
Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8)

     1.10 Real Estate Brokers: (See also Paragraph 15)

          (a) Representation: The following real estate brokers (the “Brokers”) and
brokerage relationships exist in this transaction (check applicable boxes):

o                                         represents Lessor exclusively (“Lessor’s Broker”);

o                                         represents Lessee exclusively (“Lessee’s Broker”); or

þ Cornish & Carey Commercial represents both Lessor and Lassee (“Dual Agency”).

          (b) Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in a separate
written agreement (or if there is no such agreement, the sum of
                    
or                     % of the total
Base Rent for the brokerage services rendered by the Brokers).

     1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by                                        
            (“Guarantor”). (See also Paragraph 37)

     1.12
Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 49 through 59 and Exhibits [ILLEGIBLE], all of which
constitute a part of this Lease.

2. Premises.

     2.1
Letting. Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor, the Premises, for the term, at the rental, and upon
all of the terms, covenants and conditions set forth in this Lease. Unless
otherwise provided herein, any statement of size set forth in this Lease, or
that may have been used in calculating Rent, is an approximation which the
Parties agree is reasonable and any payments based thereon are not subject to
revision whether or not the actual size is more or less.

     2.2
Condition. Lessor shall deliver that portion of the Premises contained within
the Building (“Unit”) to Lessee broom clean and free of debris on the Commencement
Date or the Early Possession
Date, whichever first occurs (“Start Date”), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect
within thirty days following the Start Date, warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning
systems (“HVAC”), loading doors, if any, and all other such elements in the Unit,
other than those constructed by Lessee, shall be in good operating condition on
said date and that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects. If a non-compliance with
such warranty exists as of the Start Date, or if one of such systems or elements
should malfunction or fail within the appropriate warranty period, Lessor shall, as
Lessor’s sole obligation with respect to such matter, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods
shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to
the remaining systems and other elements of the Unit. If Lessee does not give
Lessor the required notice within the appropriate

	 	 	 	 	 	 
	 

	 	 	 	 
	 
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	 	REVISED	 	FORM MTN-2-2/99E

 

warranty
period, correction of any such non-compliance, malfunction or failure shall be the
obligation of Lessee at Lessee’s sole cost and expense (except the repairs to the fire sprinkler systems,
roof, foundations, and/or bearing walls — see Paragraph 7).

     2.3 Compliance.
Lessor warrants that the improvements on the Premises and the Common Areas
comply with the building codes that were in effect at the time that each such improvement, or portion
thereof, was constructed, and also with all applicable laws,
covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date
(“Applicable Requirements”). Said
warranty does not apply to the use to which Lessee will put
the Premises or to any Alterations or
Utility installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee
is responsible for determining whether or not the Applicable Requirements, and especially the zoning,
are appropriate for Lessee’s intended use, and acknowledges that past uses of the Premises may no
longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as
otherwise provided promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at [ILLEGIBLE] expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within 6 months following the
Start Date, correction of the non-compliance shall be the obligation of Lessee at Lessee’s sole cost and expense. If the
Applicable Requirements are hereafter changed so as to [ILLEGIBLE] during the term of this Lease the
construction of an addition to or an alteration of the Unit, Premises
and/or Building, the
remediation of any Hazardous Substance, or the reinforcement or other physical modification of the
Unit, Premises and/or Building (“Capital Expenditure”),
Lessor and Lessee shall allocate the cost of
such work as follows:

          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general,
Lessee shall be fully responsible for the cost thereof, provided,
however that if such Capital
Expenditure is required during the last 2 years of this Lease
and the cost thereof exceeds 6 months’
Base Rent, Lessee may instead terminate the Lease unless Lessor
notifies Lessee, in writing, within 10 days after receipt of
Lessee’s termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to 6
months’ Base Rent. If Lessee elects termination, Lessee shall
immediately cease the use of the Premises
which requires such Capital Expenditure and deliver to Lessor written notice specifying a
termination date at  least 90 days thereafter. Such termination date shall, however, in no event be
earlier than the last day that Lessee could legally utilize the Premises without commencing such
Capital Expenditure.

          (b) If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee
shall allocate the obligation to pay for the portion of such costs
reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d);
provided, however, that if such
Capital Expenditure is required during the last 2 years of the Lease or if Lessor reasonably determines
that it is not economically feasible to pay its share thereof, Lessor shall have the option to
terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in
writing, within 10 days after receipt of Lessor’s
termination notice that Lessee will pay for such
Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its share of any
such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent
until Lessor’s share of such costs have been fully paid. If
Lessee is unable to finance Lessor’s share
or if the balance of the Rent due and payable for the remainder of
this Lease is not sufficient to
fully reimburse Lessee on an offset basis, Lessee shall have the
right to terminate this Lease upon
30 days written notice to Lessor.

          (c) Notwithstanding
the above, the provisions concerning Capital Expenditures are intended to
apply only to non-voluntary  unexpected, and new
Applicable Requirements. If the Capital Expenditures
are instead triggered by Lessee as a result of an actual or proposed
change use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be fully responsible
for the cost thereof, and Lessee shall not have any right to terminate this Lease.

     2.4
Acknowledgements. Lessee acknowledges that: (a) it has been advised
by Lessor and/or
Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and
compliance with Applicable Requirements and the Americans with
Disabilities Act), and their
suitability for Lessee’s intended use, (b) Lessee has made such
investigation as it deems necessary
with reference to such matters and assumes all responsibility therefor as the same relate to its
occupancy of the Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any oral
or written representations or warranties with respect to said matters other than as set forth
in the Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations,
promises or warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the
Premises, and (ii) It is Lessor’s sole responsibility to
investigate the financial capability and/or suitability of all
proposed tenants.

     2.5
Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no
force or effect if immediately prior to the Start Date, Lessee was the
owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary corrective work.

     2.6
Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces
and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more parking space than
said number. Said parking spaces shall be used for parking by
vehicles no larger than full-size
passenger automobiles or pick-up trucks, herein called
“Permitted Size Vehicles.” Lessor may regulate
the loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph
2.9. No vehicles other than Permitted Size Vehicles
may be parked in the Common Area without the
prior written permission of Lessor.

          (a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee
or Lessee’s employees, suppliers, shippers, customers, contractors or invitees to be loaded,
unloaded, or parked in areas other than those designated by Lessor for such activities.

          (b) Lessee shall not service or store any vehicles in the Common Areas.

          (c) If Lessee permits or allows any of the prohibited activities described in this Paragraph
2.6, then Lessor shall have the right without notice, in addition to such other rights and remedies
that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

     2.7
Common Areas — Definition. The term “Common Areas” is defined as all areas and facilities
outside the Premises and within the exterior boundary line of the Project and interior utility
raceways and installations within the Unit that are provided and designated by the Lessor from time
to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and
their respective employees, suppliers, shippers, customers, contractors and invitees, including
parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and
landscaped areas.

     2.8 Common Areas — Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and
its employees, suppliers, shippers, contractors, customers and invitees, during the term of this
Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas
as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or restrictions governing the
use of the Project. Under no circumstances shall the right herein granted to use the Common Areas
be deemed to include the right to store any property, temporarily or
permanently, in the Common
Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor’s
designated agent, which consent may be revoked at any time. In the event that any unauthorized
storage shall occur then Lessor shall have the right, without notice,
in addition to such other
rights and remedies that it may have, to remove the property and
charge the cost to Lessee, which cost
shall be immediately payable upon demand by Lessor.

     2.9
Common Areas — Rules and Regulations. Lessor or such other person(s) as Lessor may
appoint shall have the exclusive control and management of the Common Areas and shall have the
right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations
(“Rules and Regulations”) for the management, safety, care, and cleanliness of the grounds, the
parking and unloading of vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Project and their
invitees. Lessee agrees to
abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers,
shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of
the Project.

     2.10 Common Areas — Changes. Lessor shall have the right, in Lessor’s sole discretion, from
time to time:

             (a) To make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading
and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility
 raceways;

             (b) To
close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;

             (c) To
designate other land outside the boundaries of the Project to be a part of the Common
Areas;

             (d) To
add additional building and improvements to the Common Areas;

             (e) To use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and

             (f) To
do and perform such other acts and make such other changes in, to or with respect to the
Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be
appropriate.

3. Term.

     3.1
Term. The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.

     3.2
Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the obligations to pay
Lessee’s Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to
maintain the Premises) shall, however, be in effect during such period. Any such early possession
shall not affect the Expiration Date.

     3.3 Delay in Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement
Date. If, despite said efforts,
Lessor is unable to deliver possession as agreed, Lessor shall not be
subject to any liability
therefore, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until it receives possession of the
Premises. If possession is not delivered within 60 days after the Commencement Date, Lessee may, at
its option, by notice in writing within 10 days after the end of such 60 day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations hereunder. If such

	 	 	 	 	 	 
	 

	 	 	 	 
	 
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written
notice is not received by Lessor within [ILLEGIBLE] 10 day period, Lessee’s right to cancel shall
terminate. Except as otherwise provided, if possession is
not tendered to Lessee by the Start Date
and Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the term hereof, but minus any days
of delay caused by the acts or omissions of Lessee. If possession of the Premises is not delivered
within 4 months after the Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.

     3.4
Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee
until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending
delivery of such evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of  such evidence of insurance. Further, if
Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the
Start Date shall occur but Lessor may elect to withhold possession until such conditions are
satisfied.

4.
Rent.

     4.1
Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent
(“Rent”).

