Document:

exv10w1

 

Exhibit 10.1

COMMERCIAL LEASE

This Commercial Lease, executed August 5, 2005, by and between ROSEVILLE PROPERTIES MANAGEMENT
COMPANY, a Minnesota corporation, as agent for COMMERS-KLODT III, a Minnesota general partnership
(“Landlord”) and RESTORE MEDICAL, INC., a Delaware corporation (“Tenant”).

DEFINITIONS:

“Building” — That certain Building on real property located in the City of Roseville, County of
Ramsey, State of Minnesota, containing approximately 55,950 square feet and commonly addressed as
2800 Patton Road, Roseville, Minnesota (See Exhibit A).

“Demised Premises” - That certain portion of the Building consisting of approximately 37,997 square
feet, as measured from the outside walls of the Demised Premises to the center of the partition
wall (see Exhibit B). The Demised Premises includes a non-exclusive easement for access to Common
Areas as defined below, and all licenses and easements appurtenant to the Demised Premises.

“Common Areas” — The term “Common Area” refers to all areas used non-exclusively by Tenant and
other Tenants in the Building, including, but not limited to, corridors, lavatories, driveways,
truck docks, parking lots and landscaped areas. Common Areas are available to Tenant and its
employees, agents, customers, and invitees for reasonable use in common with other lessees, their
employees, agents, customers and invitees, subject to reasonable rules and regulations set forth by
Landlord.

In consideration for the Base Rent, Additional Rent and any additional compensation(s) outlined in
this Lease, Landlord leases to Tenant the Demised Premises under the following conditions:

1.0 TERM OF LEASE, CONSTRUCTION AND POSSESSION:

Landlord gives and Tenant takes possession of Demised Premises for the term of five (5) years
beginning October 1, 2005 (the “Commencement Date”), and ending September 30, 2010 (the “Expiration
Date”), unless terminated earlier as conditioned.

Landlord shall, at Landlord’s sole expense, perform the work identified on the plans and
specifications found on Exhibit C attached hereto and incorporated by reference herein. Except as
stated on said Exhibit C, Tenant accepts the Demised Premises in an “as is” condition.

Unless otherwise stated, Landlord shall deliver possession of the Demised Premises to Tenant in the
condition required by this Lease on or before the Commencement Date, but delivery of possession
prior to or later than such Commencement Date shall not affect the expiration date of this Lease.
The rentals herein reserved shall commence on the Commencement Date. Any occupancy by Tenant prior
to the beginning commences all mutual terms and obligations of this lease. Landlord shall have no
responsibility or liability for loss or damage to fixtures, facilities or equipment installed on or
left on the Demised Premises. If Demised Premises are not ready

 

 

for occupancy by Commencement Date and possession is later than Commencement Date, rent shall begin
on date of possession.

2.0 BASE RENT:

Landlord is due and Tenant shall pay Landlord, Base Rent as scheduled:

	 	 	 	 	 
	Months 1 through 12
	 	$30,080.96 per month
	Months 13 through 24
	 	$30,397.60 per month
	Months 25 through 36
	 	$30,714.24 per month
	Months 37 through 48
	 	$31,030.88 per month
	Months 49 through 60
	 	$31,347.83 per month

3.0 ADDITIONAL RENT:

Tenant shall reimburse to Landlord monthly, throughout the Term of Lease and any extension of this
Lease, the following Additional Rent:

Common Area Maintenance (CAM) expenses, Real Estate Taxes/Assessments, any Utilities not paid
directly by Tenant, and any Miscellaneous Charges or Reimbursements.

Landlord may estimate annual CAM and Real Estate Taxes/Assessments expenses as a basis for
reimbursement for any calendar year and invoice in monthly installments (see Exhibit D). During
the Term of Lease and/or any extension of this Lease, Landlord, within 120 days of each calendar
year end, will provide to Tenant a written statement of actual CAM and Real Estate
Taxes/Assessments expenses. If Tenant has underpaid its share of any of these expenses, at
Landlord’s election, Tenant shall reimburse Landlord as invoiced. If Tenant has overpaid its share
of any of these expenses, Landlord will credit such amount against the most current monthly
invoice. If the Term of Lease is less than one calendar year any reimbursement(s) will be prorated
based on time of occupancy for such year. Upon prior written notice to Landlord, Tenant shall have
the opportunity to audit the actual CAM and Real Estate Taxes/Assessments expenses statement for a
period of 90 days upon receipt of said statement. Tenant waives its right to audit the actual CAM
and Real Estate Taxes/Assessments expenses upon its failure to exercise such right during said 90
day period.

Tenant’s share of all Additional Rent will be determined by the Tenant’s leased share (Demised
Premises) of the total building square footage along with Tenant’s proportionate share of any rooms
considered common area to the building (expenses will be calculated on an annual basis divided by
building square footage to obtain an annual cost per square foot.)

Landlord, at its election, may invoice for reimbursement(s) of any Utility usage not paid directly
by Tenant.

3.1 COMMON AREA MAINTENANCE EXPENSES (CAM):

Except as otherwise provided herein, “Common Area Maintenance” (CAM) shall include, but not
be limited to, maintenance, repair, and care of all lighting, plumbing, roofs, parking
surfaces, landscaped areas, signs, snow removal, non-structural repair and

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maintenance of the exterior of the Building, HVAC systems servicing the office space
portions of the Demised Premises, costs of equipment purchased and used for such purposes,
cleaning and cleaning supplies for the common areas, insurance premiums, management fee
based upon gross collected rents, wages and fringe benefits of personnel employed for such
work. Additionally, during the term of this Lease, any extension and/or renewal of this
Lease, CAM expenses shall include the annual cost or portion allocable to the Building of
any capital improvements made to the Building by Landlord which result in a reduction of
expenses or required under any governmental law or regulation that was not applicable at the
time it was constructed. Landlord may elect to amortize such costs over the useful life of
the improvement and at eight percent (8%) interest per annum. Notwithstanding anything to
the contrary in this Lease, the HVAC systems servicing the “clean room” and lab areas of the
Demised Premises shall be excluded from CAM and all costs associated with maintenance,
repair, and replacement of such HVAC systems shall be borne solely by Tenant. Landlord
shall conduct a building inspection and repair any leaks in the roof, at Landlord’s sole
expense, prior to the Commencement Date.

3.2 REAL ESTATE TAXES AND ASSESSMENTS:

Real Estate Taxes and Assessments shall mean all Real Estate Taxes, all assessments and any
taxes in lieu thereof payable on each calendar year, which may be levied upon or assessed
against the Building. Any tax year commencing during any lease year shall be deemed to
correspond to such lease year. In the event the taxing authorities additionally include in
such real estate and assessments the value of any improvements made by Tenant, or of
machinery, equipment, fixtures, inventory or other personal property or assets of Tenant,
then Tenant shall pay all the taxes attributable to such items. Upon Tenant’s request,
Landlord will furnish a copy of the Real Estate Tax statement. All special assessments will
be spread over the longest term available to Landlord by the assessing authority and at the
lowest interest rate available from the assessing authority.

3.3 UTILITIES

Landlord shall provide mains and conduits to supply water, gas, electricity and sanitary
sewage to the Building. Tenant shall pay, when due, all charges for sewer and water usage,
garbage/refuse disposal/removal and recycling, electricity, gas and other fuels,
telephone/communication services and/or other utility services or energy source furnished to
the Demised Premises during the term of this Lease, or any extension and/or renewal of this
Lease. If Tenant’s usage of any utility is deemed disproportionate as determined by
Landlord, Landlord may elect to submeter and bill Tenant accordingly. Landlord accepts no
responsibility for any disruption of any utility service due to accident, natural causes or
circumstances beyond Landlord’s control and/or the utility provider’s inability to deliver
said service.

3.4 MISCELLANEOUS CHARGES AND REIMBURSEMENTS

Miscellaneous Charges and Reimbursements shall include, without limitation, reconciliation
of Real Estate Taxes/Assessments, CAM and Utilities, service requests

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facilitated by Landlord at the direction of Tenant, Tenant improvement reimbursements, notes
due Landlord and any other miscellaneous charge due Landlord.

4.0 COVENANT TO PAY RENT:

The covenants of Tenant to pay the Base Rent and the Additional Rent are each independent of any
other covenant, condition, provision or agreement contained in this Lease. All rents are due and
payable as invoiced on the first of the each month during the Term of Lease and any extensions of
the Lease to Landlord at:

2575 North Fairview Avenue, Suite 250

Roseville, Minnesota 55113

or such other address as Landlord shall designate to Lessee in writing.

5.0 OVERDUE PAYMENTS:

All base rent and additional rent under this Lease and any extension shall be due on the first of
each calendar month, unless otherwise specified. Service charges shall be imposed after the tenth
of each calendar month in the amount five percent (5%) of the outstanding balance due.

6.0 USE:

The Demised Premises shall be used and occupied by Tenant solely for general office purposes as
well as the development, manufacture, marketing and sale of medical devices and/or such other
general business purposes which may otherwise be consistent and/or compatible with the business of
Tenant and its approved subtenants, and Tenant agrees that such uses shall be in compliance with
all applicable laws, ordinances and governmental regulations affecting the Building and the Demised
Premises. Tenant shall immediately discontinue any use of the Demised Premises which is not in
compliance with any applicable laws, ordinances or governmental regulations. The Demised Premises
shall not be used in such manner that, in accordance with any requirement of law or of any public
authority, Landlord shall be obliged on account of the purpose or manner of said use to make any
addition or alteration to or in the Building. The Demised Premises shall not be used in any manner
which will increase the rates required to be paid for public utility or for fire and extended
coverage insurance covering the Premises. Tenant shall occupy the Demised Premises, conduct its
business and control its agents, employees, invitees and visitors in such a way as is lawful, and
reputable and will not permit or create any nuisance, noise, odor, or otherwise interfere with,
annoy or disturb any other tenant in the Building in its normal business operations or Landlord in
its management of the Building. Tenant’s use of the Demised Premises shall conform to all the
Landlord’s rules and regulations relating to the use of the Building. Outside storage on the
Building of any type of equipment, property or materials owned or used on the Demised Premises by
Tenant or its customers and suppliers shall not be permitted, unless otherwise stated.

7.0 SECURITY AND DAMAGE DEPOSIT:

Tenant has deposited with Landlord the sum of Four Thousand Six Hundred Forty and 60/100 Dollars
($4,640.60), receipt of which is acknowledged hereby by Landlord. Landlord shall hold

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deposit, without liability for interest, as a security and damage deposit for the faithful
performance by Tenant during the Term of Lease or any extension. Prior to the time when Tenant
shall be entitled to the return of this security deposit, Landlord may co-mingle such deposit with
Landlord’s own funds and to use such security deposit for such purpose as Landlord may determine.
In the event of the failure of Tenant to keep and perform any of the terms, covenants and
conditions of the term of lease or any extension of this lease, then Landlord, either with or
without terminating this Lease, may (but shall not be required to) apply such portion of said
deposit as may be necessary to compensate or repay Landlord for all losses or damages sustained by
Landlord due to such breach on the part of Tenant. Landlord may apply said deposit without
limitation to overdue and unpaid rent, any other sum payable by Tenant to Landlord pursuant to the
provisions of this Lease, damages or deficiencies in the reletting of Demised Premises, and
reasonable attorney’s fees incurred by Landlord. Should the entire deposit or any portion thereof,
be appropriated and applied by Landlord, in accordance with the provisions of this paragraph,
Tenant upon written demand by Landlord, shall remit to Landlord a sufficient amount of cash to
restore said security deposit to the original sum deposited. Tenant’s failure to remit such
security deposit within five (5) days after receipt of such demand shall constitute a breach of
this Lease. Upon the termination of this or any extension, Landlord shall return to Tenant the
deposit or any remaining balance. Tenant shall have no right to anticipate return of said deposit
by withholding any amount required to be paid pursuant to the provisions of this Lease.

