Document:

EX-10.18

 

Exhibit 10.18

LEASE

BY AND BETWEEN

MOTOROLA, INC., a Delaware corporation

as Landlord

and

NANOSPHERE, INC. a Delaware corporation,

as Tenant.

 

LEASE

     
THIS LEASE (“Lease”), made and entered into this 24th day of March, 2003, between MOTOROLA,
INC., a Delaware corporation, having an office at 1303 East Algonquin Road, Schaumburg, Illinois
60196, (hereinafter called “Landlord”) and NANOSPHERE, INC., a Delaware corporation, having an
address at 1818 Skokie Boulevard, Northbrook, IL 60062 (hereinafter called “Tenant”);

     1. Premises.

     A. 
Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord,
40,945 rentable square feet of space (including 145 square feet of shared dock space) as
depicted in the floor plan attached hereto has Exhibit A (hereinafter the “Premises”) in the building
owned by Landlord and located at 4100 Commercial Avenue, Northbrook, IL, (hereinafter the
“Building”),
which Building, consists of 83,172 rentable square feet.

     B. Landlord hereby grants to Tenant, during the Term of this Lease or any extension
thereof, in a ratio of 3.5 parking spaces per 1,000 square feet of rentable space leased by
Tenant, the non-exclusive use in common with other tenants or occupants of the Building of 143
parking spaces for use by Tenant’s employees, invitees, visitors and agents of the parking spaces
adjacent to the Building.

     2. Term.

     A. The term of this Lease shall be for a period of seven (7) years, and three months,
which term shall commence on March 24, 2003 (hereinafter “Commencement Date”) and end on
May 31, 2010; (hereinafter “Term”) said Term subject to extensions pursuant to agreement of
the parties or any option hereinafter set forth.

     B. 
In the event possession of the Premises is delivered to Tenant after the Commencement Date
set forth in Paragraph 2.A. hereinabove, the Term shall be deemed to commence on the date possession
is delivered to Tenant and the termination date shall be extended accordingly, but in the event the new
termination date would occur other than the last day of a calendar month, said termination date
shall be on the last day of that month. If Landlord fails to deliver the Premises to Tenant by May
1,2003, it shall be a default of Landlord under this Lease.

      3. Base Rent.

     Tenant
shall pay to Landlord a late charge equal to One Thousand Two Hundred and 00/100
Dollars ($1,200.00) for any installment of monthly Base Rent (defined below) or any other amount
payable under this Lease that is paid late as liquidated damages to compensate Landlord for costs
and inconveniences of special handling and disruption of cash flow. Late charges and interest in
the amount of the higher of either ten percent (10%) per annum or prime rate plus two points per
annum as declared from time to time by The Northern Trust Bank located in Chicago, Illinois shall
commence on the fifth business day of each calendar month. In any five (5) year period during the
Lease term, Tenant shall not be charged late fees or interest on two (2) late payments so long as
Tenant pays the late amount within three (3) days after receipt of a notice indicating a late
payment.

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     A. Base Rent — Initial Term.

     During the initial Term of the Lease, Tenant will pay to Landlord, in advance and without
demand at the office of the Landlord or at such other place as Landlord from time to time may
notify Tenant in writing, monthly base rent, (hereinafter “Base Rent”) payable on the first day of
each calendar month pursuant to the following schedule:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lease Years	 	Months	 	Annual Base Rent Rate	 	Monthly Base Rent
	1
	 	 	1-3	 	 	$11.00/SF	 	Abated
	1
	 	 	4-12	 	 	$11.00/SF	 	$	37,532.92	 
	2
	 	 	13-24	 	 	$11.28/SF	 	$	38,471.24	 
	3
	 	 	25-36	 	 	$11.56/SF	 	$	39,433.02	 
	4
	 	 	37-48	 	 	$11.85/SF	 	$	40,418.85	 
	5
	 	 	49-60	 	 	$12.14/SF	 	$	41,429.32	 
	6
	 	 	61-72	 	 	$12.45/SF	 	$	42,465.05	 
	7
	 	 	73-84	 	 	$12.76/SF	 	$	43,526.68	 
	8
	 	 	85-87	 	 	$13.08/SF	 	$	44,614.84	 

with appropriate proration of Base Rent if the initial Term or any portion of the Term hereof
should commence on a date other than the first day of a calendar month. The first day of month
four (4) shown above is the Base Rent Commencement Date per Section 3B below.

     For purposes of this Lease, the term “Lease Year” means the one year period beginning on the
Commencement Date and ending 364 days thereafter and the anniversary thereof each year. For
purposes of this Lease, the partial month of March, 2003 shall be considered for purposes of
computation of the rental abatement as a “Lease Month”.

     B. Rent Commencement Dates — Base Rent Abatement.

     Tenant shall commence paying Base Rent to Landlord for the Premises on the earlier of the
first (1st) day of the fourth (4h) month after the Commencement Date or
July 1, 2003 (hereinafter the “Base Rent Commencement Date”). Tenant shall commence paying
Additional Rent to Landlord for the Premises thirty (30) days after the Commencement Date, but
in no event later than April 1, 2003, (hereinafter the “Additional Rent Commencement Date”).
Base Rent shall abate for the Premises until the Base Rent Commencement Date.

     C. Additional Rent.

     In addition to the Base Rent required to be paid by Tenant under this Section 3, Tenant
shall pay to Landlord as additional rent all other amounts required to be paid under the terms
of this Lease and required to be paid by Tenant under Section 50 below, which amounts constitute
costs for real estate taxes, insurance and common area maintenance. All amounts payable to
Landlord under this Lease constitute rent and shall be payable without notice, demand, deduction
or offset, except as set forth in this Lease, to such person and at such place as Landlord may
from time to time designate by written notice to Tenant.

     4. Condition of Premises/Landlord’s Work.

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     A. Landlord shall have no obligation to make any improvements or alterations to the Premises
or the Building whatsoever prior to the Commencement Date, and Tenant accepts the Premises in an
“AS IS” condition, with all faults; the foregoing, however, shall not relieve Landlord of its maintenance
and repair obligations with respect to the Building as otherwise set forth in this Lease or Landlord’s
responsibility to repair latent defects in the Premises. Provided, however that

	 	(i)	 	Within sixty (60) days after the Commencement Date of this Lease, Landlord agrees
to install a demising wall between the Premises and the other areas of the Building as
indicated on Exhibit A attached hereto;
	 
	 	(ii)	 	Landlord agrees to install or cause to be installed an electric meter for the
Premises and such other separate utility meters as Landlord determines are feasible for
the Premises at Landlord’s expense and not as an operating cost of the Building;
	 
	 	(iii)	 	Landlord agrees to deliver the Premises to Tenant in a broom clean condition; and
	 
	 	(iv)	 	Landlord agrees to replace the floor tiles in the computer room that are damaged
or curled at Landlord’s expense.

     B. Tenant Improvements.

     With respect to Tenant Improvements, the parties agree as follows:

     (i) Landlord and Tenant acknowledge and agree that Tenant is hereby authorized to construct
and install at the Premises those improvements (hereinafter the “Tenant Improvements”) described
in Exhibit B attached hereto and incorporated herein. Tenant shall, at its sole expense (but
subject to reimbursement by Landlord from the Tenant Improvement Allowance described below),
construct the Tenant Improvements as described in Exhibit B in accordance with the plans and
specifications. The plans and specifications for the Tenant Improvements shall be subject to
Landlord’s approval (which approval or disapproval, and in the case of a disapproval with written
reasons for the disapproval, shall be given by Landlord within five (5) business days after
receipt of such plans and specifications for initial submissions and within three (3) business
days after receipt of such plans and specifications that have been modified or corrected) which
shall not be, unreasonably withheld or delayed by Landlord.

     (ii) Tenant agrees that it will apply for and obtain any required building permits. All
construction shall be performed in a workmanlike manner with valid permits. If any improvements to
the Building or Premises are required by the local municipality due to the Tenant Improvements or
alterations requested by Tenant, such additional improvements shall be at Tenant’s expense.

     C. Tenant Improvement Allowance.

     (i) Landlord hereby agrees to provide Tenant with a tenant improvement allowance of Five and
00/100 Dollars ($5.00) per rentable square foot or Two Hundred Four Thousand Seven Hundred Twenty-Five
and 00/100 Dollars ($204,725.00) (hereinafter the “Tenant Improvement Allowance”). Tenant shall have
the right to utilize all or any portion of the Tenant Improvement Allowance for costs associated with
relocating to the Premises and for construction of the Tenant Improvements including, but not limited
to, costs attributable to construction of the Tenant Improvements, architecture, design and engineering
fees, costs incurred for the purchase of

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furniture, furniture systems, telecommunication systems, management information systems,
moving costs and other costs associated with the relocation to the Premises.

     (ii) The Tenant Improvement Allowance will be paid to Tenant or Tenant’s contractors for
construction of the Tenant Improvements and/or other permitted costs as outlined above. If the
Tenant Improvements cost more than the Tenant Improvement Allowance, Tenant shall pay for such
overage. One-half of the Tenant Improvement Allowance will be paid to Tenant on or before thirty
(30) days after the Commencement Date. Upon payment by Tenant of Base Rent on the Base Rent
Commencement Date, the remainder of the Tenant Improvement Allowance will be paid to Tenant, at
Tenant’s option, either to Tenant or to Tenant’s contractors upon completion of the Tenant
Improvements (or completion of such portion of the Tenant Improvements or other allowable costs to
equal the Tenant Improvement Allowance) and upon satisfaction of the following requirements: (i)
Landlord has received Tenant’s direction to make such disbursements at least fifteen (15) days
prior to the date such sums are due to Tenant or Tenant’s contractors, (ii) Tenant has delivered to
Landlord such sworn statements, affidavits and lien waivers from all contractors, subcontractors
and material suppliers as Landlord may reasonably require and (iii) Tenant has delivered to
Landlord reasonable detail, invoices and backup to support the disbursement of the Tenant
Improvement Allowance.

     (iii) Landlord shall have the right to approve the list of Tenant’s contractors and
subcontractors.

     (iv) Any unused portion of the Tenant Improvement Allowance may be utilized by Tenant as a
credit applicable to Base Rent and Additional Rent until the Tenant Improvement Allowance is fully
utilized by Tenant, if Tenant’s cost of construction of its Tenant Improvements and Tenant’s costs
associated with relocation to the Premises do not exhaust the Tenant Improvement Allowance.

     5. Use.

     Tenant shall have the right to use the Premises for any lawful purpose permitted by applicable
zoning ordinances. Tenant in its use and occupancy of the Premises shall not commit waste, nor
overload the floors or structure, nor subject the Premises to any use which would tend to damage
any portion thereof, provided such tendency to cause damage is reasonably foreseeable.

     All of the portions of the Building made available by Landlord for use in common to tenants
and their employees and invitees (“Common Areas”) shall at all times shall remain subject to
Landlord’s exclusive control and Landlord shall be entitled to make such changes in the Common
Areas as it deems appropriate, so long as access to the Premises is not materially changed and
Tenant’s occupancy of the Premises for its desired use is not interrupted.

     6. Security Deposit.

     Tenant has deposited or has agreed that Landlord may deposit out of the Tenant Improvement
Allowance, the sum of Seventy-Five Thousand and 00/100 Dollars ($75,000.00) (hereinafter the
“Security Deposit”) with Landlord concurrently with the full execution and delivery of this Lease.
This Security Deposit will be returned to Tenant without interest within thirty (30) days after
the expiration or earlier termination of the Lease and upon return of the Premises to Landlord in
full compliance with the terms of this Lease. In the event Tenant defaults

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under any provision of this Lease, Landlord may, after written notice to Tenant and after the
expiration of applicable cure periods, apply all, or any part of the Security Deposit to amounts
owed by Tenant hereunder. In the event Landlord elects to apply the Security Deposit as provided
for above, Tenant shall promptly restore such deposit to the original amount. Landlord may, at its
discretion, commingle such funds with its other funds.

     7. Compliance.

     Tenant shall, during the Term of this Lease conform the use Tenant makes of the Premises to
all applicable laws, statutes, orders, ordinances, rules and regulations of all federal, state or
political subdivisions having jurisdiction over the Premises, now in force or that may be enacted
hereafter, provided that the provisions of this Paragraph 7 shall not require the Tenant to
structurally rebuild, the Premises and/or the improvements forming a part of the Premises to make
said Premises and/or improvements comply with any such laws, statutes, orders, ordinances, rules or
regulations, unless such structural improvements are required due to the specific use that Tenant
makes of the Premises. To Landlord’s knowledge, since the date that is two (2) years prior to the
Commencement Date, Landlord has not received any written notice from any governmental body that the
Building violates in any material respect any governmental law or regulation, which remains
unresolved with the issuing governmental body.

     8. No Waste or Damage.

     Tenant shall not commit any waste upon or do any damage to the Premises. Tenant shall not use
or permit the use of the Premises for any unlawful purpose. Tenant shall not permit any rubbish,
refuse or garbage to accumulate or create a fire hazard in or about the Premises. In connection
with its occupancy of the Premises, Tenant shall not use the Premises in violation of any laws,
ordinances, regulations or orders of any duly constituted authorities of the city, county, state
and federal government.

     
9. Changes, Alterations and Additions.

     No material changes, alterations or additions shall be made to the Premises by Tenant without
the prior approval of Landlord, which approval shall not be unreasonably withheld. For purposes of
this Section 9, a “material” change, alteration or addition shall be a change that requires the
expenditure of a sum in excess of Twenty-Five Thousand and 00/100 Dollars ($25,000.00). Prior to
making any such changes, alterations or additions, Tenant shall submit written plans and drawings
respecting same to Landlord and Landlord shall approve or disapprove same within fifteen (15) days
after receipt thereof. All changes, alterations and additions shall comply with the applicable
City, County and State laws, statutes, orders, ordinances, rules and regulations. Landlord
agrees, if necessary, to join in any applications to governmental authorities for such permits as
may be required to do the work contemplated in this Paragraph 9. Any Tenant Improvements,
permanent additions to or alterations of the Premises, except removable paneling and wall fixtures
and furniture and trade fixtures (and further excluding all signs, and goods and materials used in
the Tenant’s business) shall become a part of the realty and belong to Landlord unless otherwise
agreed by Landlord and Tenant. If Landlord so requests at least three (3) months before the
expiration of the Lease, Tenant shall remove its Tenant Improvements and other alterations to the
Premises at the expiration of the Lease and restore the Premises to an office condition or to such
condition as existed immediately before the installation of the Tenant

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Improvements or alterations. In no event will Tenant be required to remove the labs existing
in the Premises upon the Commencement Date. Tenant’s removable paneling and wall fixtures and
furniture, trade fixtures, signs, laboratory equipment, goods and materials used in Tenant’s
business shall at all times remain personal property and may be removed from time to time by
Tenant provided, however, that Tenant shall be responsible for the cost of repair and restoration
of any physical injury to the Premises caused by the removal of any such property. The furniture
listed in Exhibit C to this Lease shall not belong to Tenant, unless and until the provisions of
Section 58B are satisfied. The items listed in Exhibit D (the “Landlord Equipment Inventory”) to
this Lease including the generators, UPS equipment, security system and fume hoods shall at all
times remain the property of Landlord.

     10. Ingress and Egress.

     The Landlord grants to Tenant the nonexclusive right to ingress and egress to the Premises
over (a) the existing streets and highways adjoining the Premises and (b) any and all portions of
the property and the Building of which the Premises are a part. Tenant shall have full and
unimpaired access to the Premises at all times, twenty-four (24) hours a day, seven (7) days a
week, except as provided in Paragraphs 12, 16 and 17. The Landlord will not unreasonably interrupt
or disturb any entrances, and will use all reasonable means to prevent any interruption,
disturbance or deprivation by any third party.

     11. Services.

In addition to the repairs set forth in Section 12, Landlord shall perform or provide the
following services with respect to the Building:

	 	(a)	 	Maintenance of all common areas of the Building, including interior lobbies, loading dock
hallways, landscaping, the fire alarm system until separated and parking areas;
	 
	 	(b)	 	Water to the Premises;
	 
	 	(c)	 	Snow and ice removal from outdoor common areas; and
	 
	 	(d)	 	Access to the Premises at all times.

Notwithstanding anything contained herein to the contrary, in the event of any interruption of
services (which interruption is within Landlord’s control) rendering all or any portion of the
Premises untenantable, Tenant shall be entitled to an abatement of rent for the affected portion of
the Premises at such time as the interruption exceeds five (5) business days.

     12. Repairs.

     Landlord, during the Term of this Lease and any extension thereof, shall make all repairs and
replacements to all structural portions of the Premises, including, but not limited to, the
exterior walls (including doors), roof and foundations, pipes and conduits, and utility
installations, adjoining sidewalks, driveways, service areas and curbs (irrespective of any duty
on the part of any governmental agency to make or order such repairs and replacements), and all
repairs and replacements necessary to put and maintain the exterior of the Premises and parking
area (including, but not limited to, filling holes and resealing as necessary, but subject to
normal wear and tear), including all improvements now or hereafter thereon, and all appurtenances
thereto (including sewer and sewer connections, water and gas pipes and connections, electrical
wires and connections) in a safe and tenantable condition and in good order and repair as expected
for a comparable single story office flex building in the Northern Suburbs of Chicago, Illinois,
except for those repairs made necessary by the negligent acts of the Tenant or its employees to
the extent those repairs are not covered by Landlord’s insurance. Landlord shall make all
repairs to the

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interior of the Premises which may be of a structural nature or which are caused by structural
failures or movement, repairs to the interior of the Premises made necessary by leakage of the
roof, or by leakage of any utility installation; provided, however, that Landlord shall not be
obligated to make repairs for any structural damage caused by Tenant, its employees, invitees or
agents. Lawns, landscaping and shrubbery care and snow removal shall be the responsibility of
Landlord and shall be a common area maintenance cost of which Tenant shall pay its proportionate
share. Tenant, during the Term of this Lease and any extension thereof, agrees to keep in good
order and repair all interior portions of the Premises (including overhead doors, docks contained
within the Premises and the electric operators thereof,), except such repairs as under this Lease
Landlord is required to make and except repairs which are made necessary because of faulty
construction and except repairs which are the obligation of Landlord under Paragraph 16 of this
Lease. Tenant shall also provide ordinary maintenance for the plumbing and light fixtures (within
the Premises) and shall replace any interior glass (not part of the outside walls) which may be
damaged or broken with glass of the same quality. Tenant, at Tenant’s cost, will be responsible
for trash removal, janitorial and security for the Premises. In addition, Tenant shall (at
Tenant’s cost and expense) maintain and insure the items listed in Exhibit D as the Landlord’s
Equipment Inventory that are being utilized by Tenant during the Term of this Lease.

     13. Interior Mechanical Equipment (HVAC System).

     During the Term of this Lease and any extension thereof, Tenant at its expense, shall provide
proper, periodic and normal maintenance and inspection and replacement for such heating and air
conditioning equipment as exists upon the Premises at the commencement of this Lease as identified
in Exhibit E and such heating and air conditioning equipment as Tenant may add during the term of
this Lease. If this equipment requires repairs or replacement of parts, or both, of a major or
substantial nature (i.e., in excess of proper, periodic and normal maintenance and inspection),
these repairs or replacements, or both, shall be made by Tenant. Examples of “parts of a major or
substantial nature” are compressors, boilers and fan units. Landlord has contracted for the
maintenance of the HVAC system through an annual service and maintenance contract and has no
knowledge of any outstanding maintenance issues.