     4.2
Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in
addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6) of all Common Area
Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease
in accordance with the following provisions:

          (a) “Common
Area Operating Expenses” are defined, for purposes of this
Lease, as all costs
incurred by Lessor relating to the ownership and operation of the Project, including, but not
limited to, the following:

	 	(i)	 	The operation, repair and maintenance, in neat,
clean, good order and condition of the following:
	 
	 	 	 	(aa)  The Common Areas and Common Area
improvements, including parking areas, loading and unloading areas,
trash areas, roadways, parkways, walkways, driveways, landscaped areas,
bumpers, irrigation systems, Common Area lighting facilities, fences
and gates, elevators, roofs, and
roof drainage systems.
	 
	 	 	 	(bb) Exterior signs and any tenant directories.
	 
	 	 	 	(cc) Any fire detection and/or sprinkler systems.
	 
	 	(ii)	 	The cost of water, gas, electricity and telephone
to service the Common Areas and any utilities not separately metered.
	 
	 	(iii)	 	Trash disposal, pest control services, property
management, security services, and the costs of any environmental
inspections.
	 
	 	(iv)	 	Reserves set aside for maintenance and repair of
Common Areas.
	 
	 	(v)	 	Real Property Taxes (as defined in Paragraph 10).
	 
	 	(vi)	 	The cost of the premiums for the insurance maintained by Lessor
pursuant to Paragraph 8.
	 
	 	(vii)	 	Any deductible portion of an insured loss concerning the Building
or the Common Areas.
	 
	 	(viii)	 	The cost of any Capital Expenditure to the Building or the Project not covered
under the provisions of Paragraph 2.3 provided; however, that Lessor shall
allocate the cost of any such Capital Expenditure over a 12 year period and
Lessee shall not be required to pay more than Lessee’s Share of
1/144th of
the cost of such Capital Expenditure in any given month.
	 
	 	(ix)	 	Any other services to be provided by Lessor that are stated
elsewhere in this Lease to be a Common Area Operating Expense.

          (b) Any Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project or to the
operation, repair and maintenance thereof, shall be allocated entirely to such Unit,
Building, or other building. However, any Common Area Operating Expenses and Real
Property Taxes that are not specifically attributable to the Building or to any other
building or to the operation, repair and maintenance thereof, shall be
equitably allocated by Lessor to all buildings in the Project.

          (c) The inclusion of the improvements, facilities and services set forth in
Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either
have said improvements or facilities or to provide those services unless the Project
already has the same, Lessor already provides the services, or Lessor has agreed
elsewhere in this Lease to provide the same or some of them.

          (d) Lessee’s Share of Common Area Operating Expenses shall be payable by Lessee
within 10 days after a reasonably detailed statement of actual expenses is presented to
Lessee. At Lessor’s option, however, an amount may be estimated by Lessor from time to
time of Lessee’s Share of annual Common Area Operating Expenses and the same shall be
payable monthly or quarterly, as Lessor shall designate, during each 12 month period of
the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall deliver
to Lessee within 60 days after the expiration of each calendar year a reasonably
detailed statement showing Lessee’s Share of the actual Common Area Operating Expenses
incurred during the preceding year. If Lessee’s payments under this Paragraph 4.2(d)
during the preceding year exceed Lessee’s Share as indicated on such statement, Lessor
shall credit the amount of such over-payment
against Lessee’s Share of Common Area Operating Expenses next becoming due. If
Lessee’s payments under this Paragraph 4.2(d) during the preceding year were less than
Lessee’s Share as indicated on such statement, Lessee shall pay to Lessor the amount
of the deficiency within 10 days after delivery by Lessor to Lessee of the statement.

     4.3 
Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset or deduction (except as specifically permitted in this
Lease), on or before the day on which it is due. Rent for any period during the term hereof
which is for less than one full calendar month shall be prorated based upon the actual number
of days of said month. Payment of Rent shall be made to Lessor at its address stated herein
or to such other persons or place as Lessor may from time to time designate in writing.
Acceptance of a payment which is less than the amount then due shall not be a waiver of
Lessor’s rights to the balance of such Rent, regardless of Lessor’s endorsement of any
check so stating. In the event that any check, draft, or other instrument of
payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to
pay to Lessor the sum of $25 in addition to any late charges which may be due.

5.
Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security
Deposit as security for Lessee’s faithful performance of its obligations under this Lease. If
Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or
retain all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse of compensate Lessor for any liability, expense, loss or damage which
Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of
the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies
with Lessor sufficient to restore said Security Deposit to the full amount required by this
Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional monies with Lessor so that the total amount of the
Security Deposit shall at all times bear the same proportion to the increased Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the
Agreed Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee of assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for any increased
wear and tear that the Premises may suffer as a result thereof. If a change in control of
Lessee occurs during this Lease and following such change the financial condition of Lessee
is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall deposit such
additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition. Lessor shall not be
required to keep the Security Deposit separate from its general
accounts. Within 14 days after the expiration or termination of this Lease, if Lessor elects
to apply the Security Deposit only to unpaid Rent, and otherwise within 30 days after
the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that
portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment for any monies
to be paid by Lessee under this Lease.

6. 
Use.

     6.1 
Use.  Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage to neighboring
premises or properties. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the  [ILLEGIBLE] not impair the
[ILLEGIBLE] integrity of the improvements on the Premises or
the mechanical or electrical systems therein and/or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give
written notification of same, which notice shall include an explanation of Lessor’s objections to
the change in the Agreed Use.

     6.2 
Hazardous Substances.

          (a) Reportable
Use Require Consent. The term “Hazardous Substance” as used
in this Lease shall mean any product, substance, or waste whose
presence, use,
manufacture, disposal, transportation, or
release, either by itself or in combination with other materials expected to be on
the Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products of fractions
thereof. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous substances without the express prior
written consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or business
plan is required to be filed with, any governmental authority, and/or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the foregoing,
Lessee may use any ordinary and customary

	 	 	 	 	 
	 

	 	 	 	 
	 
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materials
reasonably required to be used in [ILLEGIBLE] course of the
Agreed Use, so
long as such [ILLEGIBLE]. in compliance with all Applicable Requirements, is not a Reportable Use,
and does not expose the Premises or neighboring property to any meaningful risk of contamination
or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as
Lessor reasonably deems
necessary to protect itself, the public, the Premises and/or the environment against damage,
contamination, injury and/or liability, including, but not limited
to, the installation (and
removal on or before Lease expiration or termination) of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit.

          (b) Duty
to inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has [ILLEGIBLE] be
located in, on, under or about the Premises, other than
as previously consented to by Lessor, Lessee shall immediately give written notice of such fact
to Lessor, and provide Lessor with a copy of any report, notice,
claim or other documentation
which it has concerning the presence of such Hazardous [ILLEGIBLE].

          (c) Lessee
Remediation. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or
[ILLEGIBLE] the Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee’s expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the
cleanup of any contamination
of, and for the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or pertaining to or
involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or
for Lessee, or any third party.

          (d) Lessee
indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties,
and attorneys’ and consultants’
fees arising out of or involving any Hazardous Substance brought onto the Premises by or for
Lessee, or any third party (provided, however, that Lessee shall have no
liability under this Lease with respect to underground migration of any Hazardous Substance
under the Premises from areas outside of the Project).
Lessee’s obligations shall include, but
not be limited to, the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee shall release
Lessee from its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

          (e) Lessor
indemnification. Lessor and its successors and assigns shall indemnify, defend,
reimburse and hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which existed as a result of Hazardous
Substances on the Premises prior to the Start Date or which are
caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and when
required by the Applicable Requirements, shall include, but not be
limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.

          (f) Investigations
and Remediations. Lessor shall retain the responsibility and pay
for any investigations or remediation
measures required by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the
[ILLEGIBLE] Date, unless such remediation
measure is required as a result of Lessee’s use (including
“Alterations”, as defined in
paragraph 7.3(a) below) of the [ILLEGIBLE], in which event Lessee shall be responsible for such
payment. Lessee shall cooperate fully in any such activities at the
request of Lessor, including
allowing Lessor and Lessor’s agents to have reasonable access
to the Premises at reasonable
times in order to carry out Lessor’s investigative and remedial responsibilities.

          (g) Lessor
Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which
case Lessee shall make the investigation and remediation thereof required by the Applicable
Requirements and this Lease shall continue in full force and effect, but
subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at
Lessor’s option, either (i) investigate and remediate such
Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate such condition
exceeds 12 times the then monthly [ILLEGIBLE] Rent or $100,000, whichever is greater, give
written notice to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence
[ILLEGIBLE] Hazardous Substance Condition, of Lessor’s
desire to terminate this Lease as of the
date 60 days following the date of such notice, in the event Lessor elects to give a termination
notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee’s
commitment to pay the amount by which the cost of the remediation of such Hazardous Substance
Condition exceeds an amount equal to 12 times the then monthly
Base Rent or $100,000, whichever
is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within
30 days following such commitment. In such event, this Lease shall continue in full force and
effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after
the required funds are available. If Lessee does not give such notice and provide the required
funds or assurance thereof within the time provided, this Lease shall terminate as of the date
specified in Lessor’s notice of termination.

     6.3
Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in
this Lease, Lessee shall, at Lessee [ILLEGIBLE] expense,
fully, diligently and in a timely
manner, materially comply with all Applicable Requirements, the requirements of any applicable
fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or
consultants which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee shall, within 10
days after receipt of Lessor’s written request,  provide Lessor with copies of all permits
and other documents, and other information evidencing Lsssee’s compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt,
notify Lessor in writing
(with copies of any documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee or the Premises to
comply with any Applicable Requirements.