In the event Landlord shall sell the Building, convey or dispose of its interest in this Lease,
Landlord may assign said security deposit or any balance to Landlord’s assignee, whereupon Landlord
shall be released from all liability for the return or repayment of such security deposit and
Tenant shall look solely to the assignee for the return and repayment of security deposit. Said
security deposit shall not be assigned or encumbered by Tenant without the written consent of
Landlord, and any assignment or encumbrance without such consent shall not bind Landlord. In the
event of any rightful and permitted assignment of this Lease by Landlord, said security deposit
shall be deemed to be held by Landlord as a deposit made by the assignee, and Landlord shall have
no further liability with respect to the return of said security deposit to the Tenant.

8.0 CARE AND REPAIR OF DEMISED PREMISES:

Tenant shall, at all times throughout the Term of this Lease and any extensions, and at its sole
expense, keep and maintain the Demised Premises in a clean, safe, sanitary and reasonable
condition, reasonable wear and tear excepted and taking into account that as of the date of this
Lease, the Demised Premises was delivered to Tenant in an “as is” condition except for those
improvements specified on Exhibit C, and in compliance with all applicable laws, codes, ordinances,
rules and regulations. Tenant’s obligations hereunder shall include, without limitation, the
maintenance, repair, replacement, if necessary, of all “non-load bearing” interior walls,
partitions, doors and windows, including the regular painting thereof, all exterior entrances,
windows, doors and docks, the replacement of all broken glass, of all fixture/equipment/component
of heating, ventilation, air conditioning (HVAC) systems associated with Tenant’s clean room and
lab areas (with the HVAC systems servicing the office space portion of the Demised Premises being a
CAM expense, the proportionate share of which CAM expense shall be borne by Tenant), all lighting
systems, plumbing systems and electrical systems; provided, however, prior to the commencement of
this Lease, Landlord agrees to

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perform an inspection of the Demised Premises and repair and/or replace, respectively, any defects
to the roof and any defective rooftop heating and cooling units. In the event that an HVAC rooftop
unit or ceiling hung unit heater requires replacement subsequent to the commencement of this Lease,
the cost of such replacement shall be shared between Landlord and Tenant, Tenant’s share to be
based on a ratio of the time of occupancy to the nearest one-half year to the estimated useful life
of the unit, unless caused by the misuse or neglect of Tenant. Such estimations are fifteen (15)
years for a roof top unit and ten (10) years for a ceiling hung unit heater under normal
conditions. With the exception of HVAC equipment, when used in this provision, the term “repairs”
shall include replacements, and all such repairs or replacements made by Tenant shall be of equal
quality to the “as is” condition of the original equipment or work to the Demised Premises as of
the Commencement Date. Tenant shall use reasonable efforts to keep and maintain all portions of
the Demised Premises and the sidewalk and areas adjoining the same in a clean and orderly
condition, free of accumulation of dirt, rubbish, snow and ice, regardless of any CAM performed by
Landlord. Tenant shall make reasonable efforts to maintain a minimum temperature in the Demised
Premises of 40 degrees during the Term of this Lease; provided, however, Tenant shall not be held
responsible for failure to maintain such minimum temperature of the Demised Premises as a result of
any disruption in utility service or an accident, Act of God, or other circumstances beyond
Tenant’s control that prevents the continuity of the utility service necessary to maintain such
minimum temperature.

If Tenant fails, refuses or neglects to maintain or repair the Demised Premises as required in this
Lease after notice shall have been given Tenant, in accordance with Article 17.0 of this Lease,
Landlord may make such repairs or replacements without liability to Landlord for any loss or damage
that may accrue to Tenant’s merchandise, fixtures or other property or to Tenant’s business by
reason thereof, and upon completion thereof, Tenant shall pay to Landlord all costs plus 15% for
overhead incurred by Landlord in making such repairs or replacements.

Landlord shall repair, at its expense, the structural portions of the Building, unless such repairs
are required as a result of the acts of Tenant, its employs, agents, assigns or invitees, the costs
thereof shall be borne by Tenant and payable by Tenant to Landlord.

Landlord shall be responsible for all outside maintenance of the Demised Premises, including
grounds and parking areas. All such maintenance which is the responsibility of the Landlord shall
be provided as reasonably necessary to the comfortable use and occupancy of Demised Premises during
business hours, except Sundays and holidays, upon the condition that the Landlord shall not be
liable for damages for its performance due to causes beyond its control.

9.0 HAZARDOUS MATERIALS:

Tenant shall not (either with or without negligence) cause or permit the escape, disposal or
release of any biologically or chemically active or other hazardous substances, or materials,
except as to such disposal or release that is done in compliance with applicable laws and
regulations. Tenant shall not allow the storage or use of such substances or materials in any
manner not sanctioned by law or by the customary standards prevailing in the industry for the
storage and use of such substances or materials, nor allow to be brought into the Project any such
materials or substances except in the ordinary course of Tenant’s business, and then only after
written notice is given to Landlord of the identity of such substances or materials. Without

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limitation, hazardous substances and materials shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601
et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.,
any applicable state or local laws and the regulations adopted under these acts. If any lender or
governmental agency shall ever require to ascertain whether or not there has been any release of
hazardous materials, and Landlord’s reasonable investigation of the same concludes that Tenant has
breached its obligations under this Article 9.0, then, to the extent of such breach, the reasonable
costs thereof shall be reimbursed by Tenant to Landlord upon demand as additional charges if such
requirement applies to the Premises. In addition, Tenant shall execute affidavits, representations
and the like from time to time at Landlord’s request concerning Tenant’s best knowledge and belief
regarding the presence of hazardous substances or materials on the Premises. In all events, Tenant
shall indemnify Landlord from any release of hazardous materials on the Premises occurring while
Tenant is in possession or elsewhere if caused by Tenant or persons acting under Tenant. The
within covenants shall survive the expiration or earlier termination of the lease term.

10.0 PUBLIC LIABILITY INSURANCE:

Tenant shall during the term hereof keep in full force and effect at its own expense a policy or
policies of public liability insurance with respect to the Demised Premises and the business of
Tenant, on terms and with companies approved in writing by Landlord, in which both Tenant and
Landlord shall be covered by being named as insured parties under reasonable limits of liability
not less than: $1,000,000 for injury/death to any one person; $2,000,000 for injury/death to more
than one person, and $1,000,000 with respect to damage to property. Such policy or policies shall
provide that ten (10) days written notice must be given to Landlord prior to cancellation thereof.
Tenant shall furnish evidence satisfactory to Landlord at the time this Lease is executed that such
coverage is in full force and effect.

11.0 SIGNAGE AND DISPLAYS:

Upon occupancy, building exterior signage, building directories and/or pylon signage shall be
approved, installed and provided for by Landlord in compliance with city ordinances and building
signage criteria. Any changes, modifications and/or maintenance of initial signage shall be at
Tenant’s sole cost and expense with approval of Landlord. Additional signage, lettering, picture,
notice or advertisement installed on or in any part of the Premises and visible from the exterior
of the Building, or visible from the exterior of the Demised Premises, shall be approved by
Landlord at Tenant’s sole cost and expense. Said signs are to be maintained by Landlord at
Tenant’s expense. Landlord may remove any unauthorized signs without any liability to Landlord and
may charge the expense incurred by such removal to Tenant. Notwithstanding anything to the
contrary in this Section 11.0, Landlord agrees to include the names of Tenant and its approved
subtenants on the monument signage adjacent to the Building.

12.0 ALTERATIONS, INSTALLATION, FIXTURES:

After completion of Landlord’s Work (as set forth on Exhibit C) and unless otherwise stated, Tenant
shall not make any alterations, additions or improvements in or to the Demised Premises or add,
disturb or in any way change any plumbing or wiring without the prior written consent of

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the Landlord, which consent will not be unreasonably withheld. In the event alterations are
required by any governmental agency by reason of the use and occupancy of the Demised Premises by
Tenant, Tenant shall make such alterations at its own cost and expense after first obtaining
Landlord’s written approval of plans and specifications and furnishing such indemnification as
Landlord may reasonably require against liens, costs, damages and expenses arising out of such
alterations. Tenant shall warrant to Landlord that all such alterations, additions, or
improvements shall be in strict compliance with all relevant laws, ordinances, governmental
regulations and insurance requirements. Construction of such alterations or additions shall
commence only upon Tenant obtaining and exhibiting to Landlord the requisite approvals, licenses
and permits and indemnification against liens. Unless otherwise agreed to, all alterations,
installations, physical additions or improvements to the Demised Premises made by Tenant shall at
once become the property of Landlord and shall be surrendered to Landlord upon the termination of
this Lease.

13.0 ACCESS TO DEMISED PREMISES:

Tenant agrees to permit Landlord and the authorized representatives of Landlord to enter the
Demised Premises at all reasonable times and upon reasonable prior notice during usual business
hours (except in the event of an emergency) for the purpose of inspecting the same and making any
necessary repairs to the Demised Premises and performing any work therein that may be necessary to
comply with any laws, ordinances, rules, regulations or requirements of any public authority or of
the Board of Fire Underwriters or any similar body or that Landlord may deem necessary to prevent
waste or deterioration in connection with the Demised Premises. Nothing herein shall imply any
duty upon the part of Landlord to do any such work which, under any provision of this Lease, Tenant
is required to perform and the performance thereof by Landlord shall not constitute a waiver of the
Tenant’s default to perform the same. Landlord may, during the progress of any work in the Demised
Premises or Building, keep and store upon the Demised Premises or Building all necessary materials,
tools, and equipment. Landlord shall not in any event be liable for inconvenience, annoyance,
disturbance, loss of business, or other damage of the Tenant, nor shall Tenant’s lease obligations
be affected by reason of making repairs or the performance of any work, including materials
handling into or through the Demised Premises or Building.

Landlord reserves the right to enter upon the Demised Premises (a) at any time in the event of an
emergency and (b) at reasonable hours to exhibit the Demised Premises to prospective purchasers or
others; and to exhibit the Demised Premises to prospective tenants and to display “For Rent” or
similar signs on windows or doors in the Demised Premises during the last one hundred twenty (120)
days of the term of this Lease, all without hindrance by Tenant.

14.0 REMOVAL OF FIXTURES:

Notwithstanding anything contained in Article 12.0, 18.0, or elsewhere in this Lease, if Landlord’s
consent to an alteration, installation or fixture is conditioned upon Tenant removing the same upon
the expiration or earlier termination of this Lease, then Tenant will promptly remove at the sole
cost and expense of Tenant that alteration, installation or fixture made by Tenant simultaneously
with vacating the Demised Premises and Tenant will promptly restore

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said Demised Premises to the condition that existed immediately prior to said fixtures, equipment
and alterations having been made.