     14. Utilities and Services.

     Tenant shall pay for all water, heat, gas, fuel, electricity, telephone service and all other
services in the nature of utility services supplied to the Premises for use by Tenant as well as
services supplied to Tenant in the operation of its business, together with any taxes thereon.

     15. Inspection.

     Tenant will allow Landlord, upon twenty-four (24) hour notice from Landlord, (except no
notice shall be required in the case of an emergency), access to the Premises at reasonable times
during normal working hours for the purpose of examining or exhibiting the same or making repairs
Landlord is required to make or exhibiting same to lenders and prospective purchasers. Unless
Tenant has given notice to Landlord to extend the Term of this Lease, Landlord may exhibit the
Premises to prospective tenants at any time within one (1) year prior to the expiration of the
lease Term or any extension thereof.

     16. Damage or Destruction of Premises.

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     A. In the event of minor damage (less than fifty percent (50%) to the Premises by fire
or any other cause which renders the Premises untenantable in part but Tenant is able in its
reasonable judgment to conduct its business therein, and Tenant continues to occupy them in
part, the rent shall be apportioned and reduced from the date the damage occurs in the proportion
that the unoccupied portion of the Premises bears to the entire Premises until the damage has been
repaired.

     B. In the event of substantial damage (fifty percent (50%) or more) (including
destruction) to the Premises by fire or any other cause which renders the Premises
untenantable in whole or in such part that Tenant in its reasonable judgment deems it impracticable to
conduct its business therein, the rent shall wholly abate and be apportioned from the date the damage
occurs until the damage has been repaired.

     C. In the event of either minor or substantial damage, unless this Lease is terminated
as hereafter provided in Paragraph 16.D. hereof, Landlord shall commence within ten (10) days
after the date the damage occurs (or within ten (10) days after receipt of such notice is
given) to repair the Premises to the condition in which they were immediately prior to such damage, and
Landlord shall complete such repair with due diligence and dispatch. If the damage is not
repaired within a reasonable time or in any event within sixty (60) days from the date the damage
occurs in the case of minor damage and one hundred twenty (120) days from the date the damage occurs in
the case of substantial damage, Tenant shall have the right to terminate this Lease by giving
Landlord written notice (served no later than thirty (30) days after such right to cancel and
terminate arises) of termination.

     D. In the event the Premises are damaged at any time during the last twelve (12)
months of the initial lease Term or at any time during the last twelve (12) months of any
extension term by fire or any other cause to the extent of fifty percent (50%) or more of the
replacement value thereof as of the date such damage occurs, this Lease, hereof, may be terminated at the
election of either Landlord or Tenant by giving notice in writing of such election to the
other party within ten (10) days from the date the damage occurs. Upon such termination, any unearned
rent or other payments paid in advance beyond the date of damage shall immediately be refunded to
Tenant.

     17. Condemnation.

     A. If the whole or any substantial part (fifty percent (50%) or more) of the Premises shall
be taken or condemned by any competent authority for any public use or purpose, the Term of
this Lease shall end upon, and not before, the date when the possession of the part so taken shall
actually be required for such use or purpose. Current rent shall thereupon be apportioned as
of the date of such termination.

     B. If only an insubstantial part (less than fifty percent (50%) of the Premises shall be taken
or condemned, and Tenant is able, in its reasonable judgment, to continue to operate its
business in the Premises, and such taking or condemnation does not give Tenant the right to terminate this
Lease, this Lease shall continue in full force and effect, and the rental due thereunder shall
abate proportionately to the extent that Tenant is deprived of usable area either in the Premises or
otherwise, and as of the date of such deprivation. If Tenant is not able, in its reasonable
judgment, to continue normal business operation, Tenant may terminate this Lease immediately upon
written notice to Landlord. In the event this Lease is not terminated under this Paragraph, Landlord
shall, at Landlord’s sole cost and expense, restore the remaining portion of the Premises to the
extent

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necessary to render them reasonably suitable for the purposes for which they were leased, and
shall make all repairs to the Premises to the extent necessary to constitute the Premises a
complete architectural unit.

     C. In any such case, whether this Lease is terminated or not, each party shall be entitled to
claim and receive an award of damages suffered by it by reason of such taking. Landlord shall be
entitled to receive and retain the entire award or consideration for the affected lands and
improvements and Tenant shall not have or advance any claims against Landlord for the value of its
property or its leasehold estate or the unexpired term of this Lease or for costs of removal or
relocation or business interruption expense or any other damages arising out of the taking or
purchase. Nothing herein shall give Landlord any interest in, or preclude Tenant from seeking and
recovering on its own account from the condemning authority, any award of compensation attributable
to the taking or purchase of Tenant’s chattels or trade fixtures or attributable to Tenant’s
relocation expense or loss of goodwill provided that any such separate claim by Tenant shall not
reduce or adversely affect the amount of Landlord’s award. If any such award made or compensation
paid to Tenant specifically includes an award or amount for Landlord, Tenant shall promptly account
therefor to Landlord.

     18. Landlord’s and Tenant’s Liability.

     Landlord shall not be liable for damage to property of Tenant in the Premises and the common
areas or for injury to person unless such damage or injury is caused by (A) Landlord’s failure to
make repairs or perform any obligations which Landlord is obligated to make under this Lease or
(B) is caused by the fault or negligence of Landlord, Landlord’s agents, employees, contractors,
subcontractors, licensees or other authorized representatives.

     Tenant shall not be liable for damage to property of Landlord in or around the Building (but
excluding the Premises) and the common areas or for injury to person unless such damage or injury
is caused by (A) Tenant’s failure to make repairs it is obligated to make under this Lease or (B)
is caused by the fault or negligence of Tenant, its agent, employees, contractors, subcontractors,
licensee or other representatives.

     19. Default.

     A. If any default of Tenant continues uncorrected for thirty (30) days (seven (7) days
in the case of a default in the payment of rent or other amount due hereunder) after receipt of
written notice from the Landlord, stating with particularity the nature and extent of the default,
the Landlord may cancel this Lease by written notice of cancellation; provided, however, that in
the case of a non-monetary default which cannot be reasonably cured by Tenant within thirty (30)
days, Tenant shall be granted an additional period of time within which to effect a cure so long
as Tenant has commenced and is diligently pursuing a cure within the initial thirty (30) day
period. No delay or omission of Landlord in exercising any right accruing upon any default of
Tenant shall impair any such right or be construed to be a waiver thereof, and every such right may
be exercised at any time during the continuance of such default. A waiver by Landlord of a breach
or a default by Tenant under any of the terms and conditions of this Lease may be exercised at any
time during the continuance of such default. A waiver by Landlord of a breach or a default under
any of the terms and conditions of this Lease by Tenant shall not be construed to be a waiver of
any subsequent breach or default or of any other term or condition of this Lease.

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     B. In the event of any default or breach of this Lease by Tenant, which continues
beyond applicable cure periods, Landlord may, at any time thereafter, with or without notice
or demand, and without limiting Landlord in the exercise of any right or remedy which Landlord
may have by reason of such default:

     (i) terminate Tenant’s right to possession of the Premises by any lawful means, in
which case this Lease and the Term hereof shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. If Landlord terminates this Lease,
Landlord may recover from Tenant (A) the worth at the time of award of the unpaid rent
which had been earned at the time of termination; (B) the worth at the time of award of
the amount by which the unpaid rent which would have been earned after termination until
the time of award exceeds the value of the Premises for the balance of the Lease Term
reduced to present value using the interest rate of ten percent (10%) per year; ( and (C)
any other amount necessary to compensate Landlord for all detriment proximately caused by
Tenant’s failure to perform its obligations under the Lease or which in the ordinary
course of things would be likely to result therefrom, including, but not limited to, the
cost of recovering possession of the Premises, expenses of releasing, including necessary
renovation and alteration of the Premises, reasonable attorneys’ fees, any real estate
commissions actually paid by Landlord. For purposes of this section, “rent” shall be
deemed to be all monetary obligations required to be paid by Tenant pursuant to the terms of this Lease.

     (ii) maintain Tenant’s right of possession in which event Landlord shall have the
remedy which permits Landlord to continue this Lease in effect after Tenant’s breach and
abandonment and recover rent as it becomes due.

     (iii) collect sublease rents (or appoint a receiver to collect such rent) and
otherwise perform Tenant’s obligations at the Premises, it being agreed, however, that the
appointment of a receiver for Tenant shall not constitute an election by Landlord to
terminate this Lease.

     (iv) pursue any other remedy now or hereafter available to Landlord under the laws or
judicial decisions of the state in which the Premises are located.

     (b) No remedy or election hereunder shall be deemed exclusive, but shall, wherever possible,
be cumulative with all other remedies at law or in equity.

     (c) Suit or suits for the recovery of such damages, or any installments thereof, may be
brought by Landlord from time to time at its election, and nothing contained herein shall be
deemed to require Landlord to postpone suit until the date when the term of this Lease would have
expired if it had not been terminated hereunder.

     C. Landlord shall not be in default under this Lease unless Landlord fails to
perform obligations required of Landlord within thirty (30) days after written notice by
Tenant (except in the case of an emergency, where Landlord must commence performance within
twenty-four (24) hours after notice) to Landlord and to the holder of any mortgage or deed of
trust encumbering the Building whose name and address shall have theretofore been furnished to
Tenant in writing, specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days
are required for its cure, then Landlord shall not be in default if Landlord commences performance

11

 

within such thirty (30) day period (or in the case of an emergency within twenty-four (24) hours
after notice) and thereafter diligently pursues the same to completion. This Lease and the
obligations of Tenant hereunder shall not be affected or impaired because Landlord is unable to
fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay
is caused by reason of strike or other labor problems, acts of God, riot, insurrection,
governmental actions or requirements, or any other cause beyond the reasonable control of
Landlord, and the time for Landlord’s performance shall be extended for the period of any such
delay.

     D. In the event of a dispute between the parties which requires a party hereto to seek
redress through an action at law or in equity (or to seek redress through a form of Alternative
Dispute Resolution) the losing party shall pay, upon demand, all of the prevailing party’s costs,
charges and expenses, including reasonable attorneys’ fees, incurred by such prevailing party in
connection with the resolution of such dispute; provided, however, attorneys’ fees shall be due
and payable only if the prevailing party is required to file suit due to default by the losing
party. For purposes of this Paragraph, the term “losing party” shall mean the party which obtains
substantially less relief than originally sought by such party in the legal or equitable action
(or Alternative Dispute Resolution forum) and the term “prevailing party” shall mean the party
which obtained substantially the relief sought by such party in the legal or equitable action (or
Alternative Dispute Resolution forum).

     20. Bankruptcy.

     In the event the estate created hereby shall be taken in execution or by other process of
law, or if Tenant shall be adjudicated insolvent or bankrupt pursuant to the provisions of any
state or federal insolvency or bankruptcy law, or if a receiver or trustee of the property of
Tenant shall be appointed by reason of Tenant’s insolvency or inability to pay its debts, or if
any assignment shall be made of Tenant’s property for the benefit of creditors, then and in any of
such events, Landlord may terminate this Lease by written notice to Tenant; provided, however, if
the order of the court creating any of such disabilities shall not be final by reason of pendency
of such proceeding, or appeal from such order, then Landlord shall not have the right to terminate
this Lease so long as Tenant performs its obligations hereunder.

     21. Indemnification.

     Tenant shall indemnify and hold Landlord harmless from all loss, damage, cost, expense or
liability (including reasonable attorneys’ fees, expenses and disbursements) incurred by Landlord
arising out of or in connection with any injury to, or death of, any person, or damage to, or
destruction of, property occurring in, on, or about the Premises, the Building in which the
Premises are located and/or the property, and which injury, death, damage or destruction is caused
by the acts or omissions of Tenant or Tenant’s employees, agents, contractors, subcontractors,
licensees or other authorized representatives; except that Landlord shall be liable to Tenant for
all loss, damage, cost, expense or liability (including reasonable attorneys’ fees,
expenses and disbursements) incurred by Tenant arising out of or in connection with any injury to,
or death of, any person, or damage to, or destruction of, property occurring in, on, or about the
Premises, the Building in which the Premises are located, and the property, and which injury,
death, damage or destruction is caused by the acts or omissions of Landlord or Landlord’s
employees, agents, contractors, subcontractors, licensees or other authorized representatives, and
shall indemnify and hold Tenant harmless therefor. A party’s obligation under this Paragraph to
indemnify and hold the other party harmless shall be limited to the sum that exceeds the amount of
insurance proceeds, if

12

 

any, received by the party being indemnified. This Section 21 is expressly subject to, and
modified by Section 22E below.

     22. Insurance.

     A. Landlord shall keep in effect, during the Term of this Lease:

	 	(1)	 	Insurance against damage to the Premises and the Building by fire and other
risks now or hereafter embraced in extended coverage, in amounts sufficient to prevent
Landlord from becoming a co-insurer, but in no event less than full replacement value
(exclusive of the cost of excavations, foundations and footings);
	 
	 	(2)	 	Insurance against such other hazards as, from time to time, are then
commonly insured against for Premises similarly situated (due regard being given to
the Premises’ height, type, construction and use), in the amount of at least Two
Million Dollars ($2,000,000) in any one occurrence upon or in connection with the use
or occupancy of the Premises resulting in bodily injury or death.

     B. Tenant shall, at its expense, keep in effect during the Term of this Lease or any
extension thereof, the following insurance in standard form policies, with an insurance
company authorized to do business in the State in which the Premises are situated.

	 	(1)	 	Comprehensive public liability insurance in the amount of at least Two
Million Dollars ($2,000,000) in any one occurrence upon or in connection with the use
or occupancy of the Premises resulting in bodily injury or death.
	 
	 	(2)	 	Comprehensive property damage insurance covering liability or damage in any
one occurrence occurring upon or in connection with the use or occupancy of the
Premises to all property in at least the sum of Two Million Dollars ($2,000,000).
	 
	 	(3)	 	All risk contents coverage (or Tenant may act as a self-insurer with respect
to such all risk insurance) on Tenant’s personal property, equipment, furnishings,
fixtures and other chattels located or to be located in the Premises.
	 
	 	(4)	 	The required statutory amount of worker’s compensation insurance.

     C. All policies of insurance required to be maintained by Landlord and Tenant
pursuant to this Lease other than B(4) above, shall name the other party as an additional
insured as their respective interests may appear (and if requested by Landlord shall bear appropriate
endorsements to protect Landlord’s mortgagee).

     D. The insurance required to be carried by Tenant shall be effective only from and
after the Commencement Date. Landlord and Tenant shall each furnish, a certificate or
certificates of insurance evidencing the existence of the required coverage.

     E. The parties release each other, and their respective authorized representatives,
from any claims for damage to any person or to the Premises and the Building and other
improvements in which the Premises are located, and to the fixtures, personal property,
Tenant’s improvements, and alterations of either Landlord or Tenant in or on the Premises and the
Building and other improvements in which the Premises are located that are caused by or result from
risks

13

 

insured against under any insurance policies carried by the parties and in force at the time of
any such damage.

     Each party shall cause each insurance policy obtained by it to provide that the insurance
company waives all right of recovery by way of subrogation against either party in connection with
any damage covered by any policy. Neither party shall be liable to the other for any damage caused
by fire or any of the risks insured against under any insurance policy required by this Lease.

     Landlord and Tenant intend, and hereby agree, that the risk of loss or damage to property
shall be borne by the parties’ insurance carriers. It is hereby agreed that Landlord and Tenant
shall look solely to, and seek recovery from, only their respective insurance carriers in the event
a loss is sustained for which Property Insurance is carried or is required to be carried under this
Lease. Landlord and Tenant expressly waive any and all claims against each other with respect to
claims, damages or losses for which Property Insurance is carried or is required to be carried
hereunder. For this purpose, applicable deductible amounts shall be treated as though they were
recoverable under such policies. If Landlord or Tenant elects to self-insure any of the insurance
required of Landlord or Tenant hereunder, the party electing to self insure shall be considered an
insurance carrier for purposes of this paragraph.

     23. Mechanic’s Liens.

     The Tenant will not permit any mechanic’s or materialmen’s or other liens to stand against
the Premises for any labor or material furnished the Tenant in connection with work of any
character performed on said Premises by or at the direction of the Tenant; and the Landlord will
not permit any such liens for work or material furnished the Landlord to stand against such
Premises. However, the Landlord and the Tenant shall respectively have the right to contest the
validity or amount of any such lien, but upon the final determination of such questions shall
immediately pay any adverse judgment rendered with all proper costs and charges and shall have the
lien released at the contestant’s own expense. If Landlord or Tenant desires to contest any such
lien, then prior to commencing such contest it will furnish the other party with a bond, if
requested, to secure the payment of such obligation.

     24. Assignment or Subletting.

     A. If Tenant requests Landlord’s consent to an assignment of the Lease or subletting of all
or a portion of the Premises, it shall submit to Landlord, in writing, (i) the name and legal
composition of the proposed assignee or subtenant, (ii) the use to which the proposed
assignee or subtenant intends to put the Premises, (iii) the terms and conditions of the proposed
assignment or sublease and of any related transaction between Tenant and the proposed assignee or
subtenant; (iv) information related to the experience, integrity and financial resources of the proposed
assignee or subtenant; (v) such publicly disclosed information as Landlord may reasonably
request to explain the transaction; (vi) reimbursement for all reasonable out of pocket costs
incurred by Landlord, including actual attorneys’ fees, in connection with evaluating the request and
preparing any related documentation, which shall not exceed Two Thousand Dollars ($2,000.00); and (vii)
the nature and character of the business of the proposed assignee or subtenant.

     B. Landlord’s consent to any such proposed assignment or subletting shall not be
unreasonably withheld. Landlord shall be considered to have reasonably denied its consent to
a proposed assignment or sublease if:

14

 

	 	(i)	 	The assignee or sublessee does not meet the minimum net worth and creditworthiness
standards utilized at the Building for tenants of a similar size and use;
	 
	 	(ii)	 	Tenant has not given Landlord thirty (30) days’ prior written notice of such assignment or
sublease, which notice shall include all information and documentation reasonably
required to satisfy the above conditions;
	 
	 	(iii)	 	Tenant is in default beyond any applicable cure period at the time of the assignment or
sublease (but at such time as any default is cured, the assignment or sublease may
proceed); and
	 
	 	(iv)	 	The assignee or sublessee fails to furnish Landlord at least ten (10)
days prior to the effective date of the assignment or sublease, a written assignment instrument in which
assignee or sublessee agrees to assume and be bound by all of the conditions,
obligations and agreements of Tenant contained in this Lease.

     C. This Paragraph shall not apply in the case of an assignment or sublease by Tenant to a
corporation which is the parent or subsidiary of or is controlled by Tenant, or to a
corporation resulting from any reorganization or merger to which Tenant or its parent or any of its
subsidiaries or any corporation controlled by it is a party.