     6.4
Inspection; Compliance.
Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and consultants shall have the right to
enter into
[ILLEGIBLE] at any time, in the case of an emergency, and otherwise at reasonable times, for the
purpose of inspecting the condition of the Premises and for verifying compliance by
Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a
violation of Applicable Requirements, or a contamination is found to exist or be imminent,
or the inspection is requested or ordered by a governmental
authority. In such case, Lessee
shall upon request reimburse Lessor for the cost of such inspection, so long as such
inspection is reasonably related to the violation or contamination.

7.
Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.

     7.1 Lessee’s Obligations.

          (a) In
General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance),
6.3 (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9
(Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, [ILLEGIBLE]
Premises, Utility Installations (intended for Lessee’s exclusive use, no matter where located),
and Alterations in good order, condition and repair (whether or not the portion of the
Premises requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s
use, any prior use, the elements or the age of such portion of the Premises), including, but not
limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting
facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which
are the responsibility of Lessor pursuant to Paragraph 7.2.
Lessee, in keeping the Premises in
good order, condition and repair, shall exercise and perform good maintenance practices,
specifically including the procurement and maintenance of the service contracts required by
Paragraph 7.1(b) below. Lessee’s obligations shall include restorations, replacements or renewals
when necessary to keep the Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.

          (b) Service
Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain
contracts, with copies to Less [ILLEGIBLE] customary form and substance for, and with
contractors specializing and experienced in the maintenance of the following equipment and
improvement, if any, if and when Installed on the Premises: (i) HVAC equipment, (ii) boiler
and pressure vessels, (iii) clarifiers, and (iv) any other
equipment, if reasonably required by
Lessor. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain any or
all of such service contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon
demand, for the cost thereof.

          (c) Failure
to Perform. If Lessee fails to perform Lessee’s obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee
(except in the case of an emergency, in which case no notice shall be required), perform such
obligations on Lessee’s behalf, and put the Premises in good order, condition and repair, and
Lessee shall promptly reimburse Lessor for the cost thereof.

          (d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7
below, and without relieving [ILLEGIBLE] of liability resulting from Lessee’s failure to
exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b)
cannot be [ILLEGIBLE] other than at a cost which is [ILLEGIBLE] 50%
of the cost of replacing such item, then such
[ILLEGIBLE] be replaced by Lessor, and the cost [ILLEGIBLE] shall be prorated
between the Parties and
Lessee shall only be obligated to pay, each month during the remainder of the term of this
Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the
cost of such replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (ie. 1/144th of the cost per month). Lessee shall pay interest on the unamortized
balance at a rate that is commercially reasonable in the judgment of Lessor’s accountants.
Lessee may, however, prepay its obligation at any time.

     7.2
Lessor’s Obligations. Subject to the provisions of
Paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to
Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls,
structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area
fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways,
driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts
thereof, as well as providing the services for which there is a Common Area Operating
Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or
interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace
windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

     7.3
Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions.
The term “Utility Installations” refers to all floor and window
coverings, air lines, power panels, electricity distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing and fencing in or on the
Premises.

	 	 	 	 	 
	 

	 	 	 	 
	 
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The term
“Trade
 Fixtures” shall mean Lessee [ILLEGIBLE] machinery and
equipment that can be removed without doing material damage to the Premises. The term
“Alterations” shall
 mean any modification of the improvements, other than Utility Installations
 or Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations
 and/or Utility Installations” are defined as Alterations and/or Utility
 Installations made by Lessee that are not yet owned by Lessee pursuant to
 Paragraph 7.4(a).

          (b) Consent. Lessee shall not make any Alterations or Utility Installations
 to the Premises without Lessor’s prior written consent
 Lessee may, however, make non-structural Utility Installations
 to the Interior of the Premises (excluding the roof)
 without such consent but upon notice [ILLEGIBLE] Lessor, as long as
 they are not visible from the outside, do not involve
 puncturing, relocating or removing the roof or any existing
 walls, and the cumulative cost thereof during this Lease as
 extended does not exceed a sum equal to 3 month’s
 Base Rent in the aggregate or a sum equal to one month’s
 Base Rent in any one year. Notwithstanding the foregoing, Lessee
 shall not make or permit any roof penetrations and/or install
 anything on the roof without the [ILLEGIBLE] written approval of Lessor. Lessor may, as a precondition to
 granting such approval, require Lessee to utilize a contractor
 chosen and/or approved by Lessor Any Alterations or Utility installations
 that Lessee shall desire to make and which require the consent of
 the Lessor shall be presented to Lessor in written form with
 detailed plans. Consent shall be deemed conditioned upon
 Lessee’s: (i) acquiring all applicable governmental
 permits, (ii) furnishing Lessor with copies of both the
 permits and the plans and specifications prior to commencement
 of the work, and (iii) compliance with all conditions of
 said permits an other Applicable Requirements in a prompt and
 expeditious manner. Any Alterations or Utility Installations
 shall be performed in a workmanlike manner with good and sufficient
 materials. Lessee shall promptly upon completion furnish Lessor
 with as-built plans and specifications. For work which costs an
 amount in excess of one month’s Base Rent, Lessor may
 condition its consent upon Lessee providing a lien and
 completion bond in an amount equal to 150% of the estimated
 cost of such Alteration or Utility Installation and/or upon
 Lessee’s posting an additional Security Deposit with Lessor.

          (c) Indemnification.

Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use on the Premises,
which claims are or may be secured by any mechanic’s or materialman’s lien against the Premises or any interest therein,
Lessee shall give Lessor not less than 10 days notice prior to
the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post notices of non-responsibility.
If Lessee shall contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered
thereof before the enforcement thereof. If Lessor shall require,
Lessee shall furnish a surety bond in an amount equal to 150% of the
amount of such contested lier claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in
any such action, Lessee shall pay Lessor’s attorneys
fees and costs .

     7.4 
Ownership; Removal; Surrender; and Restoration.

          (a) Ownership.
Subject to Lessor’s right to require removal or elect ownership
as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all
or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per paragraph 7.4(b)
hereof, all Lesser Owned Alterations and Utility Installations shall,
at the expiration or termination of this Lease, become the property
of Lessor and be surrendered by Lessee with the Premises.

          (b) Removal.
By delivery to Lessee of written notice from Lessor not earlier than 90 and not later than 30 days prior to the end of
the term of this Lease, Lessor  may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this
Lease. Lessor may require the removal at any time of all or any part
of any Lessee Owned Alterations or Utility Installations made without
the required consent.

          (c) Surrender;
Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination data, with all of the
improvements, parts and surfaces thereof broom clean and free of
debris, and in good operating order, condition and state of repair,
ordinary wear and tear excepted. “Ordinary wear and tear”
shall not include any damage or deterioration that would have been
prevented by good maintenance practice. Notwithstanding the
foregoing, if this Lease is for 12 months or less, then Lessee
shall surrender the Premises in the same
condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance
or removal of Trade Fixtures, Lessee owned Alterations and/or Utility
installations, furnishings, and equipment as well as the removal of
any storage tank installed by or for Lessee. Lessee shall
also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third
party (except Hazardous Substances which were deposited via underground migration from areas outside of the Project) even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall
remain the property of Lessee and shall be removed by Lessee.
The failure by Lessee to timely vacate the Premises pursuant to this
Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.

8. 
Insurance; Indemnity.

     8.1 
Payment of Premiums. The cost of the premiums for the insurance
policies required to be carried by Lessor,
pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common
Area Operating Expense. Premiums for policy periods commencing prior to, or extending
beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.

     8.2 Liability Insurance.

          (a) Carried
by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting
Lessee and Lessor as an additional Insured against, claims for bodily injury, personal injury and property damage based upon or arising out of the ownership,
use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit
coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or Lessors of Premises Endorsement” and
contain the “Amendment of the Pollution Exclusion Endorsement” for damage caused by heat, smoke or fumes from
hostile fire. The policy shall not contain any intra-insured
exclusions as between insured persons or organizations, but shall include coverage for liability
assumed under this Lease as an “insured contract” for the performance of Lessee’s indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee
of any obligation hereunder. All Insurance carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose Insurance shall be considered excess insurance only.

          (b) Carried
by Lessor. Lessor shall maintain liability Insurance as described
in Paragraph 8.2(a), in addition to, and not in lieu of the
insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.

     8.3 
Property Insurance—Building, Improvements and Rental Value.

          (a) Building
and Improvements. Lessor shall obtain and keep in force a policy
or policies of insurance in the name of Lessor,
with loss payable to Lessor, any ground-lessor, and to any Lender
insuring loss or damage to the Premises. The amount of such insurance
shall be equal to the
full replacement cost of the Premises, as the same shall exist from time to time or the amount required by any Lender, but in no event more than the commercially
reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures,
and Lessee’s personal property shall be insured by Lessee under
Paragraph 8.4. If the coverage is available and commercially appropriate,
such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements
requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered
loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause,
waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All
Urban Consumers for the city nearest to where the Premises are
located. If such insurance coverage
has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence.

          (b)
Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor
and any Lender, insuring the loss of the full Rent for one year with
an extended period of indemnity for an additional 180 days
(“Rental Value Insurance”).
Said insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted
annually to reflect the projected Rent otherwise payable by Lessee,
for the next 12 month period.