15.0 ASSIGNMENT OR SUBLETTING:

Tenant agrees to use and occupy the Demised Premises throughout the entire term hereof for the
purpose herein specified and for no other purposes, in the manner and to substantially the extent
now intended, and, except for any sublease of a portion of the Demised Premises to Enteromedics or
Integ/Lifescan, Tenant agrees not to transfer or assign this Lease or sublet said Demised Premises,
or any part thereof, whether by voluntary act, operation of law, or otherwise, without obtaining
the prior consent of Landlord in each instance, which consent will not be unreasonably withheld.
Tenant shall seek such consent of Landlord by a written request therefor, setting forth such
information as Landlord may deem necessary. Consent by Landlord to any assignment of this Lease or
to any subletting of the Demised Premises shall not be a waiver of Landlord’s right under this
Article as to any subsequent assignment or subletting. Landlord’s rights to assign this Lease are
and shall remain unqualified. No such assignment or subleasing shall relieve the Tenant from any
of Tenant’s obligations in this Lease contained, nor shall any assignment or sublease or other
transfer of this Lease be effective unless the assignee, subtenant or transferee shall at the time
of such assignment, sublease or transfer, assume in writing for the benefit of Landlord, its
successors or assigns, all of the terms, covenants, and conditions of this Lease thereafter to be
performed by Landlord and shall agree in writing to be bound thereby. Except for any sublease to
Enteromedics or Integ/Lifescan (for which Tenant is not responsible to share with Landlord any
rents received from said subtenants), should Tenant sublease in accordance with the terms of this
Lease, fifty percent (50%) of any increase in rental received by Tenant over the per square foot
rental rate which is being paid by Tenant shall be forwarded to and retained by Landlord, which
increase shall be in addition to the Base Rent and Additional Rent due Landlord under this Lease.

16.0 SUCCESSORS AND ASSIGNS:

The terms, covenants and conditions hereof shall be binding upon and inure to the successors and
assigns of the parties hereto.

17.0 NOTICES:

Any notice required or permitted under this Lease shall be deemed sufficiently given or secured if sent by registered
or certified return receipt mail to Tenant                                                                                                                                                          and to Landlord at the address then fixed for the payment of rent as provided in Article 4.0 of this Lease and either party may by like written
notice at any time designate a different address to which notices shall subsequently by sent or
rent to be paid.

18.0 SURRENDER:

On the Expiration Date or upon the termination hereof upon a day other than the Expiration Date,
Tenant shall peaceably surrender the Demised Premises in good order, condition and repair
(reasonable wear and tear only excepted); warehouse area in broomclean condition; office/restroom
area vacuumed and cleaned. Furthermore, Tenant shall be responsible to return

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to its original condition (reasonable wear and tear only excepted) the “controlled environment
area” (the “Clean Room”) situated in a portion of the Demised Premises in the event that Landlord
advises Tenant, in writing, to do so within one hundred twenty (120) days after the Expiration Date
or earlier termination of this Lease. Landlord will attempt to, but is not obligated to, re-let
the Demised Premises to a tenant who would accept the Clean Room in its “as is” condition and, if
Landlord is successful in re-letting the Demised Premises to a tenant who will use the Clean Room
in its “as is” condition, Tenant shall be absolved from its obligation to restore the Clean Room
portion of the Demised Premises to its original condition. On or before the Expiration Date or
upon termination of this Lease on a day other than the Expiration Date, Tenant shall, at its
expense, remove all trade fixtures, personal property and equipment and signs from the Demised
Premises and any property not removed shall be deemed to have been abandoned. Any damage caused in
the removal of such items shall be repaired by Tenant and at its expense. All alterations,
additions, improvements and fixtures (other than trade fixtures) which shall have been made or
installed by Landlord or Tenant upon the Demised Premises and all floor covering so installed shall
remain upon and be surrendered with the Demised Premises as a part thereof, without disturbance,
molestation or injury, and without charge, at the expiration or termination of this Lease. If the
Demised Premises are not surrendered on the Expiration Date or the date of termination, Tenant
shall indemnify Landlord against loss or liability, claims, without limitation, made by any
succeeding Tenant founded on such delay. Tenant shall promptly surrender all keys for the Demised
Premises to Landlord at the place then fixed for payment of rent and shall inform Landlord of
combinations of any locks and safes on the Demised Premises.

19.0 HOLDING OVER:

In the event of a holding over by Tenant after expiration or termination of this Lease without the
consent in writing of Landlord, Tenant shall be deemed a Tenant at sufferance and shall pay rent
for such occupancy at the rate of one and one-half times the last-current aggregate Base Rent and
Additional Rent, prorated for the entire holding over period, plus all attorney’s fees and expenses
incurred by Landlord in enforcing its rights hereunder, plus any other damages occasioned by such
holding over. Except as otherwise agreed, any holding over with the written consent of Landlord
shall constitute Tenant a month-to-month lease.

20.0 ABANDONMENT:

In the event Tenant shall remove its fixtures, equipment or machinery or shall vacate the Demised
Premises or any part thereof prior to the Expiration Date of this Lease, or shall discontinue or
suspend the operation of its business conducted on the Demised Premises for a period of more than
thirty (30) consecutive days (except during any time when the Demised Premises may be rendered
untenable by reason of fire or other casualty), and is simultaneously delinquent in its monetary
obligations under the Lease, then in any such event Tenant shall be in default under the terms of
this Lease. Tenant shall maintain a minimum temperature in the Demised Premises of 40 degrees
during the Lease Term.

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21.0 DEFAULT OF TENANT:

	 	a.	 	In the event of any failure of Tenant to pay any rental due hereunder within
ten (10) days after the same becomes due, or any failure to perform any other terms,
conditions or covenants of this Lease to be observed or performed by Tenant for more
than ten (10) days after written notice of such failure shall have been given to
Tenant, or if Tenant or an agent of Tenant shall falsify any report required to be
furnished to Landlord pursuant to the terms of this Lease, or if Tenant or any
guarantor of this Lease shall become bankrupt or insolvent, or file any debtor
proceedings or any person shall take or have against Tenant or any guarantor of this
Lease in any court pursuant to any statute either of the United States or of any state
a petition in bankruptcy or insolvency or for reorganization or for the appointment of
a receiver or trustee of all or a portion of Tenant’s or any such guarantor’s property,
or if Tenant or any such guarantor’s property, or if Tenant or any such guarantor makes
an assignment for the benefit of creditors, or petitions for or enters into an
arrangement with its creditors, or if Tenant shall abandon the Demised Premises or
suffer this Lease to be taken under any writ of execution, then in any such event
Tenant shall be in default hereunder, and Landlord, in addition to other rights of
remedies it may have, shall have the immediate right of re-entry and may remove all
persons and property from the Demised Premises and such property may be removed and
stored in a public warehouse or elsewhere at the cost of, and for the account of
Tenant, without being guilty of trespass, or becoming liable for any loss or damage
which may be occasioned thereby.
	 
	 	b.	 	Should Landlord elect to re-enter the Demised Premises, as herein provided, or
should it take possession of the Demised Premises pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either terminate this Lease or it
may from time to time, without terminating this Lease, make such alterations and
repairs as may be necessary in order to relet the Demised Premises, and relet the
Demised Premises or any part thereof for such term or terms (which may be for a term
extending beyond the term of this Lease) and at such rental or rentals and upon such
other terms and conditions as Landlord in its sole discretion may deem advisable. Upon
each such subletting all rentals received by the Landlord from such reletting shall be
applied first to the payment of any indebtedness other than rent due hereunder from
Tenant to Landlord; second, to the payment of any costs and expenses of such reletting,
including brokerage fees and attorney’s fees and costs of such alterations and repairs;
third, to the payment of the rent due and unpaid hereunder, and the residue, if any
shall be held by Landlord and applied in payment of future rent as the same may become
due and payable hereunder. If such rentals received from such reletting during any
month be less than that to be paid during month by Tenant hereunder, Tenant, upon
demand, shall pay any such deficiency to Landlord. No such re-entry or taking
possession of the Demised Premises by Landlord shall be construed as an election on
it’s part to terminate this Lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Landlord may at
any

-11-

 

	 	 	 	time after such reentry and reletting elect to terminate this Lease for such
previous breach. Should Landlord at any time terminate this Lease for any such
breach, in addition to any other remedies it may have, it may recover from Tenant
all damages it may incur by reason of such breach, including the cost of recovering
the Demised Premises, attorney’s fees, and costs, the unamortized portion of any
leasehold improvements made by Landlord for Tenant and including the worth at the
time of such termination of the excess, if any, of the amount of rent and charges
equivalent to rent reserved in this Lease for the remainder of the stated term over
the then reasonable rental value of the Demised Premises for the remainder of the
stated term, all of which amounts shall be immediately due and payable from Tenant
to Landlord. Landlord shall also have the right to accelerate the entire
indebtedness (including the amount of Base Rent and reasonably estimated Additional
Rent reserved in this Lease for the remainder of the Term of Lease), reduce the same
to present value using a discount rate of one hundred basis points below the “prime”
or “reference” rate then announced at Wells Fargo Bank, N.A., Minneapolis office, or
its successors and assigns (the “Prime Rate”), and recover a judgment from Tenant in
that amount.
	 
	 	c.	 	Landlord may, at its option, instead of exercising any other rights or remedies
available to it in this Lease or otherwise by law, statute or equity, spend such money
as is reasonably necessary to cure any default of Tenant herein and the amount so
spent, and costs incurred, including attorneys’ fees in curing such default, shall be
paid by Tenant, as additional rent, upon demand.
	 
	 	d.	 	In the event suit shall be brought for recovery of possession of the Demised
Premises, for the recovery of rent or any other amount due under the provisions of this
Lease, or because of the breach of any other covenant herein contained on the part of
the Tenant to be kept or performed, and a breach shall be established, Tenant shall pay
to Landlord all expenses incurred therefor, including attorney’s fees and costs,
together with interest on all such expenses at the rate of ten percent (10%) per annum
from the date of such breach of the covenants of this Lease.
	 
	 	e.	 	Tenant waives any demand for possession of the Demised Premises, and any demand
for payment of rent and any notice of intent to re-enter the Demised Premises, or of
intent to terminate this Lease, other than the notices above provided in this Article,
and any other notice or demand prescribed by any applicable statutes or laws.
	 
	 	f.	 	No remedy herein or elsewhere in this Lease or otherwise by law, statute or
equity, conferred upon or reserved to Landlord or Tenant shall be exclusive of any
other remedy, but shall be cumulative, and may be exercised from time to time and as
often as the occasion may arise.
	 
	 	g.	 	For purposes hereof, a “Landlord Default” exists if Landlord fails to perform
any of its obligations under this Lease within 30 days after receiving notice from
Tenant specifying the nature and extent of such failure; provided, however, if the
obligation is not reasonably curable within such 30 day period, the time for will

-12-

 

	 	 	 	be extended so long as Landlord continues to use reasonable efforts to effect a
cure. If a Landlord Default has occurred, then, in addition to all rights, powers
or remedies permitted by law or in equity, Tenant may cure such Landlord Default and
charge the cost thereof to Landlord, or sue for specific performance or sue for
damages. Landlord is liable for, and shall pay to Tenant within 30 days after
receiving Tenant’s invoice, all reasonable attorneys’ fees and other costs incurred
by Tenant as a result of a Landlord Default.

If Landlord fails to pay within such 30 day period the amount due, Tenant has the right to
offset such amounts against the next installments of Rent due hereunder.

22.0 EMINENT DOMAIN:

In the event of any eminent domain of condemnation proceeding or private sale in lieu thereof in
respect to the Building during the term thereof, the following provisions shall apply:

	 	a.	 	If the whole of the Building shall be acquired or condemned by eminent domain
for any public or quasipublic purpose, the term of this lease shall cease and terminate
as of the date possession shall be taken in such proceedings and all rentals shall be
paid up to that date.
	 
	 	b.	 	If any part constituting less than the whole of the Building shall be acquired
or condemned as aforesaid, and in the event that such partial taking or condemnation
shall materially affect the Demised Premises so as to render the Demises Premises
unsuitable for the business of the Tenant, in the opinion of Landlord, then the term of
this Lease shall cease and terminate as of the date possession shall be taken by the
condemning authority and rent shall be paid to the date of such termination.
	 