     D. In no event will Tenant be released from its obligations under the Lease. If consent to
an assignment or sublease is given, Tenant shall pay to Landlord, as Additional Rent fifty
percent (50%) of all amounts received from the assignee or subtenant in excess of the amounts
otherwise payable by Tenant to Landlord with respect to the space involved calculated on a per square
foot basis, less Tenant’s cost of commissions and legal fees. Profits on an assignment or sublease
by Tenant shall be computed after deduction of all expenses incurred by Tenant in connection
with any such sublease or assignment including (a) brokerage; (b) reasonable legal fees; (c)
construction costs; (d) market financial concessions granted to subtenant; (e) depreciation of any
laboratory equipment owned by Tenant and used by subtenant and (f) any other costs reasonably incurred
by Tenant applicable to the sublease or assignment.

     25. Delays.

     In the event that either party hereto shall be delayed or hindered in or prevented from the
performance of any of their or its respective provisions anywhere herein contained, by reason of
(i) the destruction, in whole or in part, of any building or improvement forming a part of the
entire Premises, or (ii) strikes, or (iii) lockouts, or (iv) labor troubles, or (v) war, whether
declared or undeclared, or (vi) riot, or (vii) Act of God, or (viii) embargoes, or (ix) delays in
transportation, or (x) inability to procure materials and/or labor, or (xi) failure of power, or
(xii) restrictive governmental laws or regulations, whether valid or not, or (xiii) insurrection,
or (xiv) acts of terrorism or (xv) any other reason other than financial, beyond the reasonable
control of such party, and not the fault of the party so delayed or hindered in or prevented from
performing work or doing acts otherwise required under this Lease, then performance of such work or
doing of such acts shall be excused for the period of the delay, and the period for the performance
of such work or doing such acts shall be extended for a period equivalent to the period of such
delay; provided, however, that the provisions of this Paragraph shall not operate so as to excuse
or release Tenant from the prompt payment of rent or other sums required to be paid by Tenant to
Landlord or to other payees anywhere hereunder.

     26. Right of First Offer.

15

 

     In the event that all or any portion of the Building not occupied by Tenant becomes
available for lease to third parties (hereinafter the “First Offer Space”) during the Term of this
Lease, Landlord shall notify Tenant in writing (the “First Offer Notice”) of the availability of
the First Offer Space, the anticipated date on which the First Offer Space will be vacated by the
then existing tenant and Landlord’s opinion of the market rate of rent which will be applicable to
such First Offer Space. For a period of ten (10) business days following receipt of Landlord’s
written notice containing such information, Tenant shall have the right of first offer to lease
the First Offer Space by giving Landlord written notice thereof within such ten business day
period. If Tenant elects to lease such First Offer Space, the rate of rent for such space shall be
the market rate as indicated in Landlord’s written notice to Tenant and the First Offer Space
shall be included in the Premises on a date which is no later than forty-five days after Tenant
elects in writing to lease such First Offer Space.

     If Tenant fails to elect to lease the First Offer Space within such ten business day period,
Landlord shall be entitled to lease the space to third parties and conclude transactions with
third parties on terms not more favorable to any third party (taking into consideration the
overall effective rental rate and economic package for the space) than the terms contained in
Landlord’s notice to Tenant, until such time as such First Offered Space once again becomes
available for lease to third parties (at which time such First Offer Space shall again become
subject to Tenant’s first offer rights under this Paragraph 26. If Landlord has not leased the
First Offer Space within nine (9) months of the date of the First Offer Notice, Landlord must once
again comply with the provisions of this Section 26 with respect to the First Offer Space.

     27. Option to Renew.

     Tenant is hereby granted two (2) successive options to renew this Lease on the following
terms and conditions:

     A. At the time of the exercise of an option to renew and at the time of the
commencement of the said renewal, the Tenant shall not be in default in accordance with the
terms and provisions of this Lease (all required notices having been given and all relevant cure
periods having expired), and shall be in possession of the entire Premises pursuant to this Lease.

     B. Notice of the exercise of each option shall be sent to the Landlord, in writing, at
least nine (9) months before the expiration of the then current Term of this Lease.

     C. Each renewal term (hereinafter “Renewal Term”) shall be for a period of five (5)
years to commence at the expiration of the initial Term or the then current Term of this
Lease, and all of the terms and conditions of this Lease (except that Base Rent payable during the
respective Renewal Term shall be at the rate that is the greater of ninety five percent (95%) of fair
market rent or the net Base Rent payable in the last month of the immediately preceding Term) shall apply
during the respective Renewal Term.

     D. If Tenant fails to exercise the first renewal option for the Premises the later
renewal option shall be considered null and void and of no further force and effect.

     E. Fair market rent shall be a rental rate equal to the then current market rate, for
comparable space in other buildings comparable to the Premises in the submarket taking into
account all relevant factors including the size and cost of the building in question when
compared

16

 

to the Premises and the amenity package available for the building in question when compared to the
Premises, the creditworthiness of the Tenant, all concessions which are being offered to renewal
tenants as new tenant improvements, size and location of the space and the rate shall specifically
exclude amounts previously attributed to Tenant’s original Tenant Improvements (collectively the
“Market Rate”).

Upon receiving notice of Tenant’s intent to extend the term of the Lease, Landlord shall notify
Tenant in writing of its determination of Market Rate. In the event Tenant rejects Landlord’s
determination of the Market Rate, Tenant shall include with its notice of rejection, Tenant’s
determination of Market Rate. Landlord and Tenant shall then negotiate in good faith for thirty
(30) days following the delivery of Tenant’s notice to Landlord in an attempt to reach an agreement
as to the Market Rate. If, however, Landlord and Tenant are unable to reach an agreement as to the
Market Rate, then Tenant shall have the option within five (5) days following the end of such
thirty (30) day period to (1) revoke its election to extend the term of this Lease, or (2) to
request non-binding mediation. In the event that Tenant shall revoke its notice to extend the term
of this Lease, the Lease shall expire per its terms. In the event that Tenant shall elect the
non-binding mediation, then Landlord and Tenant shall, within ten (10) days thereafter, each
designate a qualified real estate professional. The two (2) such appointees shall within five (5)
days thereafter, designate a third real estate professional having substantially similar
qualifications.

After a third real estate professional has been designated in accordance with the above paragraph,
then within twenty (20) days after the appointment of the third representative, the group shall
present their findings regarding the issues of market terms and conditions to both the Landlord and
Tenant. If, at that time, Landlord and Tenant are in agreement with the mediation group’s findings,
then the Lease shall be modified under those terms and conditions.

If, at the time of the mediation group’s presentation, no agreement can be reached then, Tenant’s
sole option is to cancel the option to renew or to agree to Landlord’s determination of Market
Rate.

     28. Intentionally Deleted.

     29. Subordination.

     This Lease shall be subject and subordinated at all times to the liens of any mortgages or
deeds of trust in any amount or amounts whatsoever now existing or hereafter encumbering the
Premises, without the necessity of having further instruments executed by Tenant to effect such
subordination. Notwithstanding the foregoing, Tenant covenants and agrees to execute and deliver
upon demand, such further instruments evidencing such subordination of this Lease to such liens of
mortgages or deeds of trust as may be reasonably requested by Landlord. So long as Tenant shall pay
the rent reserved and comply with, abide by and discharge the terms, conditions, covenants and
obligations on its part, to be kept and performed herein and shall attorn to any successor in
title, the peaceable possession of the Tenant in and to the Premises for the Term of this Lease,
shall not be disturbed, in the event of the foreclosure of any such mortgage or deed of trust, by
the purchaser at such foreclosure sale or such purchaser’s successor in title. Notwithstanding the
foregoing provisions of this Paragraph 29, Tenant shall not be obligated to subordinate its
interest in this Lease unless the mortgagee agrees in writing pursuant to a subordination,
non-disturbance and attornment agreement or the like, in a form reasonably acceptable to Tenant,
not to disturb

17

 

Tenant’s lawful possession of the Premises and to recognize Tenant’s rights under this Lease so
long as Tenant is not in default beyond applicable cure periods under the terms of this Lease.

     30. Holdover.

     If Tenant holds over after the expiration of the Term of this Lease or any extension thereof,
the Base Rent shall be one hundred fifty percent (150%) of the base monthly rental as paid during
the last month of the initial Term or any renewal term hereof, and shall otherwise be on the terms
and conditions herein specified so far as applicable.

     31. Intentionally Deleted.

     32. Alternative Dispute Resolution. Landlord and Tenant shall attempt to settle any
claim or controversy arising out of this Lease through consultation and negotiation in the spirit
of mutual friendship and cooperation. If such attempts fail, then the dispute shall first be
submitted to a mutually acceptable neutral advisor for mediation, fact-finding or other form of
alternate dispute resolution. Neither of the parties may unreasonably withhold acceptance of such
an advisor, and his or her selection will be made within 30 days after notice by the other party
demanding such mediation. Cost of such mediation or any other alternate dispute resolution agreed
upon by the parties shall be shared equally by Landlord and Tenant. Any dispute which cannot be so
resolved between the parties within sixty (60) days of the date of the initial demand by either
party for such mediation, shall be finally determined by the courts. The use of such a procedure
shall not be construed to affect adversely the rights of either party under the doctrines of
laches, waiver or estoppel. Nothing in this Paragraph shall prevent either party from pursuing
judicial proceedings if (a) good faith efforts to resolve a dispute under these procedures have
been unsuccessful or (b) interim resort to a court is necessary to prevent serious and irreparable
injury to a party or to others.

     33. Environmental.

     For purposes of this paragraph:

     (1) “Environmental Conditions” shall mean the environmental conditions at the Premises,
including the presence of any Hazardous Materials, as of the commencement of the term of this
Lease.

     (2) “Environmental Requirement” shall mean any law, regulations or legal requirement relating
to health, safety or the environment, now in effect or hereinafter enacted, including but not
limited to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA”), the
Toxic Substances Control Act (“TSCA”), the Federal Insecticide Fungicide and Rodenticide Act
(FIFRA”), the Resource Conservation and Recovery Act (“RCRA”), the Clean Air Act (CAA”) and the
Clean Water Act (“CWA”), the Occupational Safety and Health Act (OSHA”) and all similar state and
local laws, rules, regulations and guidance, now in existence or hereinafter enacted, as each such
law, rule or regulation may be amended from time to time.

     (3) “Environmental Hazard” shall mean Hazardous Materials (as defined hereinafter), or the
storage, handling, production, disposal, treatment or release thereof.

     (4) “Hazardous Material” shall mean (a) any hazardous waste, any extremely
hazardous
waste or any restricted hazardous waste, or words of similar import, as defined in

18

 

the
Resource Conservation and Recovery Act (42 U.S. C. Section 6901
et seq.); (b)
any hazardous substances as defined in the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.); (c) any toxic
substances as defined in the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.); (d) any pollutant as defined in the Clean Water Act (33 U.S.C.
Section 1251 et seq.); (e) gasoline, petroleum or other hydrocarbon products or
by-products; (f) asbestos; (g) bio-hazardous substances or constituents; or (h) any
other materials, substances or wastes subject to environmental regulation under any
applicable federal, state or local law, regulation, or ordinance now or hereafter in
effect.

     (5) “Environmental Release” shall mean any release, spill, leak, discharge, injection,
disposal, or emission of any Hazardous Materials on, under, in or at the Premises or
environment.

     (6) A. Tenant agrees to indemnify and save harmless Landlord’s successors and assigns
and Landlord’s present and future officers, directors, employees and agents (collectively
“Landlord’s Indemnitees”) from and against any and all liabilities, penalties, fines,
forfeitures, demands, damages, losses, claims, causes of action, suits, judgments, and costs and expenses
incidental thereto (including cost of defense, settlement, reasonable attorneys’ fees,
reasonable consultant’s fees and reasonable expert fees), which Landlord or any or all of Landlord’s
Indemnitees may hereafter suffer, incur, be responsible for or disburse as a result of:

(1) any governmental action, order, directive, administrative proceeding or ruling;

(2) personal or bodily injuries (including death) or damage (including loss of use) to any
premises (public or private);

(3) cleanup, remediation, investigation or monitoring of any pollution or contamination of
or adverse effects on human health or the environment; or

(4) any violation or alleged violation of laws, statutes, ordinances, orders, rules or
regulations of any governmental entity or agency

     (collectively “Environmental Liabilities”) directly or indirectly caused by or arising out of
any Environmental Hazards existing on or about the premises but only to the extent that any such
existence is caused by Tenant’s presence or activities on the Premises.

          B. At all times during the term of the Lease, Tenant shall conduct its activities at
the Premises in strict compliance with all applicable Environmental Requirements.

          C. Tenant shall notify Landlord immediately of any Environmental Release at,
on, under, or from the Premises. Unless directed otherwise by the Landlord, Tenant shall act
immediately to investigate the extent of, and to take appropriate action to abate and
remediate, such Environmental Release, whether or not ordered or otherwise directed to do so by any
governmental entity or otherwise obligated to do so by any Environmental Requirement, unless
to do so would require the approval of a government entity.

          D. Landlord shall have the right to make inquiries concerning all environmental
matters and Tenant will cooperate with such inquiries. Such inquiries may include physical

19

 

inspections, including tests and sampling, at the Premises, or otherwise, and interviews
with personnel of Tenant.

          E. To the best of Landlord’s knowledge, there are no Hazardous Materials
present at the Building that would give rise to a violation of any applicable
environmental requirements.

          F. The provision of this paragraph shall survive the termination of this Lease.

     34. Brokers.

     The parties agree that Binswanger CBB, representing the Landlord and CB Richard Ellis,
representing the Tenant. (“Broker”) are the sole brokers who brought about this Lease. Tenant
represents and warrants that Tenant did not negotiate with respect to the leasing of the Premises
through any other broker and that no other broker was instrumental in bringing about this Lease.
Tenant shall indemnify Landlord against any and all claims of any other brokers with whom Tenant
has had any dealings, and shall hold Landlord harmless from all losses and expenses in connection
therewith, including reasonable legal expenses. Landlord represents and warrants that Landlord has
not dealt with any other real estate broker in connection with the leasing of the Premises, and
Landlord agrees to indemnify and hold Tenant harmless from all losses and expenses in connection
with the claims of any real estate broker claiming by, under or through Landlord, including
reasonable legal expenses. Landlord shall pay the commission of the Broker pursuant to the terms
of a separate written listing agreement with Binswanger CBB.

     35. Notices.

     All notices, approvals or requests in connection with this Lease shall be sent by certified
mail, or via overnight carrier with delivery charges prepaid or with delivery not conditioned upon
payment of charges, except notices concerning repairs and replacements which may be given orally or
by any other means which might reasonably be expected to give the other party notice; provided,
however, that no notice other than by certified mail or overnight carrier shall constitute a notice
of default authorizing cancellation of this Lease. Notices to the Landlord shall be addressed and
sent as follows:

Motorola, Inc.

1303 E. Algonquin Road, 7th Floor

Schaumburg, IL 60196

Attention: Real Estate & Development Department

With a copy to:
 Motorola, Inc.

37 Elmdale Avenue 
Johnston, RI
02919-1611 
Attn: Lease
Administration

Notices to the Tenant shall be addressed and sent as follows:

Nanosphere, Inc.

4100 Commercial Avenue

20

 

Northbrook, IL 60062

Attention: Chief Operating Officer

With a copy to: 
D. Scott
Hargadon, Esq.
 Lord
Bissell & Brook 
115 South
LaSalle Street 
Chicago, IL
60603

The effective date of any such notice, approval, request, demand or communication shall be three
(3) business days after the date on which the same is deposited in the mail, if delivered by
certified or registered mail, or shall be upon receipt if delivered by overnight courier or by
personal delivery. Either party may at any time designate by written notice to the other a change
of address for notice purposes.

     36. Waiver.

     Failure or delay on the part of Landlord or Tenant to exercise any right, remedy, power or
privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in
writing and must be signed by the party making the waiver. A written waiver of a default shall not
operate as a waiver of any other default or of the same type of default on a future occasion.

     37. Amendments.

     No revision, modification or amendment of this Lease shall be valid unless made in writing
and signed by duly authorized representatives of both parties.

     38. Quiet Enjoyment.

     If Tenant performs the terms of this Lease, Landlord will warrant and defend Tenant in the
quiet and peaceful enjoyment and possession of the Premises during the Term hereof and any
extension without interruption by Landlord or any person claiming under Landlord.

     39. Conveyance by Landlord.

     Upon a sale or other transfer of the Building by Landlord, Landlord’s interest in this Lease
shall automatically be transferred to the transferee, the transferee shall automatically assume all
of Landlord’s obligations under this Lease accruing from and after the date of the transfer, and,
provided Landlord shall have delivered Tenant’s Security Deposit to such transferee pursuant to a
written assignment of which Tenant has received notice, Landlord shall be released of all
obligations under this Lease arising after the transfer. Subject to the provisions of Paragraph 29,
Tenant shall upon request attorn in writing to the transferee.

     40. Intentionally Deleted.

     41. Construction of Language.

21

 

     The terms Lease, lease agreement or agreement shall be inclusive of each other, and
include renewals, extensions or modifications of the Lease. Words of any gender used in this Lease
shall be held to include any other gender, and words in the singular shall be held to include the
plural and the plural to include the singular, when the sense requires. Paragraph headings and
titles are not a part of the Lease and shall have no effect upon the construction or interpretation
of any part hereof.

     42. Marginal Headings.

     The headings in this Lease are used only for convenience in finding the subject matters, and
are not to be taken as part of this Lease, or to be used in determining the intent of the parties.

     43. Entire Agreement.

     This Lease constitutes the final expression of the agreement of the parties; it is intended
as a complete and exclusive statement of their agreement, and it supersedes all prior and
concurrent promises, representations, negotiations, discussions and agreements that may have been
made with respect to the subject matter hereof.

     44. Severability.

     If any provision of this Lease, or the application thereof to any person or circumstance,
shall be held invalid or unenforceable by any court of competent jurisdiction, the remainder of
this Lease or the application of such provisions to persons or circumstances, other than those as
to which it is held invalid or unenforceable, shall not be affected thereby.

     45. Estoppel Certificate.

     Tenant shall, from time to time upon not less than ten (10) business days’ prior written
request by Landlord, deliver to Landlord a statement in writing certifying, if true: (a) that this
Lease is unmodified and in full force and effect or, that there have been modifications, that the
Lease as modified is in full force and effect; (b) the dates to which Rent and other charges have
been paid; (c) that Landlord is not in default under any provision of this Lease or, if in
default, a detailed description thereof and (d) such other matters as reasonably requested by
Landlord or its mortgagee. Any estoppel certificate given in good faith by Tenant, shall not waive
any of Tenant’s rights hereunder to audit and correct Additional Rents charged to Tenant.

     46. Signs.

     As permitted by law, Tenant shall be entitled to exterior Building and/or ground signage as
reasonably approved by Landlord. Tenant shall not exhibit, inscribe, paint or affix any sign on
the exterior of the Building or the property or in any window of the Premises without Landlord’s
prior written consent. In the event of Tenant’s uncured default as set forth above, Landlord, in
addition to its other remedies available hereunder, may remove such signs without any liability to
Tenant and Tenant shall reimburse Landlord for the cost of such removal immediately upon demand
therefor.