          (c) Adjacent
Premises. Lessee shall pay for any increase in the premiums for
the property insurance of the Building and for the Common Areas buildings in the Project if said increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

          (d) 
Lessee’s
Improvements. [ILLEGIBLE] is the Insuring Party, Lessor
shall not be required to insure Lessee Owned Alterations and Utility
Installations under the terms of this lease.

     8.4 
Lessee’s Property; Business Interruption Insurance.

          (a) Property
Damage. Lessee shall
obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations.
Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence.
The proceeds from any such insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with
written evidence that such insurance is in force.

          (b) Business
Interruption. Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse Lessee for direct or indirect
loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.

          (c)
No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business operations or obligations under this Lease.

     8.5 
Insurance Policies. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state
where the Premises are located, and maintaining during the policy
term a “General Policyholders Rating” of at least B+, V,
as set forth in the most current issue of “Best’s Insurance
Guide”, or such other rating as may be required by a Lender. Lessee shall not do or permit
to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates
evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to

	 	 	 	 	 
	 

	 	 	 	 
	 
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Lessor.
Lessee shall, at least 30 days prior [ILLEGIBLE]
expiration of such policies, furnish
Lessor with [ILLEGIBLE] of renewals or “insurance
binders” evidence renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee
to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the
remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain
the insurance required to be carried by it, the
other Party may, but shall not be required
to, procure and maintain the same.

     8.6
Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each
hereby release and relieve the other and waive their entire right to recover damages against the
other, for loss of or damage to its property arising out of or
incident to the perils required to be
insured against herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have
their respective property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the
case may be, so long as the insurance is not
invalidated thereby.

     8.7
Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify,
protect, defend and hold harmless [ILLEGIBLE] Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damage liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising
out of, involving, or in connection with, the
use and occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall [ILLEGIBLE] notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be defended or indemnified.

     8.8
Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the
person or goods, wares, merchandise [ILLEGIBLE] other
property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in
or about the Premises, whether, such damage or [ILLEGIBLE]
is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinkler, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said
injury or damage results from conditions arising upon the Premises or
upon other portions of the Building, or from other sources or places.
Lessor shall not
liable for any damages arising from any act or neglect
[ILLEGIBLE] any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other
lease in the Project. Notwithstanding Lessor’s negligence
[ILLEGIBLE] breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee’s business or for any
loss of income or profit therefrom.

9. Damage or Destruction.

     9.1 Definitions.

          (a)
“Premises Partial Damage” shall mean damage or
destruction to the improvements on the Premises,
other than Lessee Owned Alterations and Utility installations, which can reasonably be repaired in 3 months or less
from the date of the damage or destruction, and the
[ILLEGIBLE] thereof does not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

          (b)
“Premises Total Destruction” shall mean damage or
destruction to the improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 3
months or less from the date of the damage or destruction and/or the
cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall
notify Lessee in writing within 30 days from the date of the damage destruction as to whether or not the damage is Partial or Total.

          (c)
“Insured Loss” shall mean damage or destruction to
improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered
by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

          (d)
 “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by Lessor at
the time of the occurrence to their condition existing immediately
prior thereto, including
demolition, debris removal and upgrading required by the operation of Applicable Requirements,
and without deduction for depreciation.

          (e)
“Hazardous Substance Condition” shall mean the
occurrence or discovery of a condition involving
the presence of, or a contamination by, a Hazardous Substance as
defined in Paragraph 6.2(a), in, on, or under the Premises.

     9.2
Partial Damage — Insured Loss. If a Premises Partial
Damage that is an insured Loss occurs, then
Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
installations) as soon as reasonably possible and this Lease shall
continue in full force and
effect; provided, however, that Lessee shall, at Lesson’s election, make the repair of any damage or
destruction the total cost to repair of which is $5,000 or less, and,
in such event, Lesser shall make any applicable insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds
are not sufficient to effect such repair, the insuring Party shall promptly contribute the shortage in proceeds as and when required to complete
said repairs. In the event, however, such shortage was due to the
fact that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lesser shall have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days
following receipt of written notice of such shortage and request
therefor. If Lessor receives said funds or adequate assurance thereof within said 10 day period,
the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such
funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make such
restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall
remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage
or destruction. Premises Partial Damage due to flood or earthquake
shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

     9.3
Partial Damage — Uninsured Loss. If a Premises Partial
Damage that is not an Insured Loss occurs, unless caused by a negligent or [ILLEGIBLE] act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense),
Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii)
terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such
termination shall be effective 60 days following the date of
such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10
days after receipt of the termination notice to give written notice
to Lessor of Lessee’s commitment to pay for the repair of such
damage without reimbursement
from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event
this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds
are available. If Lessee does not make the required Commitment, this Lease shall terminate as of the date specified in the termination notice.

     9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60
days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right
to recover Lessor’s damages from Lessee, except as provided in
Paragraph 8.6.

     9.5
Damage Near End of Term. If at any time during the last
6 months of this Lease there is damage for which the cost to
repair exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
60 days following the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of
such damage. Notwithstanding the foregoing, if Lessee at that time
has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to
make the repairs on or before the earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option
[ILLEGIBLE]. If Lessee duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as
soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such
funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee’s option shall
be extinguished.

     9.6
Abatement of Rent; Lessee’s Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance
Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be
abated in proportion [ILLEGIBLE] not to exceed the proceeds received [ILLEGIBLE]
the Rental Value insurance. All other obligations of Lessee hereunder
shall be performed by Lessee, and Lessor shall have no liability for
any such damage, destruction, remediation, repair or restoration except as provided herein.

          (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial
and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee
may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual
notice, of Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such notice and
such repair or restoration is not commenced within 30 days
thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within such 30 days, this Lease shall
continue in full force and effect. “Commence” shall mean either the unconditional authorization
of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.

     9.7 Termination; Advance payments. Upon termination of :this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by
Lessee to Lessor. Lessor shall, in addition, return to Lessee so much
of Lessee’s Security Deposit as has not been, or is not then required to be, used
by Lessor.

     9.8
Waive Statutes. Lessor and lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or
future statute to the extent inconsistent herewith.

10. Real Property Taxes.

	 	 	 	 	 
	 

	 	 	 	 
	 
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     10.1
Definition. As used here [ILLEGIBLE] term “Real
Property Taxes” shall include any [ILLEGIBLE]
assessment; real estate [ILLEGIBLE] or extraordinary, or rental levy or tax (other than inheritance, personal income
or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or
equitable interest of Lessor in the Project, Lessor’s right to
other income therefrom, and/or
Lessor’s business of leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Project address and where the proceeds so generated
are to be applied by the city, county or other local taxing authority of a jurisdiction within which
the Project is located. The term “Real Property Taxes”
shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events occurring during the
term of this Lease, including [ILLEGIBLE] not limited to, a change in the ownership of the Project or any
portion thereof or a change in the improvements thereon. in
calculating Real Property Taxes for any
calendar year, the Real Property Taxes for any real estate tax year shall be included in the
calculation of Real Property Taxes for such calendar year, based upon the number of days which such
calendar year and tax year have in common.

     10.2
Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project, and except as
otherwise provided in Paragraph 10.3 any such amounts shall be included in the calculation of Common Area Operating Expenses in
accordance with the provision’s of Paragraph 4.2.

     10.3 Additional Improvements.
Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessor’s records
and work sheets as being caused by additional improvements placed
upon the Project by other lessees
or by Lessor for the exclusive enjoyment [ILLEGIBLE] such other
lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall,
however, pay to Lessor at the time Common Area
Operating Expenses [ILLEGIBLE] payable under
Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility installations placed upon the Premises by Lessee or at
Lessee’s request

     10.4 Joint Assessment. If
 the Building is not separately assessed, Real Property Taxes allocated to
the Building shall be an equitable proportion of the Real Property Taxes for all of the land and
improvements included within the tax parcel assessed, such proportion
to be determined [ILLEGIBLE] Lessor from
the respective valuations assigned in the assessor’s work sheets or such other information as may be
reasonably available. Lessor’s reasonable determination thereof, in good faith, shall be conclusive.

     10.5 Personal Property Taxes.
Lessee shall pay prior to delinquency all taxes assessed against and
levied upon Lessee Owned Alterations and Utility installations, Trade Fixtures, furnishings,
equipment and all personal property of Lessee contained in the Premises. When possible, Lessee
shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and
[ILLEGIBLE] separately from the real
property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property,
Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 days after receipt of a
written statement setting forth the taxes applicable to Lessee’s property.

11.
Utilities. Lessee shall pay for all water, gas, heat, light,
 power, telephone, trash disposal,
and other utilities and services supplied to the Premise together with any taxes thereon.
Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor
determines that Lessee using a disproportionate amount of water, electricity or other commonly
metered utilities, or that Lessee is generating such a large volume of trash as require an
increase in the size of the dumpster and/or an increase in the number of times per month that the
dumpster is emptied, then Lessor may increase Lessee’s Base Rent by an amount equal to such
increased costs.

12. Assignment and Subletting.

     12.1 Lessor’s Consent Required.

          (a) Lessee
shall not voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease or in
the Premises without Lessor’s prior written consent.

          (b) A
change in the control of Lessee shall constitute an assignment
requiring consent. The transfer,
on a cumulative basis, [ILLEGIBLE] 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.

          (c) The
involvement of Lessee or its assets in any transaction, or series of transactions (by way
of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a
formal assignment or hypothecation of this Lease or Lessee’s assets occurs [ILLEGIBLE] results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as
it was represented at the time of the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately
prior to said transaction [ILLEGIBLE]
transactions constituting such reduction whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold [ILLEGIBLE]
consent “Net Worth of Lessee” shall mean the
net worth of Lessee (excluding any guarantors) established under generally accepted accounting
principles.