	 	 	 	In the event of a partial taking or condemnation of the Building which shall not
materially affect the Demised Premises so as to render the Demised Premises
unsuitable for the business of the Tenant, in the opinion of the Landlord, this
Lease shall continue in full force and effect with a proportionate abatement of the
Base Rent and Additional Rent based on the portion, if any of the Demised Premises
taken. Landlord reserves the right, at its option, to restore the building and the
Demised Premises to substantially the same condition as they were prior to such
condemnation. In such event, Landlord shall give written notice to Tenant, within
30 days following the date possession shall be taken by the condemning authority, of
Landlord’s intention to restore. Upon Landlord’s notice of election to restore,
Landlord shall commence restoration and shall restore the Building and the Demised
Premises with reasonable promptness, subject to delays beyond Landlord’s control and
delays in the making of condemnation or sale proceeds adjustments by Landlord; and
Tenant shall have no right to terminate this Lease except as herein provided. Upon
completion of such restoration, the rent shall be adjusted based upon the portion,
if any, of the Demised Premises restored.

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	 	c.	 	In the event of any condemnation or taking as aforesaid, whether whole or
partial, the Tenant shall not be entitled to any part of the award paid for such
condemnation and Landlord is to receive the full amount of such award, the Tenant
hereby expressly waiving any right to claim to any part thereof.
	 
	 	d.	 	Although all damages in the event of any condemnation shall belong to the
Landlord whether such damages are awarded as compensation for diminution in value of
the leasehold or to the fee of the Demised Premises, Tenant shall have the right to
claim and recover from the condemning authority, but not from Landlord, such
compensation as may be separately awarded or recoverable by Tenant in Tenant’s own
right on account of any and all damage to Tenant’s business by reason of the
condemnation and for or on account of any cost or loss to which Tenant might be put in
removing Tenant’s merchandise, furniture, fixtures, leasehold improvements and
equipment. However, Tenant shall have no claim against Landlord or make any claim with
the condemning authority for the loss of its leasehold estate, any unexpired term or
loss of any possible renewal or extension of said lease or loss of any possible value
of said lease, any unexpired term, renewal or extension of said lease.

23.0 RULES AND REGULATIONS:

Tenant shall observe and comply with such further reasonable rules and regulations as Landlord may
prescribe, on written notice to Tenant for the safety, care and cleanliness of the Building.

24.0 DAMAGE OR DESTRUCTION:

In the event of any damage or destruction to the Premises by fire or other cause during the term
hereof, the following provisions shall apply:

	 	a.	 	If the Building is damaged by fire or any other cause to such extent that the
cost of restoration, as reasonably estimated by Landlord, will equal or exceed thirty
percent (30%) of the replacement value of the Building (exclusive of foundations) just
prior to the occurrence of the damage, then Landlord may, not later than the sixtieth
(60th) day following the damage, give Tenant written notice of Landlord’s election to
terminate this Lease.
	 
	 	b.	 	If the cost of restoration as estimated by Landlord will equal or exceed fifty
percent (50%) of said replacement value of the Building and if the Demised Premises are
not suitable as a result of said damage for the purposes for which they are demised
hereunder, in the reasonable opinion of Tenant, then Tenant may, no later than the
sixtieth (60th) day following the damage, give Landlord a written notice of election to
terminate this Lease.
	 
	 	c.	 	If the cost of restoration as estimated by Landlord shall amount to less than
thirty percent (30%) of said replacement value of the Building, or if, despite the
cost, Landlord does not elect to terminate this Lease, Landlord shall restore the
Building and the Demised Premises with reasonable promptness, subject to delays beyond
Landlord’s control and delays in the mating of insurance adjustments by

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	 	 	 	Landlord; and Tenant shall have no right to terminate this Lease except as herein
provided. Landlord shall not be responsible for restoring or repairing leasehold
improvements of the Tenant.
	 
	 	d.	 	In the event of either of the elections to terminate, this Lease shall be
deemed to terminate on the date of the receipt of the notice of election and all
rentals shall be paid up to that date. Tenant shall have no claim against Landlord for
the value of any unexpired term of this Lease.
	 
	 	e.	 	In any case where damage to the Building shall materially affect the Demised
Premises so as to render them unsuitable in whole or in part for the purposes for which
they are demised hereunder, then, unless such destruction was wholly or partially
caused by the negligence or breach of the terms of this Lease by Tenant, its employees,
contractors or licensees, a portion of the rent based upon the amount of the extent to
which the Demised Premises are rendered unsuitable shall be abated until repaired or
restored. If the destruction or damage was wholly or partially caused by negligence or
breach of the terms of this Lease by Tenant as aforesaid and if Landlord shall elect to
rebuild, the rent shall not abate and the Tenant shall remain liable for the same.

25.0 CASUALTY INSURANCE:

	 	a.	 	Landlord shall at all times during the term of this Lease, at its expense,
maintain a policy or policies of insurance with premiums paid in advance issued by an
insurance company licensed to do business in the State of Minnesota insuring the
Building against loss or damage by fire, explosion or other insurable hazards and
contingencies for the full replacement value, provided that Landlord shall not be
obligated to insure any furniture, equipment, machinery, goods or supplies not covered
by this Lease which Tenant may bring upon the Demised Premises or any additional
improvements which Tenant may construct or install on the Demised Premises.
	 
	 	b.	 	Tenant shall not carry any stock of goods or do anything in or about the
Demised Premises which will in any way impair or invalidate the obligation of the
insurer under any policy of insurance required by this Lease.
	 
	 	c.	 	Landlord hereby waives and releases all claims, liabilities and causes of
action against Tenant and its agents, servants and employees for loss of damage to, or
destruction of, the Building or any portion thereof, including the buildings and other
improvements situated thereon, resulting from fire, explosion or the other perils
included in standard extended coverage insurance, whether caused by the negligence of
any of said persons or otherwise. Likewise, Tenant hereby waives and releases all
claims, liabilities and causes of action against Landlord and its agents, servants and
employees for loss of damage to, or destruction of, any of the improvements, fixtures,
equipment, supplies, merchandise and other property, whether that of Tenant or of
others in, upon or about the Premises resulting from fire, explosion or the other
perils included in standard coverage insurance,

-15-

 

	 	 	 	whether caused by the negligence of any of said persons or otherwise. The waiver
shall remain in force whether or not the Lessee’s insurer shall consent thereto.
	 
	 	d.	 	In the event that the use of the Demised Premises by Tenant increases the
premium rate for insurance carried by Landlord on the improvements of which the Demised
Premises are a part, Tenant shall pay Landlord, upon demand, the amount of such premium
increase. If Tenant installs any electrical equipment that overloads the power lines
to the building or its wiring, Tenant shall, at its own expense, make whatever changes
are necessary to comply with the requirements of the insurance underwriter, insurance
rating bureau and governmental authorities having jurisdiction.

26.0 COVENANTS TO HOLD HARMLESS:

Unless the liability for damage or loss is caused by the negligence of Landlord, its agents or
employees, Tenant shall hold harmless Landlord from any liability for damages to any person or
property in or upon the Demised Premises and the Building, including the person and property of
Tenant and its employees and all persons in the Building at its or their invitation or sufferance,
and from all damages resulting from Tenant’s failure to perform the covenants of this Lease. All
property kept, maintained or stored on the Demised Premises shall be so kept, maintained or stored
at the sole risk of Tenant. Tenant agrees to pay all sums of money in respect of any labor,
service, materials, supplies or equipment furnished or alleged to have been furnished to Tenant in
or about the Demised Premises, and not furnished on order of Landlord, which may be secured by any
mechanic’s materialmen’s or other lien to be discharged at the time performance of any obligation
secured thereby matures, provided that Tenant may contest such lien, but if such lien is reduced to
final judgment and if such judgment or process thereon is not stayed, or if stayed and said stay
expires, then and in each such event, Tenant shall forthwith pay and discharge said judgment.
Landlord shall have the right to post and maintain on the Demised Premises, notices of
nonresponsibility under the laws of the State of Minnesota.

Except to the extent that the liability for damage or loss is caused by the negligence of Tenant,
its agents or employees, Landlord shall, subject to Section 25(c), hold harmless Tenant from any
liability for damages to any person or property in or upon the Building, including the person and
property of Landlord and its employees and all persons in the Building at its or their invitation
or sufferance, and from all damages to the extent resulting from Landlord’s failure to perform the
covenants of this Lease.

27.0 NON-LIABILITY:

Subject to the terms and conditions of Article 26.0 hereof, Landlord shall not be liable for any
damage to property of Tenant or of others located on the Premises, nor for the loss or damage to
any property of Tenant or of others by theft or otherwise. Landlord shall not be liable for any
injury or damage to persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or snow or leaks from any part of the Premises or from the pipes,
appliances, or plumbing works or from the roof, street or subsurface or from any other place or by
dampness or by any other cause of whatsoever nature. Landlord shall not be liable for any

-16-

 

such damage caused by other Tenants or persons in the Premises, occupants or adjacent property, of
the buildings, or the public or caused by operations in construction of any private, public or
quasi-public work. Landlord shall not be liable for any such damage caused by other tenants or
persons in the Premises, occupants of adjacent property, of the buildings, of the public or caused
by operations.

28.0 SUBORDINATION:

This Lease shall be subordinated to any mortgage that may now exist or that may hereafter be placed
upon the Demised Premises and to any and all advances made thereunder, and to the interest upon the
indebtedness evidenced by such mortgages, and to all renewals, replacements and extensions thereof;
provided, however, that Tenant’s possession of the Demised Premises will not be disturbed as long
as Tenant is not in default beyond applicable cure periods under this Lease. In the event of
execution by Landlord after the date of this Lease of any such mortgage, renewal, replacement or
extension, Tenant agrees to execute a subordination agreement with the holder thereof which
agreement shall provide that:

	 	a.	 	Such holder shall not disturb the possession and other rights of Tenant under
this Lease so long as Tenant is not in default hereunder.
	 
	 	b.	 	In the event of acquisition of title to the Demised Premises by such holder,
such holder shall accept the Tenant as Tenant of the Demised Premises under the terms
and conditions of this Lease and shall perform all the obligations of Landlord
hereunder, and
	 
	 	c.	 	The Tenant shall recognize such holder as Landlord hereunder
	 
	 	d.	 	Tenant shall, upon receipt of a request from Landlord therefor, execute and
deliver to Landlord or to any proposed holder of a mortgage or trust deed or to any
proposed purchaser of the Premises an Estoppel Letter.

29.0 ATTORNMENT:

In the event of a sale or assignment of Landlord’s interest, in the Building in which the Demised
Premises are located, or this Lease, or if the Building comes into custody or possession of a
mortgagee or any other party whether because of a mortgage foreclosure, or otherwise, Tenant shall
attorn to such assignee or other party and recognize such party as Landlord hereunder; provided,
however, Tenant’s peaceable possession will not be disturbed so long as Tenant faithfully performs
its obligations under this Lease. Tenant shall execute, on demand, any attornment agreement
required by any such party to be executed, containing such provisions as such party may require.
Landlord shall have no further obligations under this Lease after any such assignment.

30.0 NOVATION IN THE EVENT OF SALE:

In the event of the sale of the Demised Premises, Landlord shall be and hereby is relieved of all
of the covenants and obligations created hereby accruing from and after the date of sale, and such
sale shall result automatically in the purchaser assuming and agreeing to carry out all the

-17-

 

covenants and obligations of Landlord herein. Notwithstanding the foregoing provisions of this
Section 30.0, Landlord, in the event of a sale of the Demised Premises, shall cause to be included
in this agreement of sale and purchase a covenant whereby the purchaser of the Demised Premises
assumes and agrees to carry out all of the covenants and obligations of Landlord herein.