     47. Intentionally Deleted.

     48. Rules
and Regulations.

22

 

     Tenant agrees for itself, its employees, agents, clients, customers, invitees and
guests, to comply fully with the following reasonable rules and regulations and with such
reasonable modifications thereof and additions thereto as Landlord may make for the Building.

	 	A.	 	Tenant shall not use the name of the Building for any purpose other than that
of the business address of Tenant, nor shall Tenant advertise its business or profession
in any manner that violates the codes of ethics adopted by any recognized association
or organization pertaining to such business or profession. Any use by Tenant of
any picture or likeness of the Building does not constitute the granting by
Landlord of any rights to the use of the design of the Building by any party nor a
waiver of any rights with respect thereto.
	 
	 	B.	 	Tenant shall not obstruct or permit the obstruction in any manner of the
sidewalks, driveways, docks, dock areas, walks, parking areas and other common areas of the
property, except as reasonably required for immediate loading or unloading, nor
shall Tenant place objects against glass partitions, doors or windows which would
be unsightly from the exterior of the Building.
	 
	 	C.	 	Except for guide dogs, no animals or pets shall be brought or permitted to
be in the Building or on the Premises.
	 
	 	D.	 	Tenant shall not make noises, cause disturbances or vibrations, or use or
operate any electrical or electronic devices or other devices that emit anything which may
disturb or annoy other tenants or occupants of the Building or interfere with
their use of any device, or play any loud musical equipment or instruments that will
disturb other tenants or occupants of the Building.
	 
	 	E.	 	Tenant shall not create any odors which may be offensive to other tenants or
occupants of the Building.
	 
	 	F.	 	Except upon prior permission of Landlord, no additional locks or similar
devices shall be attached to any door and no locks shall be changed except by Landlord.
No keys for any door other than those provided by Landlord shall be made. If
more than two keys for one lock are desired by Tenant, Landlord shall provide the
same upon payment of a reasonable fee by Tenant. Upon termination of this Lease
or of Tenant’s possession of the Premises, Tenant shall surrender all keys for door
locks and other locks in or about the Premises and shall make known to Landlord
the combination of all locks, safes, cabinets and vaults which are not removed by
Tenant.
	 
	 	G.	 	Tenant assumes full responsibility for protecting the Premises from theft,
robbery and pilferage. Except during Tenant’s normal business hours, Tenant shall keep all
doors to the Premises locked and other means of entry to the Premises closed and
secured.
	 
	 	H.	 	Tenant shall not overload any driveway, parking area or any floor and shall
not install any heavy objects, safes, machines or other equipment without having
received Landlord’s prior written consent as to size, maximum weight, routing and
location thereof.

23

 

	 	I.	 	Tenant shall ascertain from Landlord the maximum amount of electrical current
which can safely be used in the Premises, taking into account the capacity of the
electric wiring in the Building and the Premises and the needs of other tenants
and shall not use more than such safe capacity. Landlord’s consent to the
installation of electric equipment shall not relieve Tenant from the obligation
not to use more electricity than such safe capacity.
	 
	 	J.	 	Tenant shall not burn any trash or refuse in the Building or on the property.

     Tenant shall be responsible for the observance of all of the foregoing rules and regulations
by Tenant’s employees, agents, clients, customers, invitees and guests. Landlord and Tenant agree
that Landlord’s remedy for violation of any of the foregoing rules and regulations by Tenant (or
any person or entity under Tenant’s authority or control) shall be a payment by Tenant to Landlord
an amount equal to the reasonably substantiated actual damages suffered or incurred by Landlord on
account of such violation. In the event of any inconsistency between the Lease and the rules and
regulations, the Lease shall prevail and control. Any violation of the rules and regulations by
any individual that is not under Tenant’s control shall not constitute a default under the Lease.
Landlord shall enforce the rules and regulations in a non-discriminatory manner but in any event
to provide Tenant quiet enjoyment of the Premises for the use permitted by the Lease.

     49. Counterparts.

     This Lease may be executed in counterparts, which together shall constitute a single
instrument.

     50. Additional Rent — Operating Expenses and Real Estate Taxes.

     For purposes of this Paragraph and this Lease, the term “Tenant’s Percentage Share” shall mean
a percentage which is equal to the number of the rentable square footage of the Premises divided by
the total number of rentable square footage contained in the Building of which the Premises are a
part. The parties hereby agree that: (1) the Premises consist of 40,945 rentable square feet of
area; (2) the Building of which the Premises are a part consists of a total of 83,172 rentable
square feet of area; and (3) the Tenant’s Percentage Share is forty-nine and 22/100 percent
(49.22%) in reference to the Building of which the Premises are a part. Landlord and Tenant each
acknowledge that the Base Rent specified in Paragraph 3 of the Lease does not provide for Operating
Expenses and Real Estate Taxes which may hereafter pertain to the Building of which the Premises
are a part. Tenant shall pay as Additional Rent its proportionate share of Real Estate Taxes and
Operating Expenses as follows:

     A. Real Estate Taxes. Tenant shall pay to Landlord, Tenant’s Percentage Share of the
Real Estate Taxes assessed against the land and improvements of the Building of which the Premises
form a part. The Additional Rent imposed hereby shall be paid by Tenant to Landlord together with
Tenant’s Percentage Share of Operating Expenses in installments on a monthly basis with Tenant’s
Base Rent payments. Should the taxing authorities include in such Real Estate Taxes the value of
any improvements made by Tenant, or include machinery, equipment, fixtures, inventory or other
personal property or assets of Tenant, the Tenant shall also pay the entire taxes for such items.
The term “Real Estate Taxes” shall mean all general and special real and personal

24

 

property taxes and assessments for the Building and expenses incurred in efforts to reduce taxes or
assessments.

     B. Operating Expenses. In addition to the monthly Base Rent, Tenant shall pay to
the parties respectively entitled thereto all impositions (including any taxes on rentals paid
to Landlord), insurance premiums, operating charges, maintenance charges, construction costs,
and any other charges, costs and expenses which arise or may be contemplated under any
provisions of this Lease as being Tenant’s responsibility and cost, during the Term. The
specific responsibility of Landlord and Tenant for repairs, replacements and maintenance is more
fully described in Section 12 above. Tenant shall pay to Landlord, Tenant’s Percentage Share of
the Operating Expenses pertaining to the land and improvements of the Building of which the
Premises form a part. For purposes of this Lease, the term “Operating Expenses” shall consist of
all costs of operating, maintaining, replacing and repairing the Building, including without
limitation, the following:

	 	(i)	 	Premiums for property, casualty, liability, rent interruption or other insurance.
	 
	 	(ii)	 	Salaries, wages and other amounts paid or payable for personnel including the
property manager, superintendent, operation ad maintenance staff, and other employees of
Landlord involved in the maintenance and operation of the Building, at or below the
level of property manager (to the extent a property manager is shared with other
facilities, the Building is charged only a corresponding percentage of this cost),
including contributions and premiums towards fringe benefits, unemployment and worker’s
compensation insurance, pension plan contributions and similar premiums and
contributions and the total charges of any independent contractors or managers engaged
in the repair, care, maintenance and cleaning of any portion of the Building.
	 
	 	(iii)	 	Cleaning, including sweeping of parking and sidewalk areas and removal of snow
and ice.
	 
	 	(iv)	 	Landscaping, including irrigating, trimming, mowing, fertilizing, seeding and
replacing of plants, shrubs and trees.
	 
	 	(v)	 	Utilities, including fuel, gas, electricity, water, sewer, telephone, generator
and other services for the common areas of the Building.
	 
	 	(vi)	 	Maintaining, operating, repairing and replacing equipment servicing the common
areas of the Building.
	 
	 	(vii)	 	Other items of repair or maintenance of the Building.
	 
	 	(viii)	 	The cost of the rental of any equipment and the cost of supplies used in the
maintenance and operation of the Building.
	 
	 	(ix)	 	Audit fees and the cost of accounting services incurred in the preparation of
statements referred to in this Lease and financial statements, and in the computation
of the rents and charges payable by tenants of the Building
	 
	 	(x)	 	Costs of capital expenditures incurred for the purpose of reducing Operating
Expenses, and necessary to comply with requirements of applicable law.
	 
	 	(xi)	 	A fee (not to exceed two percent (2%) of all gross rents collected at the Building)
for the administration and management of the Building appropriate to the nature of the
Building as reasonably determined by the Landlord from time to time.
	 
	 	(xii)	 	Costs of alterations or modifications to the Building.
	 
	 	(xiii)	 	Costs of maintenance, repair and replacement (but not the cost of separation itself) of
the fire alarm system until separated. 

The Additional Rent imposed hereby shall be paid by Tenant
to Landlord upon submission by Landlord of an invoice and backup.

25

 

     C. Notwithstanding anything to the contrary, the following shall be excluded from
“Operating Expenses”:

	 	(i).	 	Amounts reimbursed by other sources, such as insurance proceeds,
equipment warranties, judgments or settlements.
	 
	 	(ii).	 	Utilities or other expenses paid directly by tenants to suppliers or paid by
tenants to Landlord for separately metered or special services such as after hours air
conditioning expenses.
	 
	 	(iii).	 	Costs of initial improvements to, or alterations of any tenant premises.
	 
	 	(iv).	 	The cost of any repairs, alterations, additions, improvements, changes,
replacements or other items which under generally accepted accounting principles are
properly classified as capital expenses. Notwithstanding the foregoing, Operating
expenses may include: (i) the cost of capital improvements to the Building expended by
Landlord to comply with laws and regulations passed after the date of this Lease
(“Compliance Capital Costs”); Compliance Capital Costs shall be amortized over the
useful life of the improvements in accordance with generally accepted accounting
principles and shall not exceed in any year an amount equal to three percent (3%) of
the total Operating Expenses, excluding taxes, for such year; and (ii) to the extent
that any such repairs, alterations, additions, etc. result in a reduction of Operating
Expenses, Landlord may charge annually a prorata amount of such cost amortized over the
useful life of the item in question based on generally accepted accounting principles,
but in an amount which does not exceed the savings in operating expenses which has been
realized for that year.
	 
	 	(v).	 	Lease payments for rental equipment (other than equipment for which
depreciation is properly chargeable as Operating Expenses) which would constitute a
capital expenditure if the equipment were purchased.
	 
	 	(vi).	 	The cost of repairing, replacing, maintaining or otherwise correcting initial
defects in the design, construction or equipment of the Building or any latent defect
in the Building discovered during the Term of this Lease.
	 
	 	(vii).	 	Wages, salaries, benefits and compensation paid or given to (a) executives,
shareholders, officers, directors or partners of Landlord; (b) any principal or partner of
the entity for time to time comprising Landlord; (c) off-site employees at the Building
above the level of property manager;
	 
	 	(viii).	 	Payments of principal, interest and other
charges of any nature made on any indebtedness (secured or unsecured) applicable to the
Building including any mortgage, debt, ground rent, or other sums payable under any ground
or underlying lease or leases for the building and all costs paid or incurred to obtain,
close, record, modify, combine, recast consolidate, extend, refinance and replace in whole
or in part any financing or ground or underlying lease.
	 
	 	(ix).	 	Any fees, including attorneys’ fees, costs, and commissions incurred in (a)
procuring or attempting to procure other tenants (including Tenant) or other occupants
of space in the Building including, but not necessarily limited to brokerage
commissions, finders fees, attorneys, fees and expenses, entertainment costs, travel
expenses and advertising and production costs; (b) negotiations for leases with
tenants, other occupants or prospective tenants of the Building; (c) disputes or lease
defaults of any nature of Tenant, other occupants, or prospective tenants or; (d)
negotiations or disputes with employees, management agents, purchasers, ground lessors
or mortgagees of the Building.

26

 

	 	(x).	 	Any cost included in Operating Expenses representing an amount paid to a person, firm,
corporation, affiliate, subsidiary or other entity related to Landlord, or any employee or
agent of the same, which is in excess of the amount which would have been paid on an
arms-length basis in the absence of such relationship.
	 
	 	(xi).	 	Costs, fines, interest,
penalties, legal fees, liens or costs of litigation incurred due to the late payments of
taxes, utility bills, or other costs (including ground rents) incurred by Landlord’s
failure to make such payments when due;
	 
	 	(xii).	 	Any insurance deductible in excess of $25,000;
	 
	 	(xiii).	 	Non-cash items, such as deductions for depreciation and amortization of the Building
and the Building equipment, or interest on capital invested; and
	 
	 	(xiv).	 	Reserves for repairs, maintenance and replacements.

     If Landlord desires Tenant to pay its proportionate share of Real Estate Taxes and Operating
Expenses on a monthly basis, at the beginning of each calendar year, Landlord shall supply to
Tenant an estimate, certified by an authorized agent or officer of Landlord, setting forth in
detail Landlord’s reasonable estimate of Operating Expenses and Real Estate Taxes for the Building
for such calendar year, and Tenant’s Percentage Share of same. The Additional Rent imposed hereby
shall be paid by Tenant to Landlord in monthly installments, in advance, as the Operating Expenses
and Real Estate Taxes components of the total monthly rent. Each such monthly installment of
Operating Expenses and Real Estate Taxes shall be equal to one-twelfth (1/12) of Tenant’s
Percentage Share of the Landlord’s reasonable estimate of the Operating Expenses and Real Estate
Taxes for the Building for such calendar year. Within one hundred eighty (180) days after the end
of each calendar year Landlord shall provide to Tenant a detailed statement, certified by an
authorized agent or officer of Landlord, setting forth in reasonable detail the actual Operating
Expenses and Real Estate Taxes for the preceding calendar year. Such statement shall also include a
calculation or reconciliation of estimated Operating Expenses to actual Operating Expenses and of
any overpayment or underpayment made by Tenant to Landlord with respect to the Operating Expenses
for such preceding calendar year. In the event Tenant underpaid Landlord for Tenant’s Percentage
Share of Operating Expenses for such preceding calendar year, Tenant shall pay the amount of such
underpayment to Landlord within thirty (30) days of Tenant’s receipt of Landlord’s certified
statement. In the event Tenant overpaid Landlord for Tenant’s Percentage Share of Operating
Expenses and Real Estate Taxes of such year, Landlord shall credit Tenant an amount equal to such
overpayment amount against Tenant’s future monthly Operating Expense and Real Estate Tax
obligations until such credit is exhausted. (If such overpayment by Tenant is made in the last year
of the Lease Term, Landlord shall remit to Tenant the amount of the overpayment due hereunder
within thirty (30) days of the expiration or termination date of the Lease.) If a dispute arises
between Landlord and Tenant as to whether any item or items shall be properly included in such
statement, the matter shall be determined in accordance with Paragraph 32 of the Lease, and the
determination of such matter as therein provided shall be final and binding upon Landlord and
Tenant. Landlord shall provide a statement not later than July 1st following the close
of any calendar year reconciling Tenant’s estimated payments for Operating Expenses and the actual
amounts owed by Tenant for such year (“Annual Statement”). Furthermore, Landlord shall not increase
the amount of estimated payments for Operating Expenses in a current year until the Operating
Expenses for the previous year has been reconciled by an Annual Statement.

Tenant, or its certified professional accountant, shall have the right to examine Landlord’s books
and records showing Operating Expenses and Real Estate Taxes at Tenant’s sole cost and expense.
Such examination will be upon reasonable prior notice to Landlord and during normal

27

 

business hours at any time within four (4) months following the furnishing by Landlord to Tenant of
Landlord’s annual statement reconciling estimated operating expenses to actual operating expenses.
Tenant shall pay its cost incurred in connection with the audit and shall not be reimbursed by
Landlord unless Tenant elects to dispute the statement of Additional Rent and/or Operating Expenses
and such statement determined to be in error in Landlord’s favor (i.e., Landlord has overcharged)
by more than four percent (4%), in which case, Landlord shall reimburse Tenant the amount of any
such error and shall pay Tenant’s reasonable audit costs within thirty (30) days after notice
thereof. If such statement is determined to be in error in Landlord’s favor by four percent (4%) or
less, Landlord shall reimburse Tenant the amount of such error. Tenant shall have the right to use
an auditor of its choice as long as the auditor is a certified professional accountant and whose
fee is computed on a contingency basis, if Tenant so chooses.

     51. Landlord’s Right of Entry.

     Upon reasonable notice to Tenant, Landlord shall have access to the Premises for purposes of
showing the Premises to current or prospective lenders, to prospective purchasers of the Building
and, during the twelve-month period preceding the expiration of the term of this Lease, to
prospective tenants.

     52. Surrender.

     Upon the expiration or termination of this Lease or of Tenant’s right to possession, Tenant
shall surrender the Premises in a clean undamaged condition, in good working order, reasonable
wear and tear and damage by casualty expected, and shall remove all of Tenant’s equipment,
fixtures, Tenant Improvements and property and repair all damage caused by the removal and restore
the Premises.

     53. Landlord Liability.

     Notwithstanding anything to the contrary in this Lease, neither Landlord nor Landlord’s
directors, officers, shareholders, employees, agents, constituent partners, beneficiaries,
trustees, representatives, successors or assigns (collectively “Landlord’s Affiliates”) shall be
personally responsible or liable for any representation, warranty, covenant, undertaking or
agreement contained in the Lease, and the sole right and remedy of the Tenant or any subsequent
sublessee or assignee shall be against Landlord’s interest in the Building. Neither Tenant nor any
subsequent sublessor or assignee shall seek to obtain any judgment imposing personal liability
against Landlord, Landlord’s Affiliates, or their successors or assigns nor execute any judgment or
place any lien against any property other than Landlord’s interest in the Building. This Section 53
shall not apply to Landlord’s obligation to pay the Tenant Improvement Allowance. In addition to
Tenant’s rights contained herein or available in law or in equity, in the event Tenant obtains a
judgment against Landlord (which is not appealed by Landlord) arising out of Landlord’s default
under the Lease, Tenant may, to the extent the judgment is not paid by Landlord, elect to set off
the amount of the judgment, plus any statutory interest per year, against the next due installments
of Rent. Election by Tenant to set off against Rent shall not constitute an election of remedies
and Tenant may pursue all remedies available at law and equity to enforce the judgment against
Landlord.

     54. No Party To Be Deemed Drafter.

28

 

     Landlord and Tenant have both had the opportunity to have counsel examine this Lease and
to propose changes to clarify any ambiguities. Accordingly, in any interpretation of this Lease, an
ambiguity shall not be resolved by interpreting the Lease against the drafter. The language of this
Lease shall be interpreted according to the fair meaning and not for or against either party.

     55. No Intended Third Party Beneficiary.

     Landlord and Tenant may each, separately, deal with other persons in connection with the
Premises or with other matters that may also relate to or be the subject of this Lease. Landlord
and Tenant do not intend to make any such third person with whom each of them may deal an intended
third party beneficiary under this Lease. There is no third person who is an intended third party
beneficiary under this Lease. No incidental beneficiary (whatever relationship such person may have
with Landlord or Tenant) shall have any right to bring an action or suit, or to assert any claim
against Landlord or Tenant under this Lease.

     56. No Offer.

     The submission of this Lease for examination does not constitute a reservation of an option
to lease the Premises, and this Lease becomes effective as a lease only upon its execution,
delivery by Landlord and Tenant and the payment of the Security Deposit by Tenant within five (5)
days after execution.