          (d) An
assignment or subletting without consent shall, at Lessor’s
option, be a Default curable after
notice per Paragraph 13.1 [ILLEGIBLE] or a non curable Breach without the necessity of any notice and grace
period. If Lessor elects to treat such unapproved assignment or
subletting as non curable Breach,
Lessor may either (i) terminate this Lease or (ii)upon
30 days written notice, increase the monthly
Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental
adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to 110% of the price previously in
effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the remainder the Lease term shall be increased to
110% of the scheduled adjusted rent.

          (e) Lessee’s
remedy for any breach of Paragraph 12:1 by Lessor shall be limited to compensatory
damages and/or injunctive [ILLEGIBLE].

     12.2
Terms and Conditions Applicable to Assignment and Subletting.

          (a) 
Regardless of Lessor’s consent, no assignment or subletting
shall; (i) be effective without the
express written assumption [ILLEGIBLE] such assignee or sublessee of the obligations of Lessee under this
Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability
Lessee for the payment of Rent or for the performance of any other obligations to be performed by
Lessee.

          (b) 
Lessor may accept Rent or performance of Lessee’s obligations from any person other than
Lessee pending disapproval of assignment. Neither a delay in
the approval or disapproval of such assignment nor
the acceptance of Rent or performance shall [ILLEGIBLE] a waiver or
estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

          (c) Lessor’s
consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any
Guarantors or anyone else responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting
Lessor’s remeditation against any other
person or entity responsible therefore to Lessor, or any security held by Lessor.

          (e) Each
request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor (determination as to the financial and operational responsibility
and appropriateness of the proposed assignee or sublessee, including
but not limited to the intended use and/or required modification of
the Premises. If any, together with a fee of $1,000 or
10% of the-current monthly Base Rent applicable to the portion of the
Premises which is the subject of the proposed assignment or subleases,
whichever is greater, as consideration for Lessor’s considering
a processing said request. Lessee agrees to provide lessor with such other or additional information
and/or documentation as may be reasonably requested

          (f)
Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease be deemed to have assumed and agreed to, conform and comply with each and every term, covenant,
condition and obligation herein to be observed performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of assignment or
sublease to which Lessor has specifically consented to in writing.

          (g)
Lessor’s consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease
unless such transfer is specifically consented to by Lessor in writing. (See
Paragraph 39.2)

     12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting Lessee of all or any part of the Premises and shall be deemed included in all subleases under this
Lease whether or not expressly incorporated therein:

          (a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent
payable on any sublease, and Lessor [ILLEGIBLE] collect such Rent and apply same toward Lessee’s
obligations under this Lease; provided, however, that until a Breach shall occur in the performance
Lessee’s obligations, Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or
any assignment of such sublease, not by reason of collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee’s obligations to such sublessee Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written
notice from Lessor stating that a Breach exists in performance of
Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become
due under the sublease. Sublessee shall rely upon such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to
inquire as to whether such Breach exists, notwithstanding [ILLEGIBLE] claim from Lessee to the contrary.

          (b)
[ILLEGIBLE] undertake the obligations of the sublessor
under such sublease from the time of the
exercise of said option to the expiration of such sublease; provided however, Lessor shall not be
liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for
any prior Defaults or Breaches such sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.

          (d) No sublessee shall further assign or sublet all or any part of the Premises
without Lessor’s prior written consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who
shall have the right to cure [ILLEGIBLE] Default of Lessee
within the grace period if any, specified in such notice. The sublessee shell
have a right of reimbursement and offset from and [ILLEGIBLE] Lessee for any
such Defaults cured by the sublessee.

13. Default; Breach; Remedies.

     13.1
Default; Breach. A “Default” is defined as a failure
by the Lessee to comply with or perform any of the terms, convents
conditions Rules and Regulations under this Lessee. A:
“Breach” is defined as the occurrence of one of more the
following Defaults, and the
failure of Lessee to [ILLEGIBLE] such Default within any applicable grace period:

          (a) The
abandonment of the Premises: or the vacating of the Premises without
providing a
commercially reasonable level security, or where the coverage of the property insurance described in
Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable
assurance to minimize potential vandalism.

	 	 	 	 	 
	 
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          (b) The
failure of Lessee to make any payment of Rent or any Security
Department required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation
under this Lease which endangers
or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information
which Lessor may reasonably require of
Lessee under the terms of this Lease, where any such failure continues for a period of 10 days
following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written
notice, provided however, that if the nature of Lessee’s Default is such that more than 30 days are
reasonably required for its cure, then it shall not be deemed to be a Breach it Lessee commences such
cure within said 30 day period and thereafter diligently prosecutes such cure to completion.

          (e) The occurrence of any of the following events: (i) the making of any general arrangement
or assignment for the benefit of creditors; (ii) becoming a
“debtor” as defined in 11 U.S.C. § 101 or
any successor statute thereto (unless, in the case of a petition
filed against Lessee, the same is
dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not
discharged within [ILLEGIBLE] days; provided,
however, in the event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect and not affect the validity of the remaining
provisions.

          (f) The discovery that any financial statement of Lessee or of any Guarantor given
to Lessor was materially false.

          (g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death
of a Guarantor, (ii) the termination of Guarantor’s liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s
breach of its guaranty obligation on an anticipatory basis, [ILLEGIBLE] Lessee’s failure, within 60 days
following written notice of any such event, to provide written alternative assurance or security,
which, when coupled with [ILLEGIBLE] then existing resources of Lessee, equals or exceeds the combined
financial resources of Lessee and the Guarantors that existed at the
time of execution this Lease.

     13.2
Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within
10 days after written notice (or in case of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessor shall not be
honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments to
be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:

          (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the
unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee [ILLEGIBLE] could be reasonably avoided; and
(iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by
the Lessee’s failure perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited
to the cost [ILLEGIBLE] recovering
possession of the Premises, expenses of reletting, including necessary renovation and alteration
of the Premises, reasonable attorneys’ fees, [ILLEGIBLE] that portion of any leasing commission paid by
Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at
the time award of the amount referred to in provision (iii) of the immediately preceding sentence
shall be computed by discounting such amount at the discount rate [ILLEGIBLE] the Federal Reserve Bank of the
District within which the Premises are located at the time of award plus one percent. Efforts by
Lessor to mitigate damage caused by Lessee’s Breach of this Lease shall not waive Lessor’s right
to recover damages under Paragraph 12. If termination of this
Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding
any unpaid Rent and damages as [ILLEGIBLE] recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit. If a notice and grace
period required under Paragraph
13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee
under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In
such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute [ILLEGIBLE] run concurrently, and the failure of Lessee to cure the Default within the greater of
the two such grace periods shall constitute both an unlawful detainer and Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said statute.

          (b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee [ILLEGIBLE] sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor
interests, shell not constitute a termination of the Lessee’s right to possession.

          (c) Pursue
any other remedy now or hereafter available under the laws or judicial decisions
of the state wherein the Premises [ILLEGIBLE]  located. The expiration or termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under [ILLEGIBLE] indemnity provisions of this Lease as
to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the
Premises.

     13.3
Inducement Recapture. Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee [ILLEGIBLE] any cash or other bonus, inducement or consideration
for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to [ILLEGIBLE]
“Inducement Provisions”, shall be deemed conditioned upon Lessee’s full and faithful performance of
all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such inducement Provision shall automatically be deemed deleted from this Lease and of no further
force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated,
given or paid by Lessor under such an inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach
by Lessee. The acceptance by
Lessor [ILLEGIBLE] rent or the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph
unless specifically so stated in
writing by Lessor at the time of such acceptance.

     13.4
Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause
Lessor to incur costs not contemplated [ILLEGIBLE] this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges and late charges which may be imposed upon Lessor by any
Lender. Accordingly, if any Rent shall not be received by Lessor
within 5 days after such amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a one-time late charge equal to 10% of each such overdue amount or $100,
whichever is greater. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs [ILLEGIBLE] will incur by reason of
such late payment. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach [ILLEGIBLE]
respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge [ILLEGIBLE]
payable hereunder, whether or not
collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this
Lease to the [ILLEGIBLE] Base Rent shall, at Lessor’s option, become due and payable quarterly in
advance.

     13.5
Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received
by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days following the
date on which it was due for non-scheduled payment, shall bear interest from the date [ILLEGIBLE] due, as
to scheduled payments, or the 31st day after it was due as to non-scheduled payments. The interest
(“ Interest”) charged shall be equal to the [ILLEGIBLE] rate reported in the Wall Street Journal as
published closest prior to the date when due plus 4%, but shall not exceed the maximum rate allowed
by law, interest is payable in addition to the potential late charge provided for in Paragraph 13.4.

     13.6
Breach by Lessor.

          (a) Notice
of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt [ILLEGIBLE]
Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of
Lessor has not been performed provided however, [ILLEGIBLE]
Lessor’s obligation is such that more than 30 days are reasonable
required for its performance, then Lessor shall not be in breach if performance is commenced
within such 30 day period and thereafter diligently pursued [ILLEGIBLE] completion.

          (b) Performance
by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice,
or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure said breach [ILLEGIBLE]
Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or
the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right
to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said
documentation to Lessor.