The Tenant agrees at any time and from time to time upon not less than ten (10) days prior written
request by the Landlord to execute, acknowledge and deliver to the Landlord a statement in writing
certifying that this Lease is unmodified and in full force and effect as modified and stating the
modifications, and the dates to which the basic rent and other charges have been paid in advance,
if any, it being intended that any such statement delivered pursuant to this paragraph may be
relied upon by any prospective purchaser of the fee or mortgagee or assignee or any mortgage upon
the fee of the Demised Premises.

31.0 QUIET ENJOYMENT:

Landlord warrants that it has full right to execute and to perform this Lease and to grant the
estate demised, and that Tenant, upon payment of the rents and other amounts due and the
performance of all the terms, conditions, covenants and agreements on Tenant’s part to be observed
and performed under this Lease, may peaceably and quietly enjoy the Demised Premises for the
business uses permitted hereunder, subject, nevertheless, to the terms and conditions of this
Lease.

32.0 RECORDING:

Tenant shall not record this Lease without the written consent of Landlord. However, upon the
request of either party hereto, the other party shall join in the execution of the Memorandum lease
for the purposes of recordation. Said Memorandum lease shall describe the parties, the Demised
Premises and the term of the Lease and shall incorporate this Lease by reference. This Article
32.0 shall not be construed to limit Landlord’s right to file this Lease.

33.0 CONSENTS BY LESSOR:

Whenever provision is made under this Lease for Tenant securing the consent or approval by
Landlord, such consent or approval shall only be in writing.

34.0 INTENT OF PARTIES:

Except as otherwise provided herein, the Tenant covenants and agrees that if it shall any time fail
to pay any cost or expense required to be paid by it, or fail to take out, pay for, maintain or
deliver any of the insurance policies above required, or fails to make any other payment or perform
any other act on its part to be made or performed as in this Lease provided, then the Landlord may,
but shall not be obligated so to do, and without notice to or demand upon the Tenant and without
waiving or releasing the Tenant from any obligations of the Tenant in this Lease contained, pay any
such cost or expense, effect any such insurance coverage and pay premiums therefor, and may make
any other payment or perform any other act on the part of the Tenant to be made and performed as in
this Lease provided, in such manner and to such extent as the Landlord may deem desirable, and in
exercising any such right, to also pay all necessary and incidental costs and expenses, employ
counsel and incur and pay reasonable attorney’s fees. All

-18-

 

sums so paid by Landlord and all necessary and incidental costs and expenses in connection with the
performance of any such act by the Landlord, together with interest thereon at the rate of fourteen
percent (14%) per annum from the date of making such expenditures, by Landlord, shall be deemed
additional rent hereunder, and shall be payable to Landlord on demand. Tenant covenants to pay any
such sum or sums with interest as aforesaid and the Landlord shall have the same rights and
remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in
the payment of the Base Rent payable under this Lease.

35.0 GENERAL:

	 	a.	 	The Lease does not create the relationship of principal and agent or of
partnership or of joint venture or of any association between Landlord and Tenant, the
sole relationship between the parties hereto being that of Landlord and Tenant.
	 
	 	b.	 	No waiver of any default of Tenant hereunder shall be implied from any omission
by Landlord to take any action on account of such default if such default persists or
is repeated, and no express waiver shall affect any default other than the default
specified in the express waiver and that only for the time and to the extent therein
stated. One or more waivers by Landlord shall not then be construed as a waiver of a
subsequent breach of the same covenant, term or condition. The consent or approval by
Landlord of any act by Tenant requiring Landlord’s consent or approval shall not waive
or render unnecessary Landlord’s consent to or approval of any subsequent similar act
by Tenant. No action required or permitted to be taken by or on behalf of Landlord
under the terms or provisions of this Lease shall be deemed to constitute an eviction
or disturbance of Tenant’s possession of the Demised Premises. All preliminary
negotiations are merged into and incorporated in this Lease. The laws of the State of
Minnesota shall govern the validity, performance and enforcement of this Lease.
	 
	 	c.	 	This Lease and the exhibits, if any, attached hereto and forming a part hereof,
constitute the entire agreement between Landlord and Tenant affecting the Demised
Premises and there are no other agreements, either oral or written, between them other
than herein set forth. No subsequent alteration, amendment, change or addition to this
Lease shall be binding upon Landlord or Tenant unless reduced to writing and executed
in the same form and manner in which this Lease is executed.
	 
	 	d.	 	If any agreement, covenant or condition of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such agreement,
covenant or condition to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby and each agreement,
covenant or condition of this Lease shall be valid and be enforced to the fullest
extent permitted by law.

-19-

 

	 	e.	 	The captions are inserted only as a matter of convenience and for reference,
and in no way define, limit or describe the scope of this Lease nor the intent or any
provision thereof.
	 
	 	f.	 	Submission of this instrument to Tenant or proposed Tenant or his agents or
attorneys for examination, review, consideration or signature does not constitute or
imply an offer to lease, reservation of space, or option to lease, and this instrument
shall have no binding legal effect until execution hereof by both Landlord/Owner and
Tenant or its agents.

36.0 RENEWAL OPTION.

Provided the Lease is in full force and effect and Tenant is not in default beyond any applicable
cure period under any of the other terms and conditions of the Lease, at the time of either
notification of renewal or commencement of the Renewal Term (as that term is hereinafter defined),
then Tenant shall have a one (1) time option to renew the Lease for a term of 60 months (the
“Renewal Term”), on the same terms and conditions set forth in the Lease, except as modified by the
terms, covenants and conditions as set forth below:

	 	a.	 	If Tenant elects to exercise said option, then Tenant shall provide Landlord
with written notice no later than the date which is six (6) months prior to the
expiration of the initial Term of this Lease, time being of the essence. If Tenant
fails to timely provide such notice, Tenant shall have no right or additional right to
extend or renew the initial Term of this Lease. The notice shall be given in the
manner provided in the Lease for the giving of notices to Landlord.
	 
	 	b.	 	Within sixty (60) days of Landlord’s receiving Tenant’s written notice of
Tenant’s intention to renew this Lease, Landlord shall notify Tenant of Landlord’s
determination of the “Fair Rental Value” (as defined below) rental rate to be
applicable during the Renewal Term. If Tenant disagrees with Landlord’s determination
of the Fair Rental Value rate to be applicable during the Renewal Term, it shall so
notify Landlord and the parties agree to negotiate in good faith to arrive upon the
Fair Rental Value rate to be applicable during the Renewal Term. If the parties cannot
agree within thirty (30) days of Landlord’s initial notification of its determination
of the Fair Rental Value rate, then Tenant’s right to renew shall lapse and this entire
Article shall become null, void, and of no further force and effect.
	 
	 	c.	 	For purposes of this Article 36, “Fair Rental Value” means the annual Base
Rent, as determined by Landlord, that a tenant would pay to a landlord under a net
lease containing other terms and conditions substantially as set forth herein with
respect to comparable premises in a comparable building in the general geographic area
as the Building is located where both the landlord and tenant are willing and able to
enter into such a lease transaction but neither would be under any compulsion to do so,
and taking into account all relevant facts and circumstances concerning the Building,
the parties and the relevant market.

-20-

 

	 	d.	 	The option set forth in this Article is not transferable, the parties hereto
acknowledge and agree that the option to renew as set forth in this Article shall be
“personal” to the Tenant executing this Lease, and that in no event will any assignee
or sublessee have any rights to exercise any rights set forth in this Article.

IN WITNESS WHEREOF, the Landlord and the Tenant have executed this lease in form and manner
sufficient to bind them at law, as of the day and year first above written.

	 	 	 
	LANDLORD:

	 	TENANT:
	ROSEVILLE PROPERTIES MANAGEMENT

	 	RESTORE MEDICAL, INC.
	COMPANY, as agent for COMMERS-
	 	 
	KLODT III
	 	 

	 	 	 	 	 	 	 
	/s/ Daniel P. Commers

	 	 	 	/s/ J. Robert Paulson, Jr.	 	 
	 

Signature

	 	 	 	 

Signature
	 	 
	 
	 	 	 	 	 	 
	Daniel P. Commers

	 	 	 	J. Robert Paulson, Jr.	 	 
	 

Name (print)

	 	 	 	 

Name (print)
	 	 
	 
	 	 	 	 	 	 
	President

	 	 	 	President and Chief Executive Officer	 	 
	 

Title

	 	 	 	 

Title
	 	 
	 
	 	 	 	 	 	 
	August 8, 2005

	 	 	 	August 8, 2005	 	 
	 

Date Signed

	 	 	 	 

Date Signed
	 	 

[Exhibits Not Filed]

-21-exv10w2

 

Exhibit 10.2

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT No. 4541 (this “Agreement”) is entered into as of March 23, 2005,
by and between LIGHTHOUSE CAPITAL PARTNERS V, L.P. (“Lender”) and RESTORE MEDICAL INC., a Delaware
corporation (“Borrower”) and sets forth the terms and conditions upon which Lender will lend and
Borrower will repay money. In consideration of the mutual covenants herein contained, the parties
agree as follows:

1.    DEFINITIONS AND CONSTRUCTION

1.1 Definitions. Initially capitalized terms used and not otherwise defined herein are defined in
the California Uniform Commercial Code (“UCC”).

“ACH” means the Automated Clearing House electronic funds transfer system.

“Advance” means a Loan advanced by Lender to Borrower hereunder.

“Basic Rate” means a variable per annum rate of interest equal to the Index plus the Interest
Margin which shall be subject to upward adjustment as provided in the Loan Agreement. On and after
the Funding Date the Basic Rate shall be fixed and not subject to any further adjustments.
Notwithstanding the foregoing, in no event shall the Basic Rate be less than 8%.

“Borrower’s Books” means all of Borrower’s books and records, including records concerning
Collateral, Borrower’s assets, liabilities, business operations or financial condition, on any
media, and the equipment containing such information.

“Collateral” means: (i) all property of Borrower in which Lender or an affiliate of Lender has a
security interest as described on Exhibit A attached hereto; and (ii) all products and proceeds of
the foregoing, including proceeds of insurance and proceeds of proceeds.

“Commitment” means $5,000,000. “Commitment Fee” means $10,000.

“Commitment Termination Date” means the earliest to occur of (i) at the election of the Lender the
earlier of (a) December 31, 2005 if Borrower has not borrowed at least $2,000,000 by such date or
(b) July 1, 2006; (ii) any Default or Event of Default, or (iii) in Lender’s sole judgment, any
adverse change in the composition of Borrower’s Board of Directors (defined as the continued
representation of MPM Capital) after the date hereof.

“Control Agreement” means an agreement substantially in the form of Exhibit I or otherwise
acceptable to Lender.

“Default” means any event that with the passing of time or the giving of notice or both would
become an Event of Default.

“Default Rate” means the lesser of 15% per annum or the highest rate permitted by applicable law.

 

 

“Disclosure Schedule” means the schedule attached as Schedule I hereto.

“Event of Default” is defined in Section 8.

“Funding Date” means any date on which an Advance is made to or on account of Borrower hereunder.

“Indebtedness” means (i) all indebtedness for borrowed money or the deferred purchase of property
or services, (ii) all obligations evidenced by notes, bonds, debentures or similar instruments,
(iii) all capital lease obligations, and (iv) all contingent obligations, including guaranties and
obligations of reimbursement or respecting letters of credit.

“Incumbency Certificate” means the document in the form of Exhibit E.