     57. Time is of the Essence.

     Time is of the essence as to each and every provision of this Lease.

     58. Miscellaneous.

     A. Emergency Generators. Tenant at Tenant’s sole cost and expense (including all
maintenance and insurance) shall have the right to utilize two of the three existing emergency
generators to be designated by Landlord which are located at the Building. Landlord agrees to
designate the two generators based upon which of the generators are currently used to back up
the equipment serving the Premises. Landlord makes no representation as to the condition of the
generators and Tenant accepts the use of such generators on an AS IS basis without warranty of
any kind or fitness for a particular purpose. Upon expiration or earlier termination of this
Lease, Tenant shall return the emergency generators to Landlord in a condition not worse than when
Tenant received them.

     
B. Furniture. The parties hereto agree that Landlord has agreed to allow Tenant to
use the furniture contained in the Premises as inventoried on Exhibit C attached hereto for
payment of an annual use charge of One Hundred Dollars ($100.00) per calendar year or portion
thereof, during each calendar year of the initial Term. Payments for the use of the furniture
shall be made to Landlord as Additional Rent. A bill of sale for said furniture will be tendered by
Landlord to Tenant only at the end of the expiration of the initial term, upon payment of the
annual use charge for the furniture for each calendar year and if Tenant is not in default
under this Lease. If for any reason, Tenant fails to make either a rent payment to the Landlord or a
furniture use payment, Landlord shall be entitled to immediate repossession of the Premises
and the furniture with no further obligation to Tenant.

29

 

     C. Fire Alarm System. The parties hereto acknowledge that the current fire alarm
system jointly services the Building and another building owned by Landlord located at 4000
Commercial Avenue, Northbrook, Illinois. Landlord shall be responsible for the maintenance of
the fire alarm system (as an Operating Expense for the Building appropriately allocated) until
such time as the fire alarm system is separated as to the Premises, at which time Tenant shall be
responsible for the maintenance of the fire alarm system for the Premises. Landlord shall
provide Tenant with 30 days prior written notice before Tenant is required to assume responsibility
for the fire alarm system.

     D. Governing Law. This Lease shall be governed by and construed in accordance
with the internal laws of the State of Illinois.

     IN WITNESS WHEREOF, the parties hereto have executed these presents, in duplicate, the day
and year first above-written.

	 	 	 	 	 	 	 	 	 	 	 
	TENANT	 	LANDLORD	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	NANOSPHERE, INC.	 	MOTOROLA, INC.,	 	 
	a Delaware Corporation	 	a Delaware Corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	
 

Print Name Vijaya Vasista

Its: C.O.O.
	 	 
	 	By:
	 	
 

Print Name: RICHARD J. KRIVA

Its: VICE PRESIDENT AND DIRECTOR

REAL ESTATE AND DEVELOPMENT
	 	 

30

 

FIRST AMENDMENT TO LEASE

     THIS FIRST AMENDMENT TO LEASE dated as of December 29, 2003, between MOTOROLA, INC., a
Delaware corporation having an office at 1303 East Algonquin Road, Schaumburg, Illinois 60196,
(hereinafter called “Landlord”) and NANOSPHERE, INC., a Delaware corporation, having an address at
4088 Commercial Avenue, Northbrook, Illinois 60062 (hereinafter called “Tenant”).

     
REFERENCE is made to a certain lease dated March 24, 2003 between Landlord and Tenant for a
portion of the 4100 Commercial Avenue, Northbrook, Illinois building owned by Landlord, together
with the right to use certain parking areas and the common areas, all as more particularly
described in the Lease.

     WHEREAS, Landlord and Tenant now desire to make certain modifications to the terms and
conditions of the Lease.

     NOW, THEREFORE, Landlord and Tenant, in consideration of the covenants and agreements
expressed herein and in the Lease, and other good and valuable consideration, the receipt and the
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that the Lease shall
be amended effective as of the date hereof as follows:

	 	1.	 	Tenant is contracting for and has agreed to have certain HVAC repairs and
modifications (totaling $95,512.78) performed for the Premises which are described and
detailed in the attached Exhibit A. Exhibit A is incorporated into this First Amendment of
Lease.
	 
	 	2.	 	Landlord has agreed to grant Tenant, in consideration for performing the HVAC repairs
and modifications, a rent abatement in the amount of Forty Seven Thousand Seven Hundred
Fifty Six and 39/100 Dollars ($47,756.39) to be used by Tenant for its February, 2004 Base
Rent and a portion of its March, 2004 Base Rent until such abatement of Base Rent totals
$47,756.39.
	 
	 	3.	 	In the event of any inconsistencies between the provisions of this First Amendment to
Lease and the Lease, the provisions of this First Amendment shall control.
	 
	 	4.	 	This First Amendment to Lease may be signed in any number of counterparts and each
thereof shall be deemed to be an original, and all such counterparts but one and the same
agreement.
	 
	 	5.	 	All capitalized terms as used herein, but not defined herein, shall have the same
meaning described to them in the Lease.
	 
	 	6.	 	This First Amendment shall be binding on successors and assigns of Landlord and
Tenant.

1

 

IN WITNESS WHEREOF, the parties have executed this First Amendment as an instrument under
seal as of the day and year first above written.

	 	 	 	 	 
	LANDLORD: 

MOTOROLA, INC.

 	 	 
	By:  	/s/	 	 
	 	Print Name: 	 	 	 
	 	Its: 	 	 	 
	 
	TENANT: 

NANOSPHERE, INC.

 	 	 
	By:  		 	 
	 	Print Name: 	V. Vasista 	 	 
	 	Its: 	C.O.O. 	 	 	 

2EX-10.19

 

Exhibit 10.19

LOAN AND SECURITY AGREEMENT

Dated as of February 7, 2007,

between

NANOSPHERE, INC.,

a Delaware corporation,

as “Borrower”,

and

VENTURE LENDING & LEASING IV, INC.,

a Maryland corporation,

as “Lender”

 

 

LOAN AND SECURITY AGREEMENT

          The Borrower and Lender identified on the cover page of this document have entered or
anticipate entering into one or more transactions pursuant to which Lender agrees to make available
to Borrower a loan facility governed by the terms and conditions set forth in this document and one
or more Supplements executed by Borrower and Lender which incorporate this document by reference.
Each Supplement constitutes a supplement to and forms part of this document, and. will be read and
construed as one with this document, so that this document and the Supplement constitute a single
agreement between the parties (collectively referred to as this “Agreement”).

          Accordingly, the parties agree as follows:

ARTICLE 1 — INTERPRETATION

     1.1 Definitions. The terms defined in Article 10 and in the Supplement will have the meanings
therein specified for purposes of this Agreement.

     1.2 Inconsistency. In the event of any inconsistency between the provisions of any Supplement
and this document, the provisions of the Supplement will be controlling for the purpose of all
relevant transactions.

ARTICLE 2 — THE COMMITMENT AND LOANS

     2.1 The Commitment. Subject to the terms and conditions of this Agreement, Lender agrees to
make term loans to Borrower from time to time from the Closing Date and to, but not including, the
Termination Date in an aggregate principal amount not exceeding the Commitment. The Commitment is
not a revolving credit commitment, and any repayments made hereunder shall not be reborrowed. Each
Loan requested by Borrower to be made on a single Business Day shall be for a minimum principal
amount set forth in the Supplement, except to the extent the remaining Commitment is a lesser
amount

     2.2 Notes Evidencing Loans; Repayment. Each Loan shall be evidenced by a separate Note
payable to the order of Lender, in the total principal amount of the Loan. Principal and interest
of each Loan shall be payable at the times set forth in the Note and regularly scheduled payments
thereof and each Final Payment shall be effected by automatic debit of the appropriate funds from
Borrower’s Primary Operating Account as specified in the Supplement hereto.

     2.3 Procedures for Borrowing.

     (a) At least five (5) Business Days’ prior to a proposed Borrowing Date, Lender shall have
received from Borrower a written request for a borrowing
hereunder (a “Borrowing Request”). Each Borrowing Request shall be in substantially the
form of Exhibit “B” to the Supplement, shall be executed by a responsible executive or
financial officer of Borrower, and shall state how much is requested, and shall be accompanied by
such other information and documentation as Lender may reasonably request

     (b) No later than 1:00 p.m. Pacific Standard Time on the Borrowing Date, if Borrower has
satisfied the conditions precedent in Article 4, Lender shall make the Loan available to Borrower
in immediately available funds. Borrower shall deliver to Lender an original executed Note(s) for
the Loan(s) covered by the Borrowing Request pursuant to Section 4.2(d).

     2.4 Interest. Except as otherwise specified in the applicable Note and/or Supplement, Basic
Interest on the outstanding principal balance of each Loan shall accrue daily at the Designated
Rate from the Borrowing Date. If the outstanding principal balance of such Loan is not paid at
maturity, interest shall accrue at the Default Rate until paid in full, as further set forth
herein.

     2.5 Final Payment. Borrower shall pay the Final Payment, if any, with respect to each Loan on
the date set forth in the Note evidencing such Loan.

     2.6 Interest Rate Calculation. Basic Interest, along with charges and fees under this
Agreement and any Loan Document, shall be calculated for actual days elapsed on the basis of a
360-day year, which results in higher interest, charge or fee payments than if a 365-day year were
used. In no event shall Borrower be obligated to pay Lender interest, charges or fees at a rate in
excess of the highest rate permitted by applicable law from time to time in effect.

     2.7 Default Interest. Any unpaid payments of principal or interest or the Final Payment with
respect to any Loan shall bear interest from their respective maturities, whether scheduled or
accelerated, at the

 

 

Designated Rate for such Loan plus five percent (5.00%) per annum, until paid in full,
whether before or after judgment (the “Default Rate”). Borrower shall pay such interest on
demand.

     2.8 Late Charges. If Borrower is late in making any payment of principal or interest or Final
Payment under this Agreement by more than five (5) days, Borrower agrees to pay a late charge of
five percent (5%) of the installment due, but not less than fifty dollars ($50.00) for any one such
delinquent payment; provided, however, that Borrower shall not pay such late charge if the
failure to make any such payment when due (taking into account applicable grace periods) arises
solely from either (i) Lender’s failure to effect timely automatic debits of the appropriate funds
from Borrower’s Primary Operating Account as provided in Section 2.2 hereunder or (ii) a technical
malfunction of an ACH transfer (and not for any other reason, including, without limitation,
insufficient funds or an act, or failure to act, by Borrower, which adversely affects the ACH
transfer). This late charge may be charged by Lender for the purpose of defraying the expenses
incidental to the handling of such delinquent amounts. Borrower acknowledges that such late charge
represents a reasonable sum considering all of the circumstances existing on the date of this
Agreement and represents a fair and reasonable estimate of the costs that will be sustained by
Lender due to the failure of Borrower to make timely payments. Borrower further agrees that proof of
actual damages would be costly and inconvenient. Such late charge shall be paid without prejudice
to the right of Lender to collect any other amounts provided to be paid or to declare a default
under this Agreement or any of the other Loan Documents or from exercising any other rights and
remedies of Lender.

     2.9 Lender’s Records. Principal, Basic Interest, Final Payments and all other sums owed under
any Loan Document shall be evidenced by entries in records maintained by Lender for such purpose.
Each payment on and any other credits with respect to principal, Basic Interest, Final Payments
and all other sums outstanding under any Loan Document shall be evidenced by entries in such
records. Absent manifest error, Lender’s records shall be conclusive evidence thereof.

     2.10 Grant of Security Interests; Filing of
Financing Statements.

          (a) To secure the timely payment and performance of all of Borrower’s Obligations to Lender,
Borrower hereby grants to Lender continuing
security interests in all of the Collateral. In connection with the foregoing, Borrower authorizes
Lender to prepare and file any financing statements describing the Collateral without otherwise
obtaining Borrower’s signature or consent with respect to the filing of such financing statements.

          (b) In furtherance of Borrower’s grant of the security interests in the Collateral pursuant to
Section 2.10(a) above, Borrower hereby pledges and grants to the Lender a security interest in all
the Shares, together with all proceeds and substitutions thereof, all cash, stock and other moneys
and property paid thereon, all rights to subscribe for securities declared or granted in connection
therewith, and all other cash and non-cash proceeds of the foregoing, as security for the
performance of the Obligations. To the extent required by the terms and conditions governing the
Shares, Borrower shall cause the books of each entity whose Shares are part of the Collateral and
any transfer agent to reflect the pledge of the Shares. Upon the occurrence and during the
continuance of an Event of Default hereunder, Lender may effect the transfer of any securities
included in the Collateral (including but not limited to the Shares) into the name of Lender and
cause new certificates representing such securities to be issued in the name of Lender or its
transferee(s). Borrower will execute and deliver such documents, and take or cause to be taken such
actions, as Lender may reasonably request to perfect or continue the perfection of Lender’s
security interest in the Shares. Unless an Event of Default shall have occurred and be continuing,
Borrower shall be entitled to exercise any voting rights with respect to the Shares and to give
consents, waivers and ratifications in respect thereof, provided that no vote shall be cast or
consent, waiver or ratification given or action taken which would be inconsistent with any of the
terms of this Agreement or which would constitute or create any violation of any of such terms. All
such rights to vote and give consents, waivers and ratifications shall terminate upon the
occurrence and continuance of an Event of Default.

          (c) Borrower is and shall remain absolutely and unconditionally liable for the performance of
its obligations under the Loan Documents, including, without limitation, any deficiency by reason
of the failure of the Collateral to satisfy all amounts due Lender under any of the Loan
Documents.

          (d) All Collateral pledged by Borrower under this Agreement and any Supplement shall secure
the timely payment and performance of all Obligations under this Agreement, the Notes and the
other Loan

 

 

Documents. Except as expressly provided in this Agreement, no Collateral pledged under this
Agreement or any Supplement shall be released until such time as all Obligations (other than
contingent, reimbursement and indemnification obligations for which no claim has been made) under
this Agreement and the other Loan Documents have been satisfied and paid in full.

ARTICLE 3 — REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants that, except as set forth in the Supplement or any schedule
of exceptions executed by the parties, as of the Closing Date and each Borrowing Date:

     3.1 Due Organization. Borrower is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation, and is duly qualified to conduct
business and is in good standing in each other jurisdiction in which its business is conducted or
its properties are located, except where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.

     3.2 Authorization, Validity and Enforceability. The execution, delivery and performance of
all Loan
Documents executed by Borrower are within Borrower’s powers, have been duly authorized, and are
not in conflict with Borrower’s certificate of incorporation or by-laws, or the terms of any
charter or other organizational document of Borrower, as amended from time to time; and all such
Loan Documents constitute valid and binding obligations of Borrower, enforceable in accordance
with their terms (except as may be limited by bankruptcy, insolvency and similar laws affecting
the enforcement of creditors’ rights in general, and subject to general principles of equity).

     3.3 Compliance with Applicable Laws.
Borrower has complied with all licensing, permit and/or other requirements necessary to lawfully
conduct the business in which it is engaged, and to any sales, leases or the furnishing of
services by Borrower, including without limitation those requiring consumer or other disclosures,
the noncompliance with which would have a Material Adverse Effect.

     3.4 No Conflict. The execution, delivery, and
performance by Borrower of all Loan Documents are
not in conflict with any law, rule, regulation, order or
directive, or any indenture, agreement, or undertaking
to which Borrower is a party or by which Borrower may be bound or affected, except to the extent
any such conflict does not cause a Material Adverse Effect. Without limiting the generality of the
foregoing, the issuance to Lender (or its designee) of shares of Borrower’s Series D Preferred
Stock and the grant of registration rights in connection therewith do not violate any agreement or
instrument by which Borrower is bound or require the consent of any holders of Borrower’s
securities other than consents which have been obtained prior to the Closing Date.

     3.5 No Litigation, Claims or Proceedings. There is no material litigation, tax claim,
proceeding or dispute pending, or, to the knowledge of Borrower, threatened against or affecting
Borrower, its property or the conduct of its business.

     3.6 Correctness of Financial Statements.
Borrower’s financial statements which have been delivered to Lender present fairly Borrower’s
financial condition in accordance with GAAP as of the latest date of such financial statements;
and since that date there has been no Material Adverse Change.

     3.7 No Subsidiaries. Borrower is not a majority owner of or in a control relationship with
any other business entity.

     3.8 Environmental Matters. To its knowledge after reasonable inquiry, Borrower has concluded
that Borrower is in compliance with Environmental Laws, except to the extent a failure to be in
such compliance could not reasonably be expected to have a Material Adverse Effect.

     3.9 No Event of Default. No Default or Event of Default has occurred and is continuing.

     3.10 Full Disclosure. None of the
representations or warranties made by Borrower in the
Loan Documents as of the date such representations
and warranties are made or deemed made, and none of
the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of
Borrower in connection with the Loan Documents
(including disclosure materials delivered by or on
behalf of Borrower to Lender prior to the Closing Date
or pursuant to Section 5.2 hereof), contains any untrue
statement of a material fact or omits any material fact
required to be stated therein or necessary to make the
statements made therein, in light of the circumstances
under which they are made, not misleading as of the
time when made or delivered.

 

 

     3.11 Specific Representations Regarding
Collateral.

     (a) Title. Except for the security interests created by this Agreement and Permitted Liens,
(i) Borrower is and will be the unconditional legal and beneficial owner of the Collateral, and
(ii) the Collateral is genuine and subject to no Liens, rights or defenses of others. There exist
no prior assignments or encumbrances of record with the U.S. Patent and Trademark Office or U.S.
Copyright Office affecting any Collateral in favor of any third party other than Lender.

     (b) Rights to Payment. The names of the obligors, amount owing to Borrower, due dates and all
other information with, respect to the Rights to Payment are and will be correctly stated in all
material respects in all Records relating to the Rights to Payment. Borrower further represents
and warrants, to its knowledge, that each Person appearing to be obligated on a Right to Payment
has authority and capacity to contract and is bound as it appears to be.

     (c) Location of Collateral. Borrower’s chief executive office, Inventory, Records,
Equipment, and any other offices or places of business are located at the address(es) shown on the
Supplement.

     (d) Business Names. Other than its full corporate name, Borrower has not conducted business
using any trade names or fictitious business names except as shown on the Supplement.

     3.12 Copyrights, Patents, Trademarks and
Licenses.

     (a) Borrower owns or is licensed or otherwise has the right to use the Copyrights, the
Patents and the Trademarks.

     (b) To Borrower’s knowledge, no slogan or other advertising device, product, process, method,
substance, part or other material now employed by Borrower infringes upon any rights held by any
other Person.

     (c) No claim or litigation regarding any of the foregoing is pending or, to Borrower’s
knowledge, threatened, which, in either case, could reasonably be expected to have a Material
Adverse Effect.

     3.13 Regulatory Compliance. Borrower has
met the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to
ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA that is
reasonably likely to result in Borrower’s incurring any liability that could have a Material
Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the
Board of Governors of the Federal Reserve System). Borrower has complied with all the provisions of
the Federal Fair Labor Standards Act.