14.
Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession whichever first occurs. If more than 10% of the floor area
of the Unit, or more than 25% of
Lessee’s Reserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee’s option, to be
exercised in writing within 10 days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within 10 days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the Premises remaining, except that the
Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by
such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution

	 	 	 	 	 
	 
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in value
of the leasehold, the value of the [ILLEGIBLE], or for severance
damages: provided, however the lessee shall be entitled to any compensation Lessee’s relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated
pursuant to the provisions of this Paragraph. All Alterations and
Utility Installations made to the
Premises by Lessee, for purposes of Condemnation only, shall be consider the property of the Lessee
and Lessee shall be entitled to any and all compensation which is payable therefor. In the event
that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to
the Premises caused by such Condemnation.

15. 
Brokerage Fees.

     15.1
Additional Commission. In addition to the payments owed pursuant to
Paragraph 1.10 above,
and unless Lessor and the Broker otherwise agree in writing, Lessor
agrees that: (a) if Lessee
exercises any Option, (b) if Lessee acquires from Lessor any rights to the Premises or
other premises owned by Lessor and located within the Project, (c) if Lessee remains in possession
of the Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base
Rent is increased, whether by agreement or operation of an escalation
clause herein, then, Lessor
shall pay Brokers a fee in accordance with the schedule of the Brokers in effect at the time of the
execution of this Lease.

     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease
shall be deemed to have assumed Lessor obligation hereunder. Brokers shall be third party
beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to
pay to Brokers all amounts due as and for brokerage fees pertaining to this Lease when due, then
such amounts shall accrue Interest. In addition, if Lessor fails to
pay all amounts to Lessee’s
Broker when due, Lessee’s Broker may send written notice to Lessor and Lessee of such failure and
if Lessor fails to pay such amount within 10 days after said
notice, Lessee shall pay said monies
to its Broker and offset such amounts against Rent. In addition,
Lessee’s Broker shall be deemed to
be a third party beneficiary of any commission agreement entered into by and/or between Lessor and
Lessor’s Broker for the limited purpose of collecting any brokerage fee owed.

     15.3
Representations and Indemnities of Broker Relationships. Lessee and Lessor each
represent and warrant to the other that it have had no dealings with any person, firm, broker or
finder (other than the Brokers, if any) in connection with this Lease, and that no one other than
said name Brokers is entitled to any commission or finder’s fee in connection herewith. Lessee and
lessor do each hereby agree to indemnify, protect, defend and hold
the other harmless from and
against liability for compensation or charges which may be claimed by any such unnamed broker,
finder or other similar party [ILLEGIBLE] of any dealings or actions of the Indemnifying Party,
including any costs, expenses, attorneys fees reasonably incurred with respect thereto.

16. 
Estoppel Certificates.

          (a) Each Party (as “Responding Party”) shall within 10 days after written notice from
the other Party (the “Requesting Party” execute,
acknowledge and deliver to the Requesting
Party a statement in writing in form similar to the then most current “Estoppel
Certificate” form published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonable requested by the
Requesting Party.

          (b) If the Responding Party shall fall to execute or deliver the Estoppel Certificate
within such 10 day period, the Requesting party may execute an
Estoppel Certificate stating that:
(i) the lease is in fall force and effect without modification except as may be represented by
the Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance,
and (iii) if Lessor is the Requesting Party, not more than one
month’s rent have been paid in
advance. Prospective purchasers and encumbrances may rely upon the Requesting Party’s Estoppel
Certificate, and the Responding Party shall be estopped from denying the truth of the facts
contained in said Certificate.

          (c) If Lessor desires to finance, refinance, or sell the Premises, of any part thereof,
Lessee and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor
such financial statements as may be reasonably required by such lender or purchaser, including but
not limited to Lessee’s financial statements for the past
3 years. All such financial statements shall be received by
Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein
set forth.

17. 
Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in
Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall
be relieved of all liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragraph 20 below,
the original Lessor under this Lease, and all subsequent holders of the Lessor’s interest in this
Lease shall remain liable and responsible with regard to the potential duties and liabilities of
lessor pertaining to Hazardous Substances as outlined in Paragraph 6.2 above.

18. 
Severability. The invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19. 
Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this
Lease shall mean and refer to calendar days.

20. 
Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of
Lessor under this Lease shall not constitute personal obligations of
Lessor, the individual
partners of Lessor or its or their individual partners, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against the individual
partners of Lessor, or its or the individual partners, directors, officers or shareholders, or any
of their personal assets for such satisfaction.

21. 
Time of Essence. Time is of the essence with respect to the performance of all obligations to
be performed or observed by the Parties under this Lease.

22. No
Prior or Other Agreements; Broker Disclaimer. This Lease
contains all agreements between the Parties with respect to any
matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each
represents and warrants [ILLEGIBLE] the Brokers that it has made, and is relying
solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this
Lease and as to the use, nature, quality and character of the
Premises. Brokers have no responsibility with respect thereto or with
respect to any default or breach hereof by either Party. The
liability (including court costs and attorneys’ fees), of any Broker
with respect to negotiation, execution, delivery or performance by
either Lessor of Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee
received by such Broker pursuant to this lease; provided, however,
that the foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such
Broker.

23.
Notices.

     23.1 
Notice Requirements. All notices required or permitted by this Lease or applicable law
shall be in writing and may be delivered in person (by and or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or
by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be
that Party’s address for delivery or mailing of notices. Either Party may by written notice to the
other specify a different address for notice, except that upon
Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for notice.
A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate in writing.

     23.2 
Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine is sufficient),
provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday
or legal holiday, it shall be deemed received on the next business day.

24. 
Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof
by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof, Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or
provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no
force or effect whatever [ILLEGIBLE] before the deposit of such payment.

25. 
Disclosures Regarding The Nature of a Real Estate Agency
Relationship.

     (a) When
entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of agency relationship
or representation it has with the agent or agents in the transaction. Lessor and Lessee
acknowledge being advised by the Brokers in this transaction, as follows:

          (i)
Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts as
the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative
obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and
loyalty in dealings with the Lessor. To the Lessee and the
Lessor: (a) Diligent exercise of
reasonable skills and care in performance of the agent’s duties. (b) A duty of honest and fair
dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the diligent attention
and observation of, the Parties. An agent is not obligated to reveal to either Party any
confidential information obtained from the other Party which does not involve the affirmative
duties set forth above.

          (ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these
situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from
the Lessor. An agent acting
only for a Lessee has the following affirmative obligations. To
the Lessee: A fiduciary
duty of utmost care, integrity, honesty, and loyalty in dealings with
the Lessee. To the
Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of
the agent’s duties. (b) A duty of honest and fair dealing
and good faith. (c) A duty to disclose
all facts known to the agent materially affecting the value or desirability of the property that
are not known to, or within

	 	 	 	 	 
	 

	 	 	 	 
	 
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the
diligent attention and observation of, the [ILLEGIBLE]. An agent is not
obligated to reveal to either [ILLEGIBLE] confidential information obtained from the other
Party which does not involve the affirmative duties set forth above.

     (iii) Agent
Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associate licenses, can legally be the agent of both the Lessor
and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a
dual agency situation, the agent has the following affirmative obligations to both the Lessor and
the Lessee: (a) A fiduciary duty of utmost [ILLEGIBLE] integrity, honesty and loyalty in the dealings with
either Lessor or the Lessee. (b) Other duties to the Lessor and
the Lessee as stated above [ILLEGIBLE] subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that the Lessor will
accept rent in an amount less than that indicated in the listing or that the Lessee is willing to
pay a higher rent than [ILLEGIBLE] offered. The above duties of the agent in a real estate transaction do
not relieve a Lessor or Lessee from the responsibility to protect their own interests Lessor and
Lessee should carefully read all agreements to assure that they
adequately express their
understanding of the transaction. A real estate agent
[ILLEGIBLE] a person qualified to advise about real
estate. If legal or tax advice is desired, consult a competent professional.

     (b) Brokers
have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys fees), of
any Broker with respect to any
breach of duty, error or omission relating to this Lease shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or [ILLEGIBLE] misconduct of such Broker.

     (c) Buyer
and Seller agree to identify to Brokers as “Confidential” any communication or
information given Brokers that is considered by such Party to be
confidential.

26. No
Right To Holdover. Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding
the expiration or termination. Nothing contained herein shall be construed as consent by Lessor
to any holding over by Lessee.

27. 
Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.

28.  Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be
observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the plural and vice
versa. This Lease shall not be construed as if prepared by one [ILLEGIBLE] the Parties, but rather according
to its fair meaning as a whole, as if both Parties had prepared it.

29. 
Binding Effect; Choice of Law. This Lease shall be binding upon
the parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto
concerning this Lease shall be
initiated in the county in which the Premises are located.

30. 
Subordination; Attornment; Non-Disturbance.

     30.1
Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of ‘trust, or other hypothecation or security device
(collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and extensions
thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together
referred to as “Lender”) shall have no liability or obligation to perform any of the obligations
of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted
hereby superior to the lien of its Security Device by giving written notice thereof to Lessee,
whereupon this Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation thereof.

     30.2
Attornment. In the event that Lessor transfers title to the Premises, or the Premises
are acquired by another upon the foreclosure or termination of a Security Device to which this Lease is
subordinated (i) Lessee shall, subject to the non-disturbance
provisions of Paragraph 30.3, attorn
to such new owner, and upon request, enter into a new lease, containing all of the terms and
provisions of this Lease, with such new owner for the remainder
[ILLEGIBLE] the term hereof, or, at the
election of such new owner, this Lease shall automatically become a new Lease between Lessee and
such new owner, upon all [ILLEGIBLE] the terms and conditions hereof, for the remainder of the term hereof,
and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new
owner shall assume all of Lessor’s obligations hereunder, except that such new owner shall not;
(a) be liable for any act or omission of any prior
[ILLEGIBLE] or with respect to events occurring
prior to acquisition of ownership; (b) be subject to any offsets
or defenses which Lessee might
have against any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d)
be liable for the return of any security deposit paid to any prior lessor.