“Index” means the prevailing variable Prime Rate of annual interest as quoted from time to time in
the western edition of the Wall Street Journal.

“Interest Margin” means 3% per annum.

“Lender’s Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees
and expenses) incurred in connection with the preparation, negotiation, modification,
administration, or enforcement of the Loan or Loan Documents, or the exercise or preservation of
any rights or remedies by Lender, whether or not suit is brought; provided however, that Lender’s
Expenses for the preparation and negotiation of the initial set of Loan Documents shall not exceed
$10,000, in each case to be evidenced by a reasonably detailed invoice setting forth such actual
costs and expenses, including reasonable attorneys’ fees and expenses. Lender will apply deposits
received before the date hereof, if any, towards Lender’s Expenses.

“Lien” means any lien, security interest, pledge, bailment, lease, mortgage, hypothecation,
conditional sales and title retention agreement, charge, claim, or other encumbrance.

“Liquidation Event” means any of: (i) a merger of Borrower with another entity whereby the
shareholders of Borrower owning at least 50% of the outstanding voting securities of Borrower
immediately prior to such merger own less than 50% of the outstanding voting securities of Borrower
immediately after such merger; (ii) the sale (in one or a series of related transactions) of all or
substantially all of Borrower’s assets; or (iii) any transaction (or series of related
transactions) whereby the shareholders of Borrower immediately prior to such transaction(s) own
less than 50% of the outstanding voting securities of Borrower immediately after such
transaction(s).

“Loan” means all of the Advances, however evidenced, and all other amounts due or to become due
hereunder.

“Loan Commencement Date” means July 1, 2006.

“Loan Documents” means, collectively, this Agreement, the Warrant, the Notes and all other
documents, instruments and agreements entered into between Borrower and Lender in connection with
the Loan, all as amended or extended from time to time.

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“Negative Pledge Agreement” means an agreement in the form of Exhibit H.

“Note” means a Secured Promissory Note in the form of Exhibit B.

“Notice of Borrowing” means the form attached as Exhibit D.

“Obligations” means all Loans, debt, principal, interest, fees, charges, Lender’s Expenses and
other amounts, obligations, covenants, and duties owing by Borrower to Lender of any kind or
description (whether pursuant to the Loan Documents or otherwise (with the exception of the
Warrant), and whether or not for the payment of money), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and including any of the same
obtained by Lender by assignment or otherwise, and all amounts Borrower is required to pay or
reimburse by the Loan Documents, by law, or otherwise.

“Permitted Indebtedness” means: (i) the Loan; (ii) unsecured trade debt incurred in the ordinary
course of Borrower’s business and (iii) Indebtedness secured by clause (ii)and (x) of Permitted
Liens.

“Permitted Liens” means: (i) Liens in favor of Lender; (ii) Liens disclosed in the Disclosure
Schedule; (iii) inchoate Liens for taxes, assessments or other governmental charges or levies not
yet due or Liens for taxes, assessments or governmental changes or levies being contested in good
faith and by appropriate proceedings; (iv) Liens in respect of property or assets of Borrower
imposed by law which were incurred in the ordinary course of business, such as carriers’,
warehousemen’s, and mechanics’ Liens, statutory landlord’s Liens, and other similar Liens arising
and paid in the ordinary course of business; (v) Liens incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment insurance and other types
of social security or to secure the performance of tenders, statutory obligations, surety bonds,
bids, leases, government contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business; (vi) licenses granted to other persons in
the ordinary course of Borrower’s business not interfering in any material respect with the
business of Borrower; (vii) licenses, leases or subleases granted in the ordinary course of
Borrower’s business to other persons not interfering in any material respect with the business of
Borrower; (viii) reasonable and ordinary course banker’s Liens, rights of setoff and similar Liens
to secure account fees, returned items, brokers fees, and brokerage claims for purchased securities
incurred on deposits or assets on deposit in the ordinary course of business and Liens Lender has
permitted pursuant to the terms of the applicable Control Agreement; (ix) Liens to secure payment
of worker’s compensation, employment insurance, old age pensions or other social security
obligations of Borrower on which Borrower is current and are in the ordinary course of its
business; provided none of the same diminish or impair Lender’s rights and remedies respecting the
Collateral and (x) Liens upon or in any equipment acquired or held by Borrower (including existing
liens on equipment disclosed in the Disclosure Schedule) to secure the purchase price of such equipment or indebtedness incurred solely for the purposes of
financing the acquisition of such equipment, in an amount not to exceed $500,000, provided that (a)
any Liens for such Indebtedness are confined to the equipment financed, and (b) such Indebtedness
is made on commercially reasonable terms.

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“Regulated Substance” means any substance, material or waste the use, generation, handling,
storage, treatment or disposal of which is regulated by any local or state government authority,
including any of the same designated by any authority as hazardous, genetic, cloning, fetal, or
embryonic.

“Responsible Officer” means each person as authorized by the board of directors of Borrower as set
forth on the Incumbency Certificate.

“Term” means the period from and after the date hereof until the full, final and indefeasible
payment and performance of all Obligations.

“Warrant” means the Warrant in favor of Lender and its affiliates to purchase securities of
Borrower substantially in the form of Exhibit C.

1.2 Interpretation. References to “Articles,” “Sections,” “Exhibits,” and “Schedules” are to
articles, sections, exhibits and schedules herein and hereto unless otherwise indicated. “Hereof,”
“herein” and “hereunder” refer to this Agreement as a whole. “Including” is not limiting. All
accounting and financial computations shall be computed in accordance with generally accepted
accounting principles consistently applied (“GAAP”). “Or” is not necessarily exclusive. All
interest computation interest shall be based on a 360-day year and actual days elapsed.

2.    THE LOANS

2.1 Commitment. Subject to the terms hereof, Lender will make Advances to Borrower up to the
principal amount of the Commitment, before the Commitment Termination Date. Notwithstanding
anything in the Loan Documents to the contrary, Lender’s obligation to make any Advances or to lend
the undisbursed portion of the Commitment shall terminate on the Commitment Termination Date.
Repaid principal of the Advances may not be re-borrowed.

2.2 The Advances. A Note setting forth the specific terms of repayment will evidence each Advance.
No Advance will be made for less than $500,000, unless less than $500,000 remains available under
the Commitment for borrowing. Absence of a Note evidencing any portion of the Loan shall not
impair Borrower’s obligation to repay it to Lender.

2.3 Terms of Payment, Repayment.

     (a) Repayment. Borrower shall repay the principal and pay interest on each Advance on the
terms set forth in the applicable Note. Amounts not paid when due hereunder or under the Note
shall bear interest at the Default Rate. If a court of competent jurisdiction determines that
Lender has received payments that, if interest, would exceed the maximum lawfully permitted, Lender
will instead apply such money to fees and expenses and then to early prepayment of principal.

     (b) ACH. All payments due to Lender must be, at Lender’s option, paid to Lender in cash or
through ACH. Borrower shall execute and deliver the ACH Authorization Form substantially in the
form of Exhibit E. If the ACH payment arrangement is terminated for any reason, Borrower shall
make all payments due to Lender at Lender’s address specified in Section 11.

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     (c) Default Rate. While an Event of Default has occurred and is continuing, interest on the
Loan shall be increased to the Default Rate. Lender’s failure to charge or accrue interest at the
Default Rate during the existence of an Event of Default shall not be deemed a waiver by Lender of
its right or claim thereto.

     (d) Date. Whenever any payment due under the Loan Documents is due on a day other than a
business day, such payment shall be made on the next succeeding business day, and such extension of
time shall be included in the computation of interest or fees, as the case may be.

2.4 Fees. Borrower shall pay to Lender the following:

     (a) Commitment Fee. The Commitment Fee, which has been previously paid by Borrower, and shall
be applied by Lender first to Lender’s Expenses and thereafter to other Obligations;

     (b) Late Fee. On demand, a late charge on any sums due hereunder that are not paid when due,
in an amount equal to 2% of the past due amount, payable on demand.

     (c) Lender’s Expenses. When requested, all Lender’s Expenses. Lender’s Expenses not paid
when due shall bear interest as principal at the Default Rate.

3.    CONDITIONS OF ADVANCES; PROCEDURE FOR REQUESTING ADVANCES

3.1 Conditions Precedent to any and all Advances. The obligation of Lender to make any Advances is
subject to each and every of the following conditions precedent in form and substance satisfactory
to Lender in its sole discretion: (i) this Agreement, a Note evidencing the Advance, the Warrant,
and all other UCC financing statements, and other documents required or as specified herein have been duly authorized, executed
and delivered; (ii) no Default or Event of Default has occurred and is continuing; (iii) delivery
of a notice of Borrowing with respect to the proposed Advance; (iv) Lender’s security interests in
the Collateral are valid and first priority, except for Permitted Liens: and (v) all such other
items as Lender may reasonably deem necessary or appropriate have been delivered or satisfied. The
extension of an Advance prior to the receipt by Lender of any of the foregoing shall not constitute
a waiver by Lender of Borrower’s obligation to deliver such item.

3.2 Procedure for Making Advances. For any Advance, Borrower shall provide Lender an irrevocable
Notice of Borrowing at least 7 business days prior to the desired Funding Date and Lender shall
only be required to make Advances hereunder based upon written requests which comply with the terms
and exhibits of this Loan Agreement (as the same may be amended from time to time), and which are
submitted and signed by a Responsible Officer. Borrower shall execute and deliver to Lender a Note
and such other documents and instruments as Lender may reasonably require for each Advance made.

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4.    CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower grants to Lender a valid, first priority, continuing
security interest in all present and future Collateral in order to secure prompt, full, faithful
and timely payment and performance of all Obligations.

4.2 Inspections. Lender shall have the right upon reasonable prior notice to inspect Borrower’s
Books, including computer files, and to make copies, and in its reasonable discretion to test,
inspect and appraise the Collateral, in order to verify any matter relating to Borrower or the
Collateral.

4.3 Authorization to File Financing Statements. Borrower irrevocably authorizes Lender at any time
and from time to time to file in any appropriate jurisdiction any financing statements and
amendments that: (i) name Collateral as collateral thereunder, regardless of whether any
particular Collateral falls within the scope of the UCC; (ii) contain any other information
required by the UCC for sufficiency or filing office acceptance, including organization
identification numbers; and (iii) contain such language as Lender determines helpful in protecting
or preserving rights against third parties. Borrower ratifies any such filings made prior to the
date hereof.

4.4 Control Agreement Action. Lender shall not exercise exclusive control pursuant to the terms of
a Control Agreement unless an Event of Default has occurred and is continuing.

5.    REPRESENTATIONS AND WARRANTIES

Borrower represents, warrants and covenants as follows:

5.1 Due Organization and Qualification. Borrower is a corporation duly formed, existing and in
good standing under the laws of its state of incorporation and qualified and licensed to do
business in, and is in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified or in which the Collateral is located and
where the failure to be so qualified could reasonably be expected to have an adverse effect on the
Borrower.

5.2 Authority. Borrower has all corporate power and authority, and has taken all actions, and has
obtained all third party consents necessary to execute, deliver, and perform the Loan Documents.

5.3 Disclosure Schedule. All information on the Disclosure Schedule is true, correct and complete
except for de minimus errors.

5.4 Authorization; Enforceability. The execution and delivery hereof, the granting of the security
interest in the Collateral, the incurring of the Obligations, the execution and delivery of all
Loan Documents and the consummation of the transactions herein and therein contemplated have been
duly authorized by all necessary action by Borrower. The Loan Documents constitute legal, valid
and binding obligations of Borrower, enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy or similar laws relating to enforcement of creditors’
rights generally.