ARTICLE 4 — CONDITIONS PRECEDENT

     4.1 Conditions to First Loan. The obligation of Lender to make its first Loan hereunder is,
in addition to the conditions precedent specified in Section 4.2 and in any Supplement, subject to
the fulfillment of the following conditions and to the receipt by Lender of the documents
described below, duly executed and in form and substance satisfactory to Lender and its counsel:

     (a) Resolutions. A certified copy of the resolutions of the Board of Directors of Borrower
authorizing the execution, delivery and performance by Borrower of the Loan Documents.

     (b) Incumbency and Signatures. A certificate of the secretary of Borrower certifying the
names of the officer or officers of Borrower authorized to sign the Loan Documents, together with
a sample of the true signature of each such officer.

     (c) Legal Opinion. The opinion of legal counsel for Borrower as to such matters as Lender may
reasonably request, including the matters covered by Sections 3.1, 3.2, 3.4 and 3.5 hereof.

     (d) Certificate and By-Laws. Certified copies of the Certificate of Incorporation and By-Laws
of Borrower, as amended through the Closing Date.

     (e) This Agreement. Original counterparts of this Agreement and the initial Supplement, with
all schedules completed and attached thereto, and disclosing such information as is acceptable to
Lender.

     (f) Financing Statements. Filing copies (or other evidence of filing satisfactory to Lender
and its counsel) of such UCC financing statements, collateral

 

 

assignments, account control agreements, and termination statements, with respect to the
Collateral as Lender shall request.

     (g) Intellectual Property Security Agreement.
An Intellectual Property Security Agreement executed by Borrower substantially in the form
attached as Exhibit “G” to the Supplement.

     (h) Lien Searches. UCC lien, judgment, bankruptcy and tax lien searches of Borrower from such
jurisdictions or offices as Lender may reasonably request, all as of a date reasonably
satisfactory to Lender and its counsel.

     (i) Good Standing Certificate. A certificate of status or good standing of Borrower as of a
date acceptable to Lender from the jurisdiction of Borrower’s organization and any foreign
jurisdictions where Borrower is qualified to do business.

     (j) Stock Subscription Agreement; Stock Certificates. The Stock Subscription Agreement (as
defined in the Supplement), together with one or more original certificates representing the
shares of Borrower’s Series D Preferred Stock issued pursuant thereto.

     (k) Insurance Certificates. Insurance certificates showing Lender as loss payee or additional
insured.

     (l) Other Documents. Such other documents
and instruments as Lender may reasonably request to effectuate the intents and purposes of this
Agreement.

     4.2 Conditions to All Loans. The obligation of Lender to make its initial Loan and each
subsequent Loan is subject to the following further conditions precedent that:

     (a) No Default. No Default or Event of Default has occurred and is continuing or will result
from the making of any such Loan, and the representations and warranties of Borrower contained in
Article 3 of this Agreement and Part 3 of the Supplement are true and correct in all material
respects as of the Borrowing Date of such Loan.

     (b) No Material Adverse Change. No event has occurred that has had or could reasonably be
expected to have a Material Adverse Change.

     (c) Borrowing Request. Borrower shall have delivered to Lender a Borrowing Request for such
Loan.

     (d) Note. Borrower shall have delivered an
original executed Note evidencing such Loan,
substantially in the form attached to the Supplement as
either Exhibits A-1 or A-2, whichever is applicable.

     (e) Supplemental Lien Filings. Borrower shall
have executed and delivered such amendments or
supplements to this Agreement and additional Security
Documents, financing statements and third party
waivers as Lender may reasonably request in
connection with the proposed Loan, in order to create,
protect or perfect or to maintain the perfection of
Lender’s Liens on the Collateral.

     (f) VCOC Limitation. Lender shall not be obligated to make any Loan under its Commitment if
at the time of or after giving effect to the proposed Loan Lender would no longer qualify as: (A)
a “venture capital operating company” under U.S. Department of Labor Regulations Section
2510.3-101(d), Title 29 of the Code of Federal Regulations, as amended; and (B) a “business
development company” under the provisions of federal Investment Company Act of 1940, as amended;
and (C) a “regulated investment company” under the provisions of the Internal Revenue Code of
1986, as amended. Lender does not now know, and has no reason to know, of any facts or
circumstances that could reasonably be expected to cause Lender to no longer qualify as (A) a
“venture capital operating company,” or (B) a “business development company,” or (C) a “regulated
investment company” as those terms are defined above. If Lender fails or refuses to make any Loan
under its Commitment for reasons set forth in this Section 4.2(f), then (1) the ratable portion of
the Commitment Fee (as defined in the Supplement) associated with such requested but unfunded Loan
shall be refunded to Borrower and (2) the number of shares of Borrower’s Series D Preferred Stock
issued to Lender or its assignee on the Closing Date (the “Initial Shares”) shall be
reduced by a number of shares equal to the product of the Initial Shares, and a fraction the
numerator of which is the principal amount of such requested but unfunded Loan, and the
denominator of which is the Commitment; provided, however, that in the event Lender
subsequently funds such Loan (with Borrower’s consent), such reductions shall be automatically
eliminated or reversed (subject to subsequent reduction in accordance with the terms of this
paragraph).

     (g) Financial Projections. Borrower shall have delivered to Lender Borrower’s business plan
and/or

 

 

financial projections or forecasts as most recently approved by Borrower’s Board of
Directors.

ARTICLE 5 — AFFIRMATIVE COVENANTS

     During the term of this Agreement and until its performance of all Obligations, Borrower
will:

     5.1 Notice to Lender. Promptly give written notice to Lender of;

     (a) Any litigation or administrative or regulatory proceeding affecting Borrower where the
amount claimed against Borrower is at the Threshold Amount or more, or where the granting of the
relief requested would reasonably be expected to have a Material Adverse Effect; or of the
acquisition by Borrower of any commercial tort claim, including brief details of such claim and
such other information as Lender may reasonably request to enable Lender to better perfect its Lien
in such commercial tort claim as Collateral.

     (b) The occurrence of any Default or any Event of Default

     (c) Any change in the location of any of Borrower’s places of business or Collateral at least
thirty (30) days in advance of such change, or of the establishment of any new, or the
discontinuance of any existing, place of business.

     (d) Any dispute or default by Borrower or any other party under any joint venture,
partnering, distribution, cross-licensing, strategic alliance, collaborative research or
manufacturing, license or similar agreement which could reasonably be expected to have a Material
Adverse Effect, including under any material license agreement or cross-licensing arrangement with
Northwestern University, Chad A. Mirkin and/or Robert L. Letsinger.

     (e) Any other matter which has resulted or could reasonably be expected to result in a
Material Adverse Change.

     5.2 Financial Statements. Deliver to Lender or cause to be delivered to Lender, in form and detail
satisfactory to Lender the following financial and other information, which Borrower warrants shall be accurate
and complete in all material respects:

     (a) Monthly Financial Statements. As soon as available but no later than thirty (30) days
after the end of each month, Borrower’s balance sheet as of the end of such period, and Borrower’s income statement for such period and for that portion of Borrower’s
financial reporting year ending with such period, prepared in accordance with GAAP and attested by
a responsible financial officer of Borrower as being complete and correct and fairly presenting
Borrower’s financial condition and the results of Borrower’s operations. After a Qualified Public
Offering, the foregoing interim financial statements shall be delivered no later than 45 days
after each fiscal quarter and for the quarter-annual fiscal period then ended.

     (b) Year-End Financial Statements. As soon as available but no later than one hundred fifty
(150) days after and as of the end of each financial reporting year, a complete copy of Borrower’s
audit report, which shall include balance sheet, income statement, statement of changes in equity
and statement of cash flows for such year, prepared in accordance with GAAP and certified by an
independent certified public accountant selected by Borrower (the “Accountant”). The
Accountant’s certification shall not be qualified or limited due to a restricted or limited
examination by the Accountant of any material portion of Borrower’s records or otherwise.

     (c) Compliance Certificates. Simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate of the chief financial
officer of Borrower substantially in the form of Exhibit “C” to the Supplement stating
whether any Default or Event of Default exists on the date of such certificate, and if so, setting
forth the details thereof and the action which Borrower is taking or proposes to take with respect
thereto.

     (d) Government Required Reports; Press Releases. Promptly after sending, issuing, making available, or filing, copies of all statements
released to any news media for publication, all reports, proxy statements, and financial
statements that Borrower sends or makes available to its stockholders, and, not later than five
(5) days after actual filing or the date such filing was first due, all registration statements
and reports that Borrower files or is required to file with the Securities and Exchange
Commission, or any other governmental or regulatory authority, including any notices or reports to
the United States Department of Commerce or other Federal agency under the Bayh-Dole Act, 35
U.S.C. section 200 et seq., relating to Borrower’s licensing arrangements with Northwestern
University.

     (e) Other Information. Such other statements, lists of property and accounts, budgets, forecasts,

 

 

reports, or other information as Lender may from time to time reasonably request.

     5.3 Managerial Assistance from Lender. Permit Lender to substantially participate in, and substantially
influence the conduct of management of Borrower through the exercise of “management rights,” as that
term is denned in 29 C.F.R. § 25l0.3-101(d)3 including without limitation the following rights:

     (a) Borrower agrees that (i) it will make its officers, directors, employees and affiliates
available at such times as Lender may reasonably request for Lender to consult with and advise as
to the conduct of Borrower’s business, its equipment and financing plans, and its financial
condition and prospects, (ii) Lender shall have the right to inspect Borrower’s books, records,
facilities and properties at reasonable times during normal business hours on reasonable advance
notice, and (iii) Lender shall be entitled to recommend prospective candidates for election or
nomination for election to Borrower’s Board of Directors and Borrower shall give due consideration
to (but shall not be bound by) such recommendations, it being the intention of the parties that
Lender shall be entitled through such rights, inter alia, to furnish “significant managerial
assistance”, as defined in Section 2(a)(47) of the Investment Company Act of 1940, to Borrower.

     (b) Without limiting the generality of (a) above, if Lender reasonably believes that
financial or other developments affecting Borrower have impaired Borrower’s ability to perform its
obligations under this Agreement, permit Lender reasonable access to Borrower’s management and/or
Board of Directors and opportunity to present Lender’s views with respect to such developments.

Lender shall cooperate with Borrower to ensure that the exercise of Lender’s rights shall not
disrupt the business of Borrower. The rights enumerated above shall not be construed as giving
Lender control over Borrower’s management or policies. The covenants contained in this Section 5.3
shall terminate upon the consummation of a sale of the Borrower’s securities pursuant to a
registration statement filed by the Borrower under the Securities Act of 1933, as amended, in
connection with a firm commitment underwritten offering of the Borrower’s securities to the
general public.

     5.4 Existence. Maintain and preserve Borrower’s existence, present form of business, and all rights and
privileges necessary or desirable in the normal course of its business; and keep all Borrower’s property in good working order and condition, ordinary
wear and tear excepted.

     5.5 Insurance. Obtain and keep in force insurance in such amounts and types as is usual in the
type of business conducted by Borrower, with insurance carriers having a policyholder rating of not
less than “A” and financial category rating of Class VII in “Best’s Insurance Guide,” unless
otherwise approved by Lender. Such insurance policies must be in form and substance satisfactory to
Lender, and shall list Lender as an additional insured or loss payee, as applicable, on
endorsements) in form reasonably acceptable to Lender. Borrower shall furnish to Lender such
endorsements, and upon Lender’s request, copies of any or all such policies.

     5.6 Accounting Records. Maintain adequate books, accounts and records, and prepare all
financial statements in accordance with GAAP, and in compliance in all material respects with the
regulations of any governmental or regulatory authority having jurisdiction over Borrower or
Borrower’s business; and permit employees or agents of Lender to inspect Borrower’s properties,
and to examine, and make copies and memoranda of Borrower’s books, accounts and records at
Borrower’s expense and at such reasonable times during normal business hours, but in no event more
than one time during any fiscal year unless an Event of Default exists (in which case, no such
limitation shall apply, and all such inspections and/or examinations shall be at the sole cost and
expense of Borrower).

     5.7 Compliance With Laws. Comply with all laws (including Environmental Laws), rules,
regulations applicable to, and all orders and directives of any governmental or regulatory
authority having jurisdiction over, Borrower or Borrower’s business, and with all material
agreements to which Borrower is a party, except where the failure to so comply would not have a
Material Adverse Effect.

     5.8 Taxes and Other Liabilities. Pay all Borrower’s Indebtedness when due; pay all taxes and other governmental or regulatory assessments
before delinquency or before any penalty attaches thereto, except as may be contested in good
faith by the appropriate procedures and for which Borrower shall maintain appropriate reserves;
and timely file all required tax returns.

     5.9 Special Collateral Covenants.

 

 

     (a) Maintenance of Collateral; Inspection. Do all things reasonably necessary to maintain, preserve, protect and keep all Collateral in good
working order and salable condition, ordinary wear and tear excepted, deal with the Collateral in
all ways as are considered good practice by owners of like property, and use the Collateral
lawfully and, to the extent applicable, only as permitted by Borrower’s insurance policies.
Maintain, or cause to be maintained, complete and accurate Records relating to the Collateral.
Upon reasonable prior notice at reasonable times during normal business hours, Borrower hereby
authorizes Lender’s officers, employees, representatives and agents to inspect the Collateral and
to discuss the Collateral and the Records relating thereto with Borrower’s officers and employees,
and, in the case of any Right to Payment, with any Person which is or may be obligated thereon.

     (b) Documents of Title. Not sign or authorize the signing of any financing statement or other
document naming Borrower as debtor or obligor, or acquiesce or cooperate in the issuance of any bill of
lading, warehouse receipt or other document or instrument of title with respect to any Collateral, except
those negotiated to Lender, or those naming Lender as secured party, or if solely to create, perfect or maintain
a Permitted Lien.

     (c) Change in Location or Name. Without at least 30 days’ prior written notice to Lender: (a) not
relocate any Collateral or Records, its chief executive office, or establish a place of business at a location
other than as specified in the Supplement; and (b) not change its name, mailing address, location of
Collateral, jurisdiction of incorporation or its legal structure.

     (d) Decals, Markings. At the request of Lender after the occurrence and during the continuance of an
Event of Default, firmly affix a decal, stencil or other marking to designated items of Equipment, indicating
thereon the security interest of Lender.

     (e) Agreement With Real Property Owner/Landlord. Obtain and maintain such acknowledgments, consents,
waivers and agreements (each a “Waiver”) from the owner, lienholder, mortgagee and landlord (each, a “Landlord”) with
respect to any real property on which Equipment is located as Lender may require, all in form and
substance satisfactory to Lender, if either such real property is located in a jurisdiction that provides for
statutory landlord’s liens or where Borrower’s lease for such real property grants to the Landlord a Lien on
Borrower’s Equipment and other personal property. In
all other cases, Borrower agrees it will use commercially reasonable efforts to obtain a Waiver
from the Landlord.

     (f) Certain Agreements on Rights to Payment. Other than in the ordinary course of business,
not make any material discount, credit, rebate or other reduction in the original amount owing on
a Right to Payment or accept in satisfaction of a Right to Payment less than the original amount
thereof.

     5.10 Authorization for Automated Clearinghouse Funds Transfer. (i) Authorize Lender to initiate
debit entries to Borrower’s Primary Operating Account, specified in the Supplement hereto, through
Automated Clearinghouse (“ACH”) transfers, in order to satisfy regularly scheduled payments of
principal, interest and Final Payments; (ii) provide Lender at least thirty (30) days notice of
any change in Borrower’s Primary Operating Account; and (iii) grant Lender any additional
authorizations necessary to begin ACH debits from a new account which becomes the Primary
Operating Account.

ARTICLE 6 — NEGATIVE COVENANTS

     During the term of this Agreement and until the performance of all Obligations, Borrower will
not:

     6.1 Indebtedness. Be indebted for borrowed money, the deferred purchase price of property, or
leases which would be capitalized in accordance with GAAP; or become liable as a surety,
guarantor, accommodation party or otherwise for or upon the obligation of any other Person, except

     (a) Indebtedness incurred for the acquisition of supplies or inventory on normal trade credit;

     (b) Indebtedness incurred pursuant to one or more transactions permitted under Section
6.4;

     (c) Indebtedness of Borrower under this Agreement;

     (d) Subordinated Debt;

     (e) Indebtedness of Borrower other than as described in subparagraph (i) hereof evidenced by
capital lease obligations entered into in order to finance capital expenditures made by Borrower
in an aggregate amount not to exceed $250,000 at any time outstanding;

 

 

     (f) Indebtedness in respect of purchase money obligations and any refinancings or renewals
thereof (in an aggregate principal amount not to exceed $100,000 at any one time outstanding);

     (g) Indebtedness resulting from investments otherwise expressly permitted under Section
6.6:

     (h) Indebtedness of Borrower in respect of bid, performance or surety bonds, workers’
compensation claims, self-insurance obligations and bankers’ acceptances issued for the account of
any Borrower in the ordinary course of business;

     (i) any Indebtedness approved by Lender prior to the Closing Date as shown on Schedule
6.1 hereto;

     (j) Indebtedness to VLL5 under the VLL5 Loan Agreement; and

     (k) additional Indebtedness of Borrower in an aggregate principal amount not to exceed
$250,000 at any time outstanding.

     6.2 Liens. Create, incur, assume or permit to exist any Lien, or grant any other Person a
negative pledge, on any of Borrower’s property, except Permitted Liens. Borrower and Lender agree
that this covenant is not intended to constitute a lien, deed of trust, equitable mortgage, or
security interest of any kind on any of Borrower’s real property, and this Agreement shall not be
recorded or recordable. Notwithstanding the foregoing, however, violation of this covenant by
Borrower shall constitute an Event of Default

     6.3 Dividends. Except after a Qualified Public Offering, pay any dividends or purchase,
redeem or otherwise acquire or make any other distribution with respect to any of Borrower’s
capital stock, except (a) dividends or other distributions solely of capital stock of Borrower,
and (b) so long as no Event of Default has occurred and is continuing and the same would be
permitted under applicable law, repurchases of stock from employees upon termination of employment
under reverse vesting or similar repurchase plans not to exceed $200,000 in any calendar year.

     6.4 Changes/Mergers. Liquidate or dissolve; or enter into any consolidation, merger or other
combination in which the stockholders of Borrower immediately prior to the first such transaction
own less than 50% of the voting stock of Borrower immediately after giving effect to such
transaction or related series of such transactions; or sell all, or substantially all, of
Borrower’s assets in a single transaction or related series of transactions, except that Borrower
may consolidate or merge, or sell all, or substantially all, of its assets so long as: (A) the
entity that results from such merger or consolidation, or proposes to purchase all, or
substantially all, of Borrower’s assets (as applicable, the “Surviving Entity”) shall have
executed and delivered to Lender an agreement in form and substance reasonably satisfactory to
Lender, containing an assumption by the Surviving Entity of the due and punctual payment and
performance of all Obligations and performance and observance of each covenant and condition of
Borrower in the Loan Documents; (B) all such obligations of the Surviving Entity to Lender shall be
guaranteed by any entity that directly or indirectly owns or controls more than 50% of the voting
stock of the Surviving Entity; (C) immediately after giving effect to such merger, consolidation or
sale of assets, no Event of Default or, event which with the lapse of time or giving of notice or
both, would result in an Event of Default shall have occurred and be continuing; and (D) the credit
risk to Lender, in its reasonable discretion, of the Surviving- Entity shall not be increased. In
determining whether the proposed merger, consolidation or asset sale would result in an increased
credit risk, Lender may consider, among other things, changes in Borrower’s management team,
employee base, access to equity markets, venture capital support, financial position and/or
disposition of intellectual property rights which may reasonably be anticipated as a result of the
transaction.