     30.3
Non-Disturbance. With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the
execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by
the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate
for the execution and delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without
the execution of any further documents; provided, however, that, upon
written request from Lessor
or a Lender in connection with a sale, financing or refinancing of
the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to
separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31.
Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision
or judgment. The term,
“Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or
the abandonment by the other Party or Broker of its claim or defense.
The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently commenced
in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence
for such services and consultation).

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises  at any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such
alterations, repairs, improvements or additions to the Premises as
Lessor may deem necessary. All
such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time
place on the Premises any ordinary “For Sale” signs and Lessor may during the last 6 months of the
term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at any time place on
the Premises any ordinary “For Sublease” sign.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises
without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.

34. Signs. Except for ordinary “For Sublease” signs which may be placed only on the Premises,
Lessee shall not place any sign upon the Project without
Lessor’s prior written consent. All signs
must comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary
or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s
election to have such event constitute the termination of such
interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party
is required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees)
incurred in the consideration of, or response
to a request by Lessee for any Lessor consent, including but not limited to consents to an
assignment, [ILLEGIBLE] use of [ILLEGIBLE] shall
be paid by Lessee upon receipt of an invoice
and supporting documentation therefor. Lessor’s consent to any act, assignment or subletting shall
not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent. The failure to
specify herein any particular condition to Lessor’s consent shall not preclude the imposition by
lessor at the time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the event that either Party
disagrees with any determination made by the other hereunder and reasonably requests the reasons
for such determination, the determining party shall furnish its reasons in writing and in
reasonable detail within 10 business days following such request.

37. Guarantor.

     37.1
Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American Industrial Real Estate Association, and each such Guarantor
shall have the same obligations as Lessee under this Lease.

     37.2
Default. It shall constitute a Default of the Lessee if any Guarantor falls or refuses,
upon request to provide: (a) evidence of the execution of the guaranty, including the authority of
the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors authorizing the making of
such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and performed under this
Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.

					
	 
	 	 	 	 
	 
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39.
Options. If Lessee is granted an [ILLEGIBLE] as
defined below, than the following provisions
[ILLEGIBLE].

     39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease
or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal or first offer to
lease either the Premises or other property of Lessor: (c) the right to purchase or the
right of first refusal to purchase the Premises or other property of Lessor.

     39.2
Options Personal To Original Lessee. Any Option granted to Lessee in
this Lease is
personal to the original Lessee, and cannot be assigned or exercised by anyone other than said
original Lessee and only while the original Lessee is in full
possession of the Premises and, if requested [ILLEGIBLE] Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or subletting.

     39.3
Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised.

     39.4 Effect of Default on Options.

          (a) Lessee
shall have no right to exercise an Option: (i) during the period commencing with
the giving of any notice of Default [ILLEGIBLE] continuing until said Default is cured, (ii) during the
period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lesssee is in Breach of this Lease, or (iv) in the event that Lessee has been given
3 or more notices of separate Default, whether or not the Defaults [ILLEGIBLE] cured, during the 12 month
period immediately preceding the exercise of the Option.

          (b) The
period of time within which an Option may be exercised shall not be
extended or enlarged by
reason of Lessee’s inability [ILLEGIBLE] exercise an Option because of the provisions of Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of
30 days after such Rent becomes [ILLEGIBLE]
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more
notices of separate Default during any 12 month period, whether
or not the Defaults are cured, or (iii)
if Lessee commits a Breach of this Lease.

40.  Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not include the cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of third parties.

41.
Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that [ILLEGIBLE] deems necessary, (ii) to cause the
recordation of parcel maps and restrictions, and (iii) to create and/or install new utility
raceways, so long as [ILLEGIBLE] easements, rights, dedications, maps, restrictions, and utility raceways
do not unreasonably interfere with the use of the Premises by Lessee.
Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate such rights.

42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the Party against whom
the obligation to pay the money is asserted shall have the right to
make payment “under protest” and [ILLEGIBLE] payment shall not be regarded as a voluntary payment and there shall survive the right on
the part of said Party to institute suit for recovery of such sum. It shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party
shall be entitled to recover [ILLEGIBLE] sum or so much thereof as it was not legally required to pay.

43.
Authority. If either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each Individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver this Lease on its
behalf. Each party shall, within [ILLEGIBLE] days after request, deliver to the other party satisfactory
evidence of such authority.

44.
Conflict. Any conflict between the printed provisions of this Lease and the typewritten
or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

45. Offer. Preparation of this Lease by either party or their agent and submission of same
to the other Party shall not be deemed an offer to lease the other Party. This Lease is not intended to be binding until executed and delivered by all
Parties hereto.

46. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at
time of the modification. As long as they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may
be reasonably required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

47.
Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee,
such multiple Parties shall have joint and [ILLEGIBLE] responsibility to comply with the terms of this
Lease.

48. Waiver of Jury Trial. The Parties hereby waive their respective rights to trial by jury in any
action or proceeding involving the Property or [ILLEGIBLE]
out of this Agreement.

49.
Mediation and Arbitration of Disputes. An Addendum requiring the
Mediation and/or the Arbitration of
all disputes between the Parties and/[ILLEGIBLE] Brokers arising out of this Lease o is þ is
not attached to this Lease.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND [ILLEGIBLE] THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT [ILLEGIBLE] PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
THE PREMISES.

 ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION OR BY [ILLEGIBLE] BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

	1.	 	SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
	2.	 	RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.
SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF
THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE
WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED
USE.

	 	 	
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS Of THE
LEASE MAY NEED TO [ILLEGIBLE] REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES
ARE LOCATED.

The
parties hereto have executed this Lease at the place and on the dates specified above their
respective signatures.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Executed at:	 	 
	 	 	 	 Executed at: 	 	 

	 
	 	 	 	  

	 	 
	 	 	 	 	 	  
   
	
on:   

	 	 	 	 	 	 	 	 on:   	 	 	 	 
	 	 	 	 	 	 	 
	 
	 By LESSOR:

	 	 	 	 	 	 By LESSEE: 	 	 
	 1325
“J ” Street L.P., a California Limited Partnership

	 	 	 	 Jomed Incorporated 
	 
	 	 	 	 
	 By: DBC Builders, Inc. , a California Corp.

	 	 	 	
By:             /s/
Kim Kelderman 
	 

	 	 	 	 

	Name
Printed: 

	 	 	 	 	 	 	Kim Kelderman
	 

	 	 	 	 
	Title: its General Partner 	 	 	 	 Title: Executive VP 
	 

	 	 	 	 	 	 	 	 
	 
	 By : /s/ David J. Kassis

 

 	 	 	 	 By: 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 Name Printed: David J. Kassis 	 	 	 	 Name Printed: 
	 

	 	 	 	 	 	 	 	 	 	 

	 Title: Vice President 	 	 	 	 Title: 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 Address:

	 	 	 	 	 	 Address: 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 Telephone: (                     )

	 	 	 	 	Telephone: (                     ) 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

					
	 
	 	 	 	 

	 
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	Federal ID No.

	 	 	 	 	 	Federal ID No.	 	 
	 

	 	            
                                    
            
                                    
            
                                    
         
            
                                    
                                    
                                    
                                    
                                    
            
                                    
                                    
                                    
                                    
                                    
            
                                    
                                    
                                    
                                    
                                    

	 	 	 	 	 	            
                                    
            
                                    
            
                                    
         
            
                                    
                                    
                                    
                                    
                                    
            
                                    
                                    
                                    
                                    
                                    
            
                                    
                                    
                                    
                                    
                                    

	 

	 	 	 	 	 	 	 	 

These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure
you are utilizing the most current form: American Industrial Real Estate Association, 700 South Flower Street, Suite
600, Los Angeles, CA90017, (213) 687-8777.

©Copyright
1999 By American Industrial Real Estate Association.

All rights reserved.

No part of these works may be reproduced in any form without permission in writing.

 

	 	 	 	 	 
	 

	 	 	 	 
	 
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	 	REVISED	 	FORM MTN-2-2/99E

 

LEASE ADDENDUM

ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-MODIFIED NET, DATED JANUARY 16, 2001 BY AND

BETWEEN 1325 J STREET L.P., A CALIFORNIA LIMITED PARTNERSHIP, AS

LESSOR

AND JOMED INCORPORATED, AS LESSEE

	49.	 	Cost of Living Adjustment:
	 
	 	 	Annual rent increases of four (4 %) percent will be assessed every two year The
monthly Base Rent shall be adjusted as follows:

	 	 	 	 	 	 	 	 	 
	Months	 	 	 	 	 	 	 	 
	01-24
	 	$4,864.00 NNN	 	 	4/1/01-3/31/03	 
	25-48
	 	$5,059.00 NNN	 	 	4/1/03-3/31/05	 
	49-60
	 	$5,261.00 NNN	 	 	4/1/05-3/31/06	 

	50.	 	Renewal Option:
	 
	 	 	Provided Lessee is not in default of the lease, Lessor shall grant Lessee two (2)
five (5)-year renewal options to extend the lease along these same terms and
conditions, with the exception of rent. Rent schedule shall be:

First Option Term:

	 	 	 	 	 
	Months:	 	 	 	 
	61-72
	 	$5,261.00 NNN
	73-96
	 	$5,471.00 NNN
	97-120
	 	$5,690.00 NNN

Second Option Term:

	 	 	 	 	 
	Months:	 	 	 	 
	121-144
	 	$5,918.00 NNN
	145-168
	 	$6,155.00 NNN
	169-180
	 	$6,401.00 NNN

	 	 	Tenant shall provide Landlord written notification within one hundred eighty
(180) days prior to expiration of original lease term to exercise said renewal option.