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5.5 Name and Location. Except as set forth on the Disclosure Schedule, Borrower has not done
business under any name other than that specified on the signature page hereof. The chief
executive office, principal place of business, and the place where Borrower maintains its records
concerning the Collateral is set forth in Section 11. The Collateral is presently located at the
address(es) set forth in Section 1 l and on the Disclosure Schedule.

5.6 Litigation. As of the date hereof or the date of the applicable Notice of Borrowing, as the
Disclosure Schedule is supplemented by Borrower, all actions or proceedings pending by or against
Borrower before any court or administrative agency are set forth on the Disclosure Schedule.

5.7 Financial Statements. All financial statements fairly represent the financial condition of the Borrower. All
statements respecting Collateral that have been or may hereafter be delivered by Borrower to Lender
are true, complete and correct in all material respects for the periods indicated.

5.8 Solvency. Borrower is solvent and able to pay its debts (including trade debts) as they come
due.

5.9 Taxes. Borrower has filed and will file all required tax returns, and has paid and will pay
all taxes it owes (except for taxes being contested in good faith and for which adequate reserves
are kept) other than where the failure to comply would not reasonably be expected to have an
adverse effect on Borrower.

5.10 Rights; Title to Assets. Borrower possesses and owns all necessary assets, rights,
trademarks, trade names, copyrights, patents, patent rights, franchises and licenses which it needs
to conduct of its business as now operated or proposed to be operated. Borrower has good title to
its assets, free and clear of any Liens, except for Permitted Liens.

5.11 Full Disclosure. No written representation, warranty or other statement made by Borrower in
any Loan Document, certificate or statement furnished to Lender contains any untrue statement of a
material fact when taken as a whole or omits to state a material fact necessary in order to make
the statements contained in such certificates or statements not misleading.

5.12 Regulated Substances. Borrower complies and will comply in all material respects with all
laws respecting Regulated Substances.

5.13 Reaffirmation. Each Notice of Borrowing will constitute (i) a warranty and representation in
favor of Lender that there does not exist any Default and (ii) a reaffirmation as of the date
thereof of all of the representations and warranties contained in this Agreement and the Loan
Documents except for representations and warranties which are made to be effective as of a specific
date, which are no longer true solely as a result of the passage of time, and for which exceptions
thereto which have been disclosed in writing to the Lender and which have been approved in writing
by the Lender, other than supplements to the Disclosure Schedule contemplated under Section 5.6,
for which no approval by Lender is required.

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6.    AFFIRMATIVE COVENANTS

Borrower covenants and agrees that it shall do all of the following until the Obligations are paid
in full and the Commitment Termination Date has passed:

6.1 Good Standing and Compliance. Borrower shall maintain all governmental licenses, rights and
agreements necessary for its operations or business and comply in all material respects with all
statutes, laws, ordinances and government rules and regulations to which it is subject.

6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Lender: (i) as soon as
prepared, and no later than 45 days after the end of each calendar month, a balance sheet, income
statement and cash flow statement covering Borrower’s operations during such period; (ii) as soon
as prepared, but no later than 90 days after the end of the fiscal year, or such other time period
as approved by the Borrower’s Board of Directors, audited financial statements prepared in
accordance with GAAP, together with an opinion that such financial statements fairly present
Borrower’s financial condition by an independent public accounting firm reasonably acceptable to
Lender; (iii) immediately upon notice thereof, a report of any legal or administrative action
pending or threatened against Borrower which an adverse determination could reasonably be expected
to result in liability to Borrower in excess of $50,000; and (iv) such other financial information
as Lender may reasonably request from time to time. Financial statements delivered pursuant to
subsections (i) and (ii) above shall be accompanied by a certificate signed by a Responsible
Officer (each an “Officer’s Certificate”) in the form of Exhibit F.

6.3 Notice of Defaults. Within 5 days after the occurrence of any Default or Event of Default, an
Officer’s Certificate setting forth the facts relating to or giving rise thereto, and the
Borrower’s proposed action with respect thereto.

6.4 Use; Maintenance. Borrower, at its expense, shall (i) maintain the Collateral in good
condition, reasonable wear and tear excepted, and will comply in all material respects with all
laws, rules and regulations regarding use and operation of the Collateral and (ii) repair or
replace any lost or damaged Collateral; provided that, Borrower may sell inventory in the ordinary
course of business and may dispose of worn out or obsolete equipment.

6.5 Insurance. Borrower, at its own expense, shall maintain insurance in amounts and coverages
reasonably satisfactory to Lender. Each insurance shall: (i) name Lender loss payee or additional
insured, as appropriate, and (ii) require the insurer to give Lender at least 30 days prior written
notice of cancellation. Borrower shall furnish all certificates of insurance reasonably required
by lender.

6.6 Loss Proceeds. So long as no Event of Default has occurred and is continuing, any proceeds of
insurance on or condemnation of Collateral shall, at Borrower’s election and so long as Lender’s
security interest in such proceeds or repaired or replacement Collateral remains first priority, be
used either to repair or replace such Collateral or otherwise applied to the purchase or
acquisition of property useful to Borrower’s business.

6.7 Further Assurances. At any time and from time to time, Borrower shall execute and deliver such
further instruments and take such further action as Lender may reasonably request to

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effect the
intent and purposes hereof, to perfect and continue perfected and of first priority Lender’s
security interests in the Collateral, and to effect and maintain ACH payment arrangements.

7.    NEGATIVE COVENANTS

Borrower will not do any of the following until the Obligations are paid in full and the Commitment
Termination Date has passed:

7.1 Location of Collateral. Change its chief executive office or principal place of business or
remove, except in the ordinary course of Borrower’s business, the Collateral (other than inventory
sold in the ordinary course of business) or Borrower’s Books from the premises listed in Section I
I without giving written notice to Lender within 30 days of such change or removal.

7.2 Extraordinary Transactions. Enter into any sale, lease, license or other disposition of its
assets, other than such transactions entered into in the ordinary course of Borrower’s business.

7.3 Restructure. Make any change in Borrower’s financial structure or business operations which
results in a change of control of Borrower; cause a Liquidation Event; or suspend operation of
Borrower’s business.

7.4 Liens. Create, incur, assume or suffer to exist any Lien of any kind with respect to any of
its property, whether now owned or hereafter acquired, except for Permitted Liens.

7.5 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, other than Permitted
Indebtedness or cause or suffer any Subsidiary to create, incur, assume or suffer to exist any
Indebtedness, other than Permitted Indebtedness.

7.6 Distributions. Pay any dividends or distributions, or redeem or purchase, any capital stock,
except (i) repurchases of capital stock from departing employees or directors, under repurchase
agreements approved by the Borrower’s Board of Directors or (ii) in connection with stock options
and warrants exchanged or exercised in connection with issuances of Borrower’s capital stock

7.7 Transactions with Affiliates. Directly or indirectly enter into any transaction with any
affiliate which is on terms less favorable to Borrower than would be obtained in an arm’s length
transaction with a non-affiliated entity; provided, any such transaction shall not be a breach of
this Section 7.7 if approved by a disinterested majority of the Borrower’s Board of Directors.

7.8 Compliance. (i) Become an “investment company” under the Investment Company Act of 1940 or
extend credit to purchase or carry margin stock; (ii) fail to meet the minimum funding requirements
of ERISA; (iii) permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur;
(iv) fail to comply with the Federal Fair Labor Standards Act; or (v) violate any other material
law or material regulation where such violation could reasonably be expected to adversely affect
Lender or have a material adverse effect on the Borrower and its subsidiaries taken as a whole.

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7.9 UCC Effectiveness. Change its name, jurisdiction of organization, or take any other action
that could render Lender’s financing statements misleading under the Code, without giving Lender 30
days advance written notice of such action.

7.10 Deposit and Securities Accounts. Maintain any deposit accounts or accounts holding securities
owned by Borrower except accounts in which Lender has obtained a perfected first priority security
interest.

8.    EVENTS OF DEFAULT

Any one or more of the following shall constitute an Event of Default by Borrower hereunder:

8.1 Payment. Borrower (i) fails to pay when due and payable in accordance with the Loan Documents
any portion of the Obligations, or (ii) cancels an ACH payment or transfer Lender has initiated in
conformity with the terms hereof provided, however, that an Event of Default shall not occur on
account of a failure to pay due solely to an administrative or operational error if Borrower had
the funds to make the payment when due and makes the payment not later than 5 days following
Borrower’s knowledge of such failure to pay.

8.2 Certain Covenant Defaults. Borrower fails to perform any obligation under Section 6.5 or 6.6,
or violates any of the covenants contained in Section 7.

8.3 Other Covenant Defaults. Borrower fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant, or agreement contained in this Agreement, in any of the other
Loan Documents, or in any other present or future agreement between Borrower and Lender and has
failed to cure such failure within 30 days after its occurrence.

8.4 Attachment. Any material portion of Borrower’s assets is attached, seized, subjected to a
government levy, lien, writ or distress warrant, or comes into the possession of any trustee or
receiver and the same is not returned, removed, waived, stayed, discharged or rescinded within 30
days.

8.5 Other Agreements. There is a default in any agreement to which Borrower is a party resulting
in a right by a third party, whether or not exercised, to accelerate the maturity of any
Indebtedness, in a principal amount greater than $50,000.

8.6 Judgments. One or more judgments for an aggregate of at least $50,000 is rendered against
Borrower and remains unsatisfied and unstayed for more than 30 days.

8.7 Injunction. Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct any material part of its business affairs, or if a judgment or other claim
becomes a Lien upon any portion of Borrower’s assets in excess of $50,000.

8.8 Misrepresentation. Any written representation, statement, or report made to Lender by Borrower
was false or misleading when made in any material respect.

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8.9 Enforceability. Lender’s ability to enforce its rights against Borrower or any Collateral is
impaired in any material respect, or Borrower asserts that any Loan Document is not a legal, valid
and binding obligation of Borrower enforceable in accordance with its terms.

8.10 Involuntary Bankruptcy. An involuntary bankruptcy case remains undismissed or unstayed for 60 days or, if earlier, an
order granting the relief sought is entered.

8.11 Voluntary Bankruptcy or Insolvency. Borrower commences a voluntary case under applicable
bankruptcy or insolvency law, consents to the entry of an order for relief in an involuntary case
under any such law, or consents or is subject to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian or other similar official of Borrower or any
substantial part of its property, or makes an assignment for the benefit of creditors, or fails
generally or admits in writing to its inability to pay its debts as they become due, or takes any
corporate action in furtherance of any of the foregoing.

8.12 Merger without Assumption. Borrower or all or substantially all of Borrower’s assets are
acquired by or merged into any other business entity where more than 50% of Borrower’s voting power
is transferred by existing shareholders of Borrower, and such acquirer or resulting entity either:
(i) does not pay off the Obligations at the closing of the acquisition, merger or sale; or (ii)
does not provide an unconditional, unlimited guaranty of the Obligations in form and substance
satisfactory to Lender and is of a credit quality unacceptable to Lender.

9.    LENDER’S RIGHTS AND REMEDIES

9.1 Rights and Remedies. Upon the occurrence and continuance of any Event of Default, Lender may,
at its election, without notice of election and without demand, do any one or more of the
following, all of which are authorized by Borrower: (i) accelerate and declare the Loan and all
Obligations immediately due and payable; (ii) make such payments and do such acts as Lender
considers necessary or reasonable to protect its security interest in the Collateral, with such
amounts becoming Obligations bearing interest at the Default Rate; (iii) exercise any and all other
rights and remedies available under the UCC or otherwise; (iv) require Borrower to assemble the
Collateral at such places as Lender may designate; (v) enter premises where any Collateral is
located, take, maintain possession of, or render unusable the Collateral or any part of it; (vi)
without notice to Borrower, set off and recoup against any portion of the Obligations; (vii) ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell
the Collateral, in connection with which Borrower hereby grants Lender a license to use without
charge Borrower’s premises, labels, name, trademarks, and other property necessary to complete,
advertise, and sell any Collateral; and (viii) sell the Collateral at one or more public or private
sales.