     6.5 Sales of Assets. Sell, transfer, lease, license or otherwise dispose of (a
“Transfer”) any of Borrower’s assets except (i) non-exclusive licenses of Intellectual
Property in the ordinary course of business consistent with industry practice; (ii) exclusive
licenses of Intellectual Property in the ordinary course of business consistent with industry
practice and approved by Borrower’s Board of Directors; provided that such exclusive licenses
neither result in a legal transfer of title of the licensed Intellectual Property nor have the
same effect as a sale of such Intellectual Property; (iii) Transfers of worn-out, obsolete or
surplus property (each as determined by Borrower in its reasonable judgment); (iv) Transfers of
Inventory; (v) Transfers constituting Permitted Liens; (vi) Transfers permitted in Section 6.6
hereunder; and (vii) Transfers of Collateral (other than Intellectual Property) for fair
consideration and in the ordinary course of its business.

     
6.6 Loans/Investments. Make or suffer to exist any loans, guaranties, advances, or investments, except:

 

 

     (a) accounts receivable in the ordinary course of Borrower’s business;

     (b) investments in domestic certificates of deposit issued by, and other domestic investments
with, financial institutions organized under the laws of the United States or a state thereof,
having at least One Hundred Million Dollars ($100,000,000) in capital and a rating of at least
“investment grade” or “A” by Moody’s or any successor rating agency;

     (c) investments in marketable obligations of the United States of America and in open market
commercial paper given the highest credit rating by a national credit agency and maturing not more
than one year from the creation thereof;

     (d) temporary advances to cover incidental expenses to be incurred in the ordinary course of
business;

     (e) investments in joint ventures, strategic alliances, licensing and similar arrangements
customary in Borrower’s industry and which do not require Borrower to assume or otherwise become
liable for the obligations of any third party not directly related to or arising out of such
arrangement or, without the prior written consent of Lender, require Borrower to transfer
ownership of non-cash assets to such joint venture or other entity; and

     (f) Loans to officers and directors of Borrower not involving the actual advance of cash by
Borrower solely to finance the purchases by such officers or directors of shares of capital stock
of Borrower on terms approved by Borrower’s board of directors, including a majority of
non-interested directors.

     6.7 Transactions With Related Persons. Directly or indirectly enter into any transaction with or for the benefit of a Related Person on
terms more favorable to the Related Person than would have been obtainable in an “arms’ length”
dealing, unless such transaction has been approved by Borrower’s board of directors, including a
majority of non-interested directors.

     6.8 Other Business. Engage in any material line of business other than the business Borrower
conducts as of the Closing Date or any other businesses reasonably related thereto.

     6.9 Financing Statements and Other Actions. Fail to execute and deliver to Lender all
financing statements, notices and other documents (including, without limitation, any filings with the United States Patent and Trademark Office) from time to
time reasonably requested by Lender to maintain a first perfected security interest in the
Collateral in favor of Lender; perform such other acts, and execute and deliver to Lender such
additional conveyances, assignments, agreements and instruments, as Lender may at any time request
in connection with the administration and enforcement of this Agreement or Lender’s rights, powers
and remedies hereunder.

     6.10 Compliance. Become an “investment company” or controlled by an “investment company,”
within the meaning of the Investment Company Act of 1940, or become principally engaged in, or
undertake as one of its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Loan for such purpose. Fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA to occur, fail to comply with the Federal Fair Labor Standards
Act or violate any law or regulation, which violation could have a Material Adverse Effect or a
material adverse effect on the Collateral or the priority of Lender’s Lien on the Collateral, or
permit any of its subsidiaries to do any of the foregoing.

     6.11 Other Deposit and Securities Accounts. Maintain any deposit accounts or accounts holding securities owned by Borrower except (i) Deposit
Accounts and investment/securities accounts as set forth in the Supplement, and (ii) other Deposit
Accounts and securities/investment accounts, in each case, with respect to which Borrower and
Lender shall have taken such action as Lender reasonably deems necessary to obtain a perfected
first security interest therein.

     6.12 Subsidiaries.

          (a) Sell, transfer, encumber or otherwise dispose of Borrower’s ownership interest in any
Subsidiary.

          (b) Cause or permit a Subsidiary to do any of the following: (a) grant Liens on such
Subsidiary’s assets, except for Liens on any property held or acquired by such Subsidiary in the
ordinary course of its business securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such property; provided, that such Lien
attaches solely to the property acquired with such Indebtedness and that the principal amount of
such Indebtedness does not exceed one hundred percent

 

 

(100%) of the cost of such property; and (b) issue any additional Shares.

     6.13 Prepayment of Indebtedness. Prepay, redeem or otherwise satisfy in any manner prior to
the scheduled repayment thereof any Indebtedness (other than the Loans). Notwithstanding the
foregoing, Lender agrees that the conversion or exchange into Borrower’s equity securities of any
Indebtedness (other than the Loans) shall not be prohibited by this Section 6.13.

ARTICLE 7 — EVENTS OF DEFAULT

     7.1 Events of Default; Acceleration. Upon the occurrence and during the continuation of any
Default, the obligation of Lender to make any additional Loan shall be suspended. The occurrence
of any of the following (each, an “Event of Default”) shall terminate any obligation of
Lender to make any additional Loan; and shall, at the option of Lender (1) make all sums of Basic
Interest and principal, all Final Payments, and any Obligations and other amounts owing under any
Loan Documents immediately due and payable without notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor or any other notices or demands, and (2) give
Lender the right to exercise any other right or remedy provided by contract or applicable law:

     (a) Borrower shall fail to pay any principal, interest or Final Payment under this Agreement
or any Note, or fail to pay any fees or other charges when due under any Loan Document, and such
failure continues for three (3) Business Days or more after the same first becomes due (each,
individually, a “Payment Default”); or an Event of Default as defined in any other Loan Document
shall have occurred. Notwithstanding the foregoing, in the event of a Payment Default resulting
solely from the technical malfunction of an ACH transfer (and not for any other reason, including,
without limitation, insufficient funds or an act, or failure to act, by Borrower, which adversely
affects the ACH transfer) then Lender shall provide Borrower notice of the same and Borrower shall
have 5 days from the receipt of such notice to cure the Payment Default.

     (b) Any representation or warranty made, or financial statement, certificate or other
document provided, by Borrower under any Loan Document shall prove to have been false or
misleading in any material respect when made or deemed made herein.

     (c) (i)Borrower shall fail to pay its debts generally as they become due or (ii) shall
commence any Insolvency Proceeding with respect to itself; an involuntary Insolvency Proceeding
shall be filed against Borrower, or a custodian, receiver, trustee, assignee for the benefit of
creditors, or other similar official, shall be appointed to take possession, custody or control of
the properties of Borrower, and such involuntary Insolvency Proceeding, petition or appointment is
acquiesced to by Borrower or is not dismissed within forty five (45) days; or the dissolution or
termination of the business of Borrower; or Borrower shall take any corporate action for the
purpose of effecting, approving, or consenting to any of the foregoing.

     (d) Borrower shall be in default beyond any applicable period of grace or cure under any
other agreement involving the borrowing of money, the purchase of property, the advance of credit
or any other monetary liability of any kind to Lender or to any Person which results in the
acceleration of payment of such obligation in an amount in excess of the Threshold Amount.

     (e) Any governmental or regulatory authority shall take any judicial or administrative
action, or any defined benefit pension plan maintained by Borrower shall have any unfunded
liabilities, any of which, would have a Material Adverse Effect.

     (f) Except as set forth in Section 6.4, any sale, transfer or other disposition of all or a
substantial or material part of the assets of Borrower, including without limitation to any trust
or similar entity, shall occur.

     (g) Any judgment(s) singly or in the aggregate in excess of the Threshold Amount shall be
entered against Borrower which remain unsatisfied, unvacated or unstayed pending appeal for ten
(10) or more days after entry thereof.

     (h) At any time prior to the initial sale of Borrower’s equity securities to the public
pursuant to a registration statement filed under the Securities Act of 1933, as amended, any
Person or two or more Persons (other than any “Excluded Person” as defined below) acting in
concert shall have acquired (in a single transaction or series of related transactions) beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission) of
outstanding shares of voting stock of Borrower representing fifty percent (50%) or more of the
voting power of all shares of Borrower’s voting stock that are outstanding

 

 

immediately after such acquisition. As used in this paragraph, “Excluded Person”
means: (i) any Person who is a stockholder of Borrower as of the Closing Date; (ii) a venture
capital firm or similar investment fund or institution; or (iii) an affiliate of any Person
described in clause (i) or (ii).

     (i) Borrower shall fail to perform or observe any covenant contained in Sections 6.1, 6.2,
6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.10, 6.12 or 6.13 of this Agreement.

     (j) Borrower shall fail to perform or observe any covenant contained in Sections 6.9 or 6.11
of this Agreement and, if capable of being cured, the breach of such covenant is not cured within
10 Business Days after the sooner to occur of Borrower’s receipt of notice of such breach from
Lender or the date on which such breach first becomes known to Borrower’s Chief Executive Officer
or Chief Financial Officer.

     (k) Borrower shall fail to perform or observe any covenant contained in Article 5 or
elsewhere in this Agreement or any other Loan Document (other than a covenant which is dealt with
specifically elsewhere in this Article 7) and, if capable of being cured, the breach of such
covenant is not cured within thirty (30) days after the sooner to occur of Borrower’s receipt of
notice of such breach from Lender or the date on which such breach first becomes known to
Borrower’s Chief Executive Officer or Chief Financial Officer; provided, however
that if such breach is not capable of being cured within such thirty (30) day period and Borrower
timely notifies Lender of such fact and Borrower diligently pursues such cure, then the cure
period shall be extended to the date requested in Borrower’s notice but in no event more than
ninety (90) days from the initial breach; provided, further, that such additional
sixty (60) day opportunity to cure shall not apply in the case of any failure to perform or
observe any covenant which has been the subject of a prior failure within the preceding one
hundred eighty (180) days or which is a willful and knowing breach by Borrower.

     7.2 Remedies Upon Default. Subject to Section 6 of Part 2 of the Supplement, upon the
occurrence and during the continuance of an Event of Default, Lender shall be entitled to, at its
option, exercise any or all of the rights and remedies available to a secured party under the UCC
or any other applicable law, and exercise any or all of its rights and remedies provided for in
this Agreement and in any other Loan Document. The obligations of Borrower under this Agreement
shall continue to be effective or be reinstated, as the case may be, if at any time any payment of
any Obligations is rescinded or must otherwise be returned by Lender upon, on account of, or in connection with, the insolvency, bankruptcy or reorganization
of Borrower or otherwise, all as though such payment had not been made.

     7.3 Sale of Collateral. Subject to Section 6 of Part 2 of the Supplement, upon the occurrence
and during the continuance of an Event of Default, Lender may sell all or any part of the
Collateral, at public or private sales, to itself, a wholesaler, retailer or investor, for cash,
upon credit or for future delivery, and at such price or prices as Lender may deem commercially
reasonable. To the extent permitted by law, Borrower hereby specifically waives all rights of
redemption and any rights of stay or appraisal which it has or may have under any applicable law in
effect from time to time. Any such public or private sales shall be held at such times and at such
place(s) as Lender may determine. In case of the sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained by Lender until the selling
price is paid by the purchaser, but Lender shall not incur any liability in case of the failure of
such purchaser to pay for the Collateral and, in case of any such failure, such Collateral may be
resold. Lender may, instead of exercising its power of sale, proceed to enforce its security
interest in the Collateral by seeking a judgment or decree of a court of competent jurisdiction.
Without limiting the generality of the foregoing, if an Event of Default is in effect,

     (1) Subject to the rights of any third parties, Lender may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive basis, any Copyrights,
Patents or Trademarks included in the Collateral throughout the world for such term or terms, on
such conditions and in such manner as Lender shall in its sole discretion determine;

     (2) Lender may (without assuming any obligations or liability thereunder), at any time and
from time to time, enforce (and shall have the exclusive right to enforce) against any licensee or
sublicensee all rights and remedies of Borrower in, to and under any Copyright Licenses, Patent
Licenses or Trademark Licenses and take or refrain from taking any action under any thereof, and
Borrower hereby releases Lender from, and agrees to hold Lender free and harmless from and against
any claims arising out of, any lawful action so taken or omitted to be taken with respect thereto
other than claims arising out of Lender’s gross negligence or willful misconduct; and

 

 

     (3) Upon request by Lender, Borrower will
execute and deliver to Lender a power of attorney, in
form and substance reasonably satisfactory to Lender
for the implementation of any lease, assignment,
license, sublicense, grant of option, sale or other
disposition of a Copyright, Patent or Trademark. In the
event of any such disposition pursuant to this clause 3,
Borrower shall supply its know-how and expertise
relating to the products or services made or rendered in
connection with Patents, the manufacture and sale of
the products bearing Trademarks, and its customer lists
and other records relating to such Copyrights, Patents
or Trademarks and to the distribution of said products,
to Lender.

     (4) If, at any time when Lender shall determine
to exercise its right to sell the whole or any part of the
Shares hereunder, such Shares or the part thereof to
be sold shall not, for any reason whatsoever, be
effectively registered under the Securities Act (or any
similar statute), then Lender may, in its discretion
(subject only to applicable requirements of law), sell
such Shares or part thereof by private sale in such
manner and under such circumstances as Lender may
deem necessary or advisable, but subject to the other
requirements of this Article 7, and shall not be
required to effect such registration or to cause the
same to be effected. Without limiting the generality
of the foregoing, in any such event, Lender in its
discretion may (i) in accordance with applicable
securities laws proceed to make such private sale
notwithstanding that a registration statement for the
purpose of registering such Shares or part thereof
could be or shall have been filed under the Securities
Act (or similar statute), (ii) approach and negotiate
with a single possible purchaser to effect such sale,
and (iii) restrict such sale to a purchaser who is an
accredited investor under the Securities Act and who
will represent and agree that such purchaser is
purchasing for its own account, for investment and
not with a view to the distribution or sale of such
Shares or any part thereof. In addition to a private
sale as provided above in this Article 7, if any of the
Shares shall not be freely distributable to the public
without registration under the Securities Act (or
similar statute) at the time of any proposed sale
pursuant to this Article 7, then Lender shall not be
required to effect such registration or cause the same
to be effected but, in its discretion (subject only to
applicable requirements of law), may require that any
sale hereunder (including a sale at auction) be
conducted subject to restrictions:

(A) as to the financial sophistication
and ability of any Person permitted to bid or
purchase at any such sale;

(B) as to the content of legends to be placed upon any certificates representing the Shares
sold in such sale, including restrictions on future transfer thereof;

(C) as to the representations required to be made by each Person bidding or purchasing at
such sale relating to such Person’s access to financial information about Borrower or any
of its Subsidiaries and such Person’s intentions as to the holding of the Shares so sold
for investment for its own account and not with a view to the distribution thereof; and

(D) as to such other matters as Lender may, in its discretion, deem necessary or
appropriate in order that such sale (notwithstanding any failure so to register) may be
effected in compliance with the Bankruptcy Code and other laws affecting the enforcement
of creditors’ rights and the Securities Act and all applicable state securities laws.

     (5) Borrower recognizes that Lender may be unable to effect a public sale of any or all the
Shares and may be compelled to resort to one or more private sales thereof in accordance with
clause (4) above. Borrower also acknowledges that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have
been made in a commercially unreasonable manner solely by virtue of such sale being private.
Lender shall be under no obligation to delay a sale of any of the Shares for the period of time
necessary to permit the applicable Subsidiary to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if Borrower and/or the
Subsidiary would agree to do so.

     7.4 Borrower’s Obligations Upon Default. Upon the request of Lender after the occurrence and
during the continuance of an Event of Default, Borrower will:

     (a) Assemble and make available to Lender the Collateral at such place(s) as Lender shall
reasonably designate, segregating all Collateral so that each item is capable of identification;
and

 

 

     (b) Subject to the rights of any lessor, permit Lender, by Lender’s officers, employees,
agents and representatives, to enter any premises where any Collateral is located, to take
possession of the Collateral, to complete the processing, manufacture or repair of any Collateral,
and to remove the Collateral, or to conduct any public or private sale of the Collateral, all
without any liability of Lender for rent or other compensation for the use of Borrower’s premises-

ARTICLE 8 — SPECIAL COLLATERAL PROVISIONS

     8.1 Compromise and Collection. Borrower and Lender recognize that setoffs, counterclaims,
defenses and other claims may be asserted by obligors with respect to certain of the Rights to
Payment; that certain of the Rights to Payment may be or become uncollectible in whole or in part;
and that the expense and probability of success of litigating a disputed Right to Payment may
exceed the amount that reasonably may be expected to be recovered with respect to such Right to
Payment. Borrower hereby authorizes Lender, after and during the continuance of an Event of
Default, to compromise with the obligor, accept in full payment of any Right to Payment such
amount as Lender shall negotiate with the obligor, or abandon any Right to Payment. Any such action
by Lender shall be considered commercially reasonable so long as Lender acts in good faith based
on information known to it at the time it takes any such action.

     8.2 Performance of Borrower’s Obligations.

Without having any obligation to do so, upon reasonable prior notice to Borrower, Lender may
perform or pay any obligation which Borrower has agreed to perform or pay under this Agreement,
including, without limitation, the payment or discharge of taxes or Liens levied or placed on or
threatened against the Collateral. In so performing or paying, Lender shall in good faith
determine the reasonable action to be- taken and the amount necessary to discharge such
obligations. Borrower shall reimburse Lender on demand for any amounts paid by Lender pursuant to
this Section, which amounts shall constitute Obligations secured by the Collateral and shall bear
interest from the date of demand at the Default Rate.

8.3 Power of Attorney. For the purpose of protecting and preserving the Collateral and Lender’s
rights under this Agreement, Borrower hereby irrevocably appoints Lender, with full power of
substitution, as its attorney-in-fact with full power and authority, after the occurrence and during the
continuance of an Event of Default, to do any act which Borrower is obligated to do hereunder, to exercise such rights with respect to the Collateral as
Borrower might exercise; to use such Inventory, Equipment, Fixtures or other property as Borrower
might use; to enter Borrower’s premises; to give notice of Lender’s security interest in, and to
collect the Collateral; and before or after Default, to execute and file in Borrower’s name any
financing statements, amendments and continuation statements, account control agreements or other
Security Documents necessary or desirable to perfect or continue the perfection of Lender’s
security interests in the Collateral. Borrower hereby ratifies all that Lender shall lawfully do or
cause to be done by virtue of this appointment.