	51.	 	Tenant Improvements:
	 
	 	 	Lessor, at Lessor’s sole cost and expense, shall complete the following tenant
improvements prior to the lease commencement:

Building Standards:

Fully sprinklered (.32 GPM/2000 SF);

Two (2) 9’ x 10’ dock doors;

One (1) 12’x 14’ grade level doors.

Warehouse:

[ILLEGIBLE] insulation [ILLEGIBLE]

100 amp, 277/480 volt, 3 phase power;

One (1) 400 watt metal halide light per 2,000 sf

Office:

Office
area to consist of +/- 1,250 sf to include:

Three (3) private offices

One (l) conference room

Two (2) restrooms:

One (1) Men’s including one (1) stool and one (1) vanity.

 

 

One
(1) Women’s including one (1) stool and one (1) vanity.

Restroom to include:

Briggs 4738 Handicap Water Closet;

Briggs Self-Rimming China Lavatories with

Delta 523 HDWF Faucet;

ISE H770 Insta-Hot Water Heater;

Floors-Armstrong Cinyl Corlon 6’ Stock;

Walls-Wilsoonart Laminet 4’x 8’ Sheets;

Painted Walls;

Exhaust Fan.

Not Included:

The following item’s are not included in this Lease and are the

responsibility of the Lessee:

• 
Racking permits

•  Fire extinguishers

•  Fire hoses

•  Signage

	52.	 	Signage:
	 
	 	 	Lessee shall be allowed signage on the western side of the .building over its main
entrance. Said signage shall conform to all county and state sign criteria and
Industrial Center signage criteria, and shall be subject to Lessor’s prior written
approval, which shall not be unreasonably withheld.
	 
	 	 	Regulations for Tenant signage at Mercantile Trade Center are as follows:

	 	1)	 	Signs are to be made from 1” thick Gator Foam.
	 
	 	2)	 	Letters are to be a maximum of 12” and a minimum of 8”.
	 
	 	3)	 	Signs can have no more than two (2) lines of text.
	 
	 	4)	 	Signs are limited to a maximum length of 15’, which would
include lettering and logos.
	 
	 	5)	 	Signs may be of any color or font style,

	 	 	Design submittals may be mailed or delivered to 1325 J Street, L.P., 4378 Auburn
Boulevard, Suite 300, Sacramento, CA 95841. Sign design assistance may be obtained from
Steve Harlow at Signature Sign & Banner, (916) 564-3020.
	 
	53.	 	Occupancy Type:
	 
	 	 	Should any governmental authority require any additional improvement, modifications,
licenses and/or permits of any kind, including but not limited to, a conditional use
permit due to Lessee’s use and/or occupancy of the Premises, it shall be provided by
Lessee, at Lessee’s sole expense. It is Lessor’s understanding that Lessee will not be
using flammable solvents or utilizing the Premises in any way that would cause Lessee’s
occupancy to be considered anything other than, a B or S type occupant.
	 
	 	 	In the event that Lessee is classified under any other occupancy type (such as an H-2 or
H-3 type for example) which requires any additional improvements to the space (i.e.
additional fire sprinkler drops, Ventilation equipment and/or ducting, additional
sheetrock, and etc.), or by Lessee’s use of the Premises, increases the fire insurance
[illegible] responsible to pay for and/or provide the same.
	 
	54.	 	Toxics Disclosure:
	 
	 	 	“Landlord and Tenant acknowledge that they have been advised that numerous federal, state,
and/or local laws, ordinances and regulations (“Laws”) affect the existence and removal,
storage, disposal, leakage of and contamination by materials designed as hazardous or
toxic (“Toxics”). Many materials, some utilized in everyday business activities and
property maintenance, are designated, as hazardous or toxic.

 

 

	 	 	Some of the Laws require that Toxics be removed or cleaned up without regard to
whether the party required to pay for the “clean up” caused the contamination,
owned the property at the time the contamination occurred or even knew about the
contamination. Some items, such as asbestos or PCB’s, which were legal when
installed, now ate classified as Toxics, and are subject to removal
requirements. Civil lawsuits for damages resulting from Toxics may be filed by
third parties in certain circumstances.
	 
	 	 	Tower Realty Group has recommended, and hereby recommends, that each of the
parties have competent, professional environmental specialists review the Property
and make recommended tests so that a reasonably informed assessment of these
matters can be made by each of the parties. Landlord and Tenant acknowledge
that neither Tower Realty Group nor its agents or salespersons, have been retained
to investigate or to arrange for investigation by others, and have not made any
recommendations or representations with regard to the presence or absence of
Toxics on, in or beneath the Property. Landlord and Tenant agree that they will
rely only on persons who are experts in this field and will obtain such expert
advice so each of them will be as fully informed as possible with regards to
Toxics in entering into the Agreement.”
	 
	55.	 	Toxic Materials:

	 	A.	 	Lessee shall not cause of permit to be discharged into the plumbing or
sewage system of the Premises or onto the and underlying or adjacent to
it, any hazardous, toxic or radioactive materials, including, but not
limited to, those materials identified in Section 6680 or Title 22 of the
California Administrative Code, Division 4, Chapter 30, as amended from
time to time (collectively “Toxic Materials”). Lessee
shall, at its sole expense, comply with any and all rules, regulations, codes, ordinances,
statues, and other requirements of lawful governmental authority
respecting to Toxic Materials, pollution, harmful chemicals, and other
materials in connection with Lessee’s activities on or about the
Premises.
Lessee specifically agrees to comply with any such requirements relating
to the handling, use, storage, and disposal of Toxic Materials and other
materials which are considered by and such governmental authorities as
harmful, dangerous, toxic, flammable, or otherwise deserving of Special
care. Lessee shall pay the full cost of any clean-up work performed on or
about the Industrial Center as required by any governmental authority in
order to remove, neutralize of otherwise teat materials of any type
whatsoever directly, or indirectly placed on or about the Premises by
Lessee or its agents, employees, contractors, or invites.
	 
	 	B.	 	Lessee shall be solely responsible for and shall indemnify,
defend, and hold Lessor harmless from any and all claims, judgements,
demands, causes or action, proceedings or hearings (collectively “Claims”)
relating to the storage, placement or use of Toxic Materials by Lessee,
its agents or invitees on or about the Premises, including, but not
limited to, Claims resulting from the contamination of subterranean water
beneath, adjoining or in the vicinity of the Industrial Center. Lessee
agrees to defend all such Claims on behalf of Lessor with counsel
acceptable to Lessor, and to pay all fees, costs, damages, or expenses
relating to or arising out of, or in connection with, any removal,
clean-up, or restoration work which is required by any governmental agency
having jurisdiction and which arises from Lessee’s storage, use or
disposal of Toxic Materials on or about the Premises during the term of
this Lease, or Option Term, if exercised.

	56.	 	The Americans With Disabilities Act (ADA):
	 
	 	 	Please be advised that an owner or tenant of real property may be subject to the
Americans With Disabilities Act (the ADA). The Act requires owners and tenants
of “public accommodations” to remove barriers to access by disabled persons
and provide auxiliary aids and services for hearing, vision of speech impaired
persons. You are advised to consult your attorney with respect to the

 

 

	 	 	application of the Act to the Property, Tower Realty Group cannot give you legal
advice on the Act or its requirements.
	 
	57.	 	Broker Disclosure:
	 
	 	 	The parties hereby expressly acknowledge that Broker has made no independent
determination or investigation regarding, but not limited to, the following: present
or future use of the Property; environmental matters affecting the Property;
the condition of the property, including, but not limited to structural mechanical,
and soils conditions, as well as issues surrounding hazardous wastes or substances
as set out above; violations of the Occupational Safety and Health Act or any other
federal, state, county or municipal laws, ordinance, or statutes; measurements of land
and/or buildings. Lessee agrees to make its own investigation and
determination regarding such items.
	 
	58.	 	Equipment Storage Prior to Lease Commencement:
	 
	 	 	Provided that Lessee is not in default under the Lease and
has complied with Section 8 of the Lease, Lessor shall permit Lessee to store equipment in the Premise prior to
occupancy. Lessee agrees to accept all responsibility for said equipment (including
but not limited to loss or  damage) and will hold Lessor and its agents
harmless from any liability resulting from Lessee’s storage of said equipment.

	 	 	 
	ACCEPTED AND AGREED:
	 	 
	 
	 	 
	LESSOR:

	 	 LESSEE:
	 
	 	 
	1325 J Street, L.P.

	 	Jomed Incorporated.
	
a California Limited Partnership

	 	 
	
By DBC Builders, Inc.,

	 	 
	
a California Corporation, its General Partner

	 	 
	 
	 	 
	/s/
David J. Kassis                                  
2.27.01

	 	/s/ Kim Kelderman
                                    
27 feb 01
	 

	 	 
	David J. Kassis                                          Date

	 	Kim Kelderman
                                        
Date
	Vice President

	 	Managing Director, Jomed Inc.

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