9.2 Power of Attorney in Respect of the Collateral. Borrower hereby irrevocably, until the
Obligations are paid in full and the Commitment Termination Date has passed, appoints Lender (which
appointment is coupled with an interest) its true and lawful attorney in fact with full power of
substitution, for it and in its name to, after an Event of Default has occurred and is continuing:
(i) ask, demand, collect, receive, sue for, compound and give acquittance for any and all Collateral with full power to settle, adjust or
compromise any claim, (ii) receive payment of and endorse the name of Borrower on any items of
Collateral, (iii) make all demands, consents

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and waivers, or take any other action with respect to,
the Collateral, (iv) file any claim or take any other action, in Lender’s or Borrower’s name, which
Lender may reasonably deem appropriate to protect its rights in the Collateral, or (v) otherwise
act with respect to the Collateral as though Lender were its outright owner.

9.3 Charges. If Borrower fails to pay any amounts required hereunder to be paid by Borrower to any
third party, Lender may at its option pay any part thereof and any amounts so paid including
Lender’s Expenses incurred shall become Obligations, immediately due and payable, bearing interest
at the Default Rate, and secured by the Collateral. Any such payments by Lender shall not
constitute an agreement to make similar payments or a waiver of any Event of Default.

9.4 Remedies Cumulative. Lender’s rights and remedies under the Loan Documents and all other
agreements with Borrower shall be cumulative. Lender shall have all other rights and remedies as
provided under the UCC, by law, or in equity. No exercise by Lender of one right or remedy shall
be deemed an election, and no waiver by Lender of any Event of Default shall be deemed a continuing
waiver. No delay by Lender shall constitute a waiver, election, or acquiescence.

9.5 Application of Collateral Proceeds. Lender will promptly apply proceeds of sale, to the extent
actually received in cash, in the manner and order it determines in its sole discretion, and as
prescribed by applicable law.

10.    WAIVERS; INDEMNIFICATION

10.1 Waivers. Without limiting the generality of the other waivers made by Borrower herein, to the
maximum extent permitted under applicable law, Borrower hereby irrevocably waives all of the
following: (i) any right to assert against Lender as a defense, counterclaim, set-off or
crossclaim, any defense (legal or equitable), set-off, counterclaim, crossclaim and/or other claim
either (a),which Borrower may now or at any time hereafter have obtained by assignment from a third
party, or (b) arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity and/or enforceability of any Loan Document, or any security interest; (ii)
presentment, demand and notice of presentment, dishonor, notice of intent to accelerate, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all
accounts, documents, instruments, chattel paper and guaranties at any time held by Lender on which
Borrower may in any way be liable and hereby ratifies and confirms whatever Lender may do in this
regard; (iii) the benefit of all marshalling, valuation, appraisal and exemption laws; (iv) the
right, if any, to require Lender to (a) proceed against any person liable for any of the
Obligations as a condition to or before proceeding hereunder; or (b) foreclose upon, sell or
otherwise realize upon or collect or apply any other property, real or personal, securing any of
the Obligations, as a condition to, or before proceeding hereunder; (v) any demand for possession
before the commencement of any suit or action to recover possession of Collateral; and (vi) any requirement
that Lender retain possession and not dispose of Collateral until after trial or final judgment.

10.2 Lender’s Liability for Collateral. Lender shall not in any way or manner be liable or
responsible for: (i) the safekeeping of any Collateral; (ii) any loss or damage thereto occurring

12

 

or arising in any manner or fashion from any cause other than Lender’s gross negligence or willful
misconduct; (iii) any diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person or entity whomsoever. Except as noted in
the preceding sentence, all risk of loss, damage or destruction of the Collateral shall be borne by
Borrower. Lender will have no responsibility for taking any steps to preserve rights against any
parties respecting any Collateral. Lender’s powers hereunder are conferred solely to protect its
interest in the Collateral and do not impose any duty to exercise any such powers. None of Lender
or any of its officers, directors, employees, agents or counsel will be liable for any action
lawfully taken or omitted to be taken hereunder or in connection herewith (excepting gross
negligence or willful misconduct), nor under any circumstances have any liability to Borrower for
lost profits or other special, indirect, punitive, or consequential damages. Lender retains any
documents delivered by Borrower only for purposes relating to the Agreement and for such period as
Lender, at its sole discretion, may determine necessary, after which time Lender may destroy such
records without notice to or consent from Borrower.

10.3 Indemnification. Borrower shall defend, indemnify, and hold Lender and each of its officers,
directors, employees, counsel, partners, agents and attorneys-in-fact (each, an “Indemnified
Person”) harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Lender’s
Expenses and reasonable attorney’s fees and the allocated cost of in-house counsel) of any kind or
nature whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement and any other Loan Documents, or the transactions contemplated
hereby and thereby. with respect to noncompliance with laws or regulations respecting Regulated
Substances, government secrecy or technology export, or any Lien not created by Lender or right of
another against any Collateral, even if the Collateral is foreclosed upon or sold pursuant hereto,
and with respect to any investigation, litigation or proceeding before any agency, court or other
governmental authority relating to this Agreement or the Advances or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively,
the “Indemnified Liabilities”); provided, that Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of such Indemnified Person. The obligations in this Section shall survive the
Term. At the election of any Indemnified Person, Borrower shall defend such Indemnified Person
using legal counsel satisfactory to such Indemnified Person, at the sole cost and expense of
Borrower. A person seeking to be indemnified under this Section 10.3 shall notify Borrower of any
event requiring indemnification within 30 days following such person’s receipt of notice of
commencement of any action of proceeding, or such person’s obtaining knowledge of the occurrence of
any other event, giving rise to a claim for indemnification hereunder. Borrower will be entitled (but not obligated) to participate in the
defense or settlement of any such action or proceeding or to participate in any negotiations to
settle or otherwise resolve any claim using counsel of its choice. All amounts owing under this
Section shall be paid within 30 days after written demand.

13

 

11.    NOTICES

All notices shall be in writing and personally delivered or sent by certified mail, postage
prepaid, return receipt requested, or by confirmed facsimile, at the respective addresses set forth
below:

	 	 	 
	If to Borrower:

	 	If to Lender:
	 
	 	 
	Restore Medical Inc.

	 	Lighthouse Capital Partners V, LP
	2800 Patton Road

	 	500 Drake’s Landing Road
	St. Paul, Minnesota 55113

	 	Greenbrae, California 94904
	Attention: Chief Financial Officer

	 	Attention: Contract Administrator
	FAX: (651) 634-3025

	 	FAX: (415) 925-3387

12.    GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties’
respective successors and permitted assigns. Borrower may not assign any rights hereunder without
Lender’s prior written consent, which consent may be granted or withheld in Lender’s sole
discretion. Lender shall have the right without the consent of or notice to Borrower to sell,
transfer, negotiate, or grant participation in all or any part of any Loan Document.

12.2 Time of Essence. Time is of the essence for the performance of all Obligations.

12.3 Severability of Provisions. Each provision hereof shall be severable from every other
provision in determining its legal enforceability.

12.4 Entire Agreement. This Agreement and each of the other Loan Documents dated as of the date
hereof, taken together, constitute and contain the entire agreement between Borrower and Lender
with respect to their subject matter and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications between the parties, whether written or oral.
This Agreement is the result of negotiations between and has been reviewed by the Borrower and
Lender as of the date hereof and their respective counsel; accordingly, this Agreement shall be
deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or
against Borrower or Lender. This Agreement may only be modified with the written consent of Lender
and Borrower. Any waiver or consent with respect to any provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on Borrower in any one case shall entitle Borrower to any
other or further notice or demand in similar or other circumstances.

12.5 Reliance by Lender. All covenants, agreements, representations and warranties made herein by
Borrower shall, notwithstanding any investigation by Lender, be deemed to be material to and to
have been relied upon by Lender.

12.6 No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Agreement or any of
the other Loan Documents shall be payable without notice or demand and shall be payable in United
States Dollars without set-off or reduction of any manner whatsoever.

14

 

12.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which, when taken together, shall constitute one and
the same original instrument.

12.8 Survival. All covenants, representations and warranties made in this Agreement shall continue
in full force and effect so long as any Obligations remain outstanding.

12.9 No Original Issue Discount. Borrower and Lender acknowledge and agree that the Warrant is
part of an investment unit within the meaning of Section 1273(c)(2) of the Internal Revenue Code,
which includes the Loan. Borrower and Lender further agree as between them, that the fair market
value of the Warrant is $100 and that, pursuant to Treas. Reg. § 1.1273-2(h), $100 of the issue
price of the investment unit will be allocable to the Warrant and the balance shall be allocable to
the Loans. Borrower and Lender agree to prepare their federal income tax returns in a manner
consistent with the foregoing and, pursuant to Treas. Reg. § 1.1273, the original issue discount on
the Loan shall be considered to be zero.

12.10 Relationship of Parties. The relationship between Borrower and Lender is, and at all times
shall remain, solely that of a borrower and lender. Lender is not a partner or joint venturer of
Borrower; nor shall Lender under any circumstances be deemed to be in a relationship of confidence
or trust or have a fiduciary relationship with Borrower or any of its affiliates, or to owe any
fiduciary duty to Borrower or any of its affiliates. Lender does not undertake or assume any
responsibility or duty to Borrower or any of its affiliates to select, review, inspect, supervise,
pass judgment upon or otherwise inform any of them of any matter in connection with its or their
property, the Loans, any Collateral or the operations of Borrower or any of its affiliates.
Borrower and each of its affiliates shall rely entirely on their own judgment with respect to such matters, and any review,
inspection, supervision, exercise of judgment or supply of information undertaken or assumed by
Lender in connection with such matters is solely for the protection of Lender and neither Borrower
nor any affiliate is entitled to rely thereon.

12.11 Choice of Law and Venue; Jury Trial Waiver. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER AND LENDER HEREBY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE CITY AND COUNTY OF SAN FRANCISCO, STATE
OF CALIFORNIA. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE
ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.

15

 

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

	 	 	 	 	 
	RESTORE MEDICAL INC.	 	LIGHTHOUSE CAPITAL
	 	 	  PARTNERS V, L.P.
	 

	 	By:
	 	LIGHTHOUSE MANAGEMENT
	 

	 	 	 	PARTNERS V, L.L.C., its general
	 

	 	 	 	partner

	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Susan L. Critzer
	 	 	 	By:
	 	/s/ Thomas Conneely	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name: Susan L. Critzer	 	 	 	Name: Thomas Conneely	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title: Chief Executive Officer	 	 	 	Title: Vice President	 	 

	 	 	 
	Exhibit A

	 	Collateral Description
	Exhibit B

	 	Form of Note
	Exhibit C

	 	Form of Preferred Stock Warrant
	Exhibit D

	 	Form of Notice of Borrowing
	Exhibit E

	 	Form of Incumbency Certificate
	Exhibit F

	 	Form of Officers Certificate
	Exhibit G

	 	ACH Authorization
	Exhibit H

	 	Form of Negative Pledge Agreement
	Exhibit I

	 	Control Agreement
	Schedule I

	 	Disclosure Schedule

16

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