     8.4 Authorization for Lender to Take Certain Action. The power of attorney created in Section
8.3 is a power coupled with an interest and shall be irrevocable. The powers conferred on Lender
hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon
Lender to exercise such powers. In no event shall Lender or any of its directors, officers,
employees, agents or representatives be responsible to Borrower for any act or failure to act,
except for gross negligence or willful misconduct. After the occurrence and during the continuance
of an Event of Default, Lender may exercise this power of attorney without notice to or assent of
Borrower, in the name of Borrower, or in Lender’s own name, from time to time in Lender’s
reasonable discretion and at Borrower’s expense. To further carry out the terms of this Agreement,
after the occurrence and during the continuance of an Event of Default, Lender may:

     (a) Execute any statements or documents or take possession of, and endorse and collect and
receive delivery or payment of, any checks, drafts, notes, acceptances or other instruments and
documents constituting Collateral, or constituting the payment of amounts due and to become due or
any performance to be rendered with respect to the Collateral.

     (b) Sign and endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts; drafts, certificates and statements under any commercial or standby letter of
credit relating to Collateral; assignments, verifications and notices in connection with Accounts;
or any other documents relating to the Collateral, including without limitation the Records.

     (c) Use or operate Collateral or any other property of Borrower for the purpose of preserving
or liquidating Collateral.

 

 

     (d) File any claim or take any other action or proceeding in any court of law or equity
or as otherwise deemed appropriate by Lender for the purpose of collecting any and all monies due
or securing any performance to be rendered with respect to the Collateral.

     
(e) Commence, prosecute or defend any suits, actions or proceedings or as otherwise deemed
appropriate by Lender for the purpose of protecting or collecting the Collateral. In furtherance
of this right, upon the occurrence and during the continuance of an Event of Default, Lender may
apply for the appointment of a receiver or similar official to operate Borrower’s business.

     (f) Prepare, adjust, execute, deliver and receive payment under insurance claims, and collect
and receive payment of and endorse any instrument in payment of loss or returned premiums or any
other insurance refund or return, and apply such amounts at Lender’s sole discretion, toward
repayment of the Obligations or replacement of the Collateral.

     8.5 Application of Proceeds. Any Proceeds and other monies or property received by Lender
pursuant to the terms of this Agreement or any Loan Document may be applied by Lender first to the
payment of expenses of collection, including without limitation reasonable attorneys’ fees, and
then to the payment of the Obligations in such order of application as Lender may elect.

     8.6 Deficiency. If the Proceeds of any disposition of the Collateral are insufficient to
cover all costs and expenses of such sale and the payment in full of all the Obligations, plus all
other sums required to be expended or distributed by Lender, then Borrower shall be liable for any
such deficiency.

     8.7 Lender Transfer. Upon a transfer of all or any part of the Obligations permitted under
this Agreement, Lender may transfer all or part of the Collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such Collateral so transferred,
and the transferee shall be vested with all the rights and powers of Lender hereunder with respect
to such Collateral so transferred, but with respect to any Collateral not so transferred, Lender
shall retain all rights and powers hereby given.

     8.8 Lender’s Duties.

     
(a) Lender shall use reasonable care in the custody and preservation of any Collateral in its
possession. Without limitation on other conduct which may be considered the exercise of reasonable
care, Lender shall be deemed to have exercised reasonable care in the custody and preservation of
such Collateral if such Collateral is accorded treatment substantially equal to that which Lender
accords its own property, it being understood that Lender shall not have any responsibility for
ascertaining or taking action with respect to calls, conversions, exchanges, maturities, declining
value, tenders or other matters relative to any Collateral, regardless of whether Lender has or is
deemed to have knowledge of such matters; or taking any necessary steps to preserve any rights
against any Person with respect to any Collateral. Under no circumstances shall Lender be
responsible for any injury or loss to the Collateral, or any part thereof, arising from any cause
beyond the reasonable control of Lender.

     (b) Lender may at any time deliver the Collateral or any part thereof to Borrower and the
receipt of Borrower shall be a complete and full acquittance for the Collateral so delivered, and
Lender shall thereafter be discharged from any liability or responsibility therefor.

     
(c) Neither Lender, nor any of its directors, officers, employees, agents, attorneys or any
other person affiliated with or representing Lender shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower or any
other party through the ordinary negligence of Lender, or any of its directors, officers,
employees, agents, attorneys or any other person affiliated with or representing Lender.

     8.9 Termination of Security Interests. Upon the payment in full of the Obligations (other
than contingent, reimbursement and indemnification obligations for which no claim has been made)
and satisfaction of all Borrower’s obligations under this Agreement and the other Loan Documents,
and if Lender has no further obligations under its Commitment, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to Borrower. Upon any such
termination, the Lender shall, at Borrower’s expense, execute and deliver to Borrower such
documents as Borrower shall reasonably request to evidence such termination.

ARTICLE 9 — GENERAL PROVISIONS

 

 

     9.1 Notices. Any notice given by any party under any Loan Document shall be in writing and
personally delivered, sent by overnight courier, or United States mail, postage prepaid, or sent by
facsimile, or other authenticated message, charges prepaid, to the other party’s or parties’
addresses shown on the Supplement. Each party may change the address or facsimile number to which
notices, requests and other communications are to be sent by giving written notice of such change
to each other party. Notice given by hand delivery shall be deemed received on the date delivered;
if sent by overnight courier, on the next Business Day after delivery to the courier service; if by
first class mail, on the third Business Day after deposit in the U.S. Mail; and if by facsimile, on
the date of transmission.

     9.2 Binding Effect. The Loan Documents shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns; provided, however, that Borrower
may not assign or transfer Borrower’s rights or obligations under any Loan Document.
Lender reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part
of, or any interest in, Lender’s rights and obligations under the Loan Documents subject to
Borrower’s consent; provided that no such consent shall be required (i) if an Event of Default has
then occurred and is continuing, or (ii) for any assignment to LLC (as defined below), or (iii) for
any collateral assignment for security purposes to an institutional lender providing financing to
Lender . In connection with any of the foregoing, Lender may disclose all documents and
information which Lender now or hereafter may have relating to the Loans, Borrower, or its
business. It is the intention of the parties that, as a “venture capital operating company,”
Venture Lending & Leasing IV, LLC (“LLC”), the parent and sole owner of Lender, shall have the
benefit of, and the power to independently exercise, those “management rights” provided in Section
5.3. To that end, the references to Lender in Sections 4.2(f), 5.1, 5.2, 5.3 and 5.9(a) hereof
shall include LLC, and LLC shall have the right to exercise the advisory, inspection, information
and other rights given to lender under those Sections independently of Lender. No amendment, modification, termination or waiver of any provision of this Agreement shall in any
event be effective unless the same shall be in writing and signed by Borrower and the Lender;
provided, however, that no amendment or modification of this Agreement shall alter
or diminish LLC’s rights under the preceding sentence without the consent of LLC.

     9.3 No Waiver. Any waiver, consent or approval by Lender of any Event of Default or breach of any
provision, condition, or covenant of any Loan Document must be in writing and shall be effective
only to the extent set forth in writing. No waiver of any breach or default shall be deemed a
waiver of any later breach or default of the same or any other provision of any Loan Document. No
failure or delay on the part of Lender in exercising any power, right, or privilege under any Loan
Document shall operate as a waiver thereof, and no single or partial exercise of any such power,
right, or privilege shall preclude any further exercise thereof or the exercise of any other power,
right or privilege. Lender has the right at its sole option to continue to accept interest and/or
principal payments due under the Loan Documents after Default, and such acceptance shall not
constitute a waiver of said Default or an extension of the maturity of any Loan unless Lender
agrees otherwise in writing.

     9.4 Rights Cumulative. All rights and remedies existing under the Loan Documents are
cumulative to, and not exclusive of, any other rights or remedies available under contract or
applicable law.

     9.5 Unenforceable Provisions. Any provision of any Loan Document executed by Borrower which
is prohibited or unenforceable in any jurisdiction, shall be so only as to such jurisdiction and
only to the extent of such prohibition or unenforceability, but all the remaining provisions of
any such Loan Document shall remain valid and enforceable.

     9.6 Accounting Terms. Except as otherwise provided in this Agreement, accounting terms and
financial covenants and information shall be determined and prepared in accordance with GAAP.

     9.7 Indemnification; Exculpation. Borrower shall pay and protect, defend and indemnify Lender
and Lender’s employees, officers, directors, shareholders, affiliates, correspondents, agents and
representatives (other than Lender, collectively “Agents”) against, and hold Lender and
each such Agent harmless from, all claims, actions, proceedings, liabilities, damages, losses,
expenses (including, without limitation, attorneys’ fees and costs) and other amounts incurred by
Lender and each such Agent, arising from (i) the matters contemplated by this Agreement or any
other Loan Documents, (ii) any dispute between Borrower and a third party, or (iii) any contention
that Borrower has failed to comply with any law, rule, regulation, order or directive applicable
to Borrower’s business; provided, however, that this indemnification shall not apply to any of the
foregoing incurred solely as the result of Lender’s or any Agent’s gross negligence or willful
misconduct. This indemnification shall survive

 

 

the payment and satisfaction of all of Borrower’s Obligations to Lender.

     9.8 Reimbursement. Borrower shall reimburse Lender for all reasonable out of pocket costs and
expenses, including without limitation reasonable attorneys’ fees and disbursements expended or
incurred by Lender in any arbitration, mediation, judicial reference, legal action or otherwise in
connection with (a) the preparation and negotiation of the Loan Documents, (b) the amendment and
enforcement of the Loan Documents, including without limitation during any workout, attempted
workout, and/or in connection with the rendering of legal advice as to Lender’s rights, remedies
and obligations under the Loan Documents, (c) collecting any sum which becomes due Lender under any
Loan Document, (d) any proceeding for declaratory relief, any counterclaim to any proceeding, or
any appeal, or (e) the protection, preservation or enforcement of any rights of Lender. For the
purposes of this section, attorneys’ fees shall include, without limitation, fees incurred in
connection with the following: (1) contempt proceedings; (2) discovery; (3) any motion, proceeding
or other activity of any kind in connection with an Insolvency Proceeding; (4) garnishment, levy,
and debtor and third party examinations; and (5) postjudgment motions and proceedings of any kind,
including without limitation any activity taken to collect or enforce any judgment. All of the
foregoing costs and expenses shall be payable upon demand by Lender, and if not paid within
forty-five (45) days of presentation of reasonably detailed invoices shall bear interest at the
highest applicable Default Rate.

     9.9 Execution in Counterparts. This Agreement may be executed in any number of counterparts which, when taken together, shall
constitute but one agreement.

     9.10 Entire Agreement. The Loan Documents are intended by the parties as the final expression
of their agreement and therefore contain the entire agreement between the parties and supersede
all prior understandings or agreements concerning the subject matter hereof. This Agreement may be
amended only in a writing signed by Borrower and Lender.

     9.11 Governing Law and Jurisdiction.

     (a) THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR
THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
BORROWER AND LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. BORROWER AND LENDER
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY
ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

     9.12 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
STATE LAW, BORROWER AND LENDER EACH WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY
OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE BORROWER AND LENDER EACH AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEMS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR

 

 

ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     9.13 Obligations and Restrictions Regarding Confidential Information. Lender acknowledges that certain information and documentation
provided by Borrower is and shall be considered as Confidential Information and is subject to the
following restrictions of use and disclosure, Lender agrees: (i) to maintain Borrower’s
Confidential Information in strict confidence; (ii) not to disclose such Confidential Information
to any third parties, except for disclosure (a) to legal counsel and accountants for Lender, (b) to
other professional advisors to Lender, (c) to regulatory officials having jurisdiction over Lender,
(d) as required by law or legal process provided Lender uses reasonable efforts to give Borrower
reasonable advance notice of such required disclosure in order to enable Borrower to prevent or
limit such disclosure unless Lender is restricted from so giving Borrower such advance notice by
such law or legal process, (e) to another financial institution in connection with any permitted
assignment or proposed assignment to that financial institution of all or part of Lender’s
interests hereunder or a participation interest in the Note(s) consistent with the terms of this
Agreement respecting assignments and participations, provided that the recipient has delivered to
Lender a written confidentiality agreement substantially similar to this Section 9.13, and (f) to
prospective purchasers of any Collateral in connection with any disposition thereof, provided that
the recipient has delivered to Lender a written confidentiality agreement substantially similar to
this Section 9.13; and (iii) not to use any such Confidential Information for any purpose except for
the business purposes as contemplated under this Agreement, Lender may also disclose the
Confidential Information of Borrower to its employees and consultants who have a bona fide need to
know such Confidential Information, but solely to the extent necessary to pursue the business
activities necessary under this Agreement; provided that each such employee and consultant first
executes a written agreement (or is otherwise already bound by a written agreement) that contains
use and nondisclosure restrictions at least as protective as Lender would use regarding its own
confidential information.

ARTICLE 10 — DEFINITIONS

     The definitions appearing in this Agreement or any Supplement shall be applicable to both the
singular and plural forms of the defined terms:

“Account” means any “account,” as such term is defined in the UCC, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest and, in any
event, shall include, without limitation, all accounts receivable, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments)
now owned or hereafter received or acquired by or belonging or owing to Borrower (including,
without limitation, under any trade name, style or division thereof) whether arising out of goods
sold or services rendered by Borrower or from any other transaction, whether or not the same
involves the sale of goods or services by Borrower (including, without limitation, any such
obligation that may be characterized as an account or contract right under the UCC) and all of
Borrower’s rights in, to and under all purchase orders or receipts now owned or hereafter acquired
by it for goods or services, and all of Borrower’s rights to any goods represented by any of the
foregoing (including, without limitation, unpaid seller’s rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), and
all monies due or to become due to Borrower under all purchase orders and contracts for the sale
of goods or the performance of services or both by Borrower or in connection with any other
transaction (whether or not yet earned by performance on the part of Borrower), now in existence
or hereafter occurring, including, without limitation, the right to receive the proceeds of said
purchase orders and contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.

“Affiliate” means any Person which directly or indirectly controls, is controlled by, or is under common control with Borrower. “Control,” “controlled by” and “under common control with” mean direct or indirect possession of the power to
direct or cause the direction of management or policies (whether through ownership of voting
securities, by contract or otherwise); provided, that control shall be conclusively presumed when
any Person or affiliated group directly or indirectly owns ten percent (10%) or more of the
securities having ordinary voting power for the election of directors of a corporation.

 

 

“Agreement” means this Loan and Security Agreement and each Supplement thereto, as each may
be amended or supplemented from time to time.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. §101, et seq.), as amended.

“Basic Interest” means the fixed rate of interest payable on the outstanding balance of
each Loan at the applicable Designated Rate.

“Borrowing Date” means the Business Day on which the proceeds of a Loan are disbursed by
Lender.

“Borrowing Request” means a written request from Borrower in substantially the form of
Exhibit “B” to the Supplement, requesting the funding of one or more Loans on a particular
Borrowing Date.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York City or San Francisco are authorized or required by law to close.

“Chattel Paper” means any “chattel paper,” as such term is defined in the UCC, now owned
or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest.

“Closing Date” means the date of this Agreement.

“Collateral” means all of Borrower’s right, title and interest in and to the following
property, whether now owned or hereafter acquired and wherever located: (a) all Receivables; (b)
all Equipment; (c) all Fixtures; (d) all General Intangibles; (e) all Inventory; (f) all
Investment Property; (g) all Deposit Accounts; (h) all Shares; (i) all other Goods and personal
property of Borrower, whether tangible or intangible and whether now or hereafter owned or
existing, leased, consigned by or to, or acquired by, Borrower and wherever located; (j) all
Records; and (k) all Proceeds of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of each of the foregoing.

“Commitment” means the obligation of Lender to make Loans to Borrower up to the aggregate
principal amount set forth in the Supplement.

“Confidential Information” means any technical or business or other confidential
information that: (i) is disclosed in writing by one party to the other party and is marked “confidential” or “proprietary”
at the time of such disclosure; or (ii) is disclosed orally by one party to the other party, is
identified as “confidential” or “proprietary” at the time of such disclosure, and is summarized in
a writing sent by the disclosing party to the receiving party within thirty (30) days after any
such disclosure; or (iii) the receiving party actually knows or would reasonably be expected to
know is considered by the disclosing party to be confidential or proprietary in nature.
Confidential Information will not include information that: (i) is now or other after becomes
generally known or available to the public, through no act or omission on the part of the receiving
party, (ii) was known by the receiving party prior to receiving such information from the
disclosing party and without restriction as to use or disclosure, (iii) is rightfully acquired by
the receiving party from a third party who has the right to disclose it and who provides it without
restriction as to use or disclosure; or (iv) is independently developed by the receiving party
without access to any Confidential Information of the disclosing party.

“Copyright License” means any written agreement granting any right to use any Copyright or
Copyright registration now owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest.

“Copyrights” means all of the following now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest: (i) all copyrights, whether
registered or unregistered, held pursuant to the laws of the United States, any State thereof or
of any other country; (ii) all registrations, applications and recordings in the United States
Copyright Office or in any similar office or agency of the United States, any State thereof or any
other country; (iii) all continuations, renewals or extensions thereof; and (iv) any registrations
to be issued under any pending applications.

“Default” means an event which with the giving of notice, passage of time, or both would
constitute an Event of Default.

“Default Rate” is defined in Section 2.7.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, now
owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest.

 

 

“Designated Rate” means the rate of interest per annum described in the Supplement as being
applicable to an outstanding Loan from time to time.

“Documents” means any “documents,” as such term is defined in the UCC, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

“Environmental Laws” means all federal, state or local laws, statutes, common law duties,
rules, regulations, ordinances and codes, together with all administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with, any governmental
authorities, in each case relating to environmental, health, or safety matters.

“Equipment” means any “equipment,” as such term is defined in the UCC, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest
and any and all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto.

“Event of Default” means any event described in Section 7.1.

“Final Payment” means, with respect to a Loan, an amount equal to that percentage of the
original principal amount of such Loan and payable at the time specified in the Supplement or the
Note evidencing such Loan.

“Fixtures” means any “fixtures,” as such term is defined in the UCC, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

“GAAP” means generally accepted accounting principles and practices consistent with those
principles and practices promulgated or adopted by the Financial Accounting Standards Board and
the Board of the American Institute of Certified Public Accountants, their respective predecessors
and successors. Each accounting term used but not otherwise expressly defined herein shall have
the meaning given it by GAAP.

“General Intangibles” means any “general intangibles,” as such term is defined in the UCC,
now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires
any interest and, in any event, shall include, without limitation, all right, title and interest that Borrower may now or hereafter have in or under any contract, all
customer lists, Copyrights, Trademarks, Patents, websites, domain names, and all applications
therefor and reissues, extensions, or renewals thereof, other rights to Intellectual Property,
interests in partnerships, joint ventures and other business associations, Licenses, permits, trade
secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, recipes, experience, processes, models, drawings, materials and records,
goodwill (including, without limitation, the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License), claims in or under insurance
policies, including unearned premiums, uncertificated securities, money, cash or cash equivalents,
deposit, checking and other bank accounts, rights to sue for past, present and future infringement
of Copyrights, Trademarks and Patents, rights to receive tax refunds and other payments and rights
of indemnification.

“Goods” means any “goods,” as such term is defined in the UCC, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

“Indebtedness” of any Person means at any date, without duplication and without regard to
whether matured or unmatured, absolute or contingent: (i) all obligations of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes, or
other similar instruments; (iii) all obligations of such Person to pay the deferred purchase price
of property or services, except trade accounts payable arising in the ordinary course of business;
(iv) all obligations of such Person as lessee under capital leases; (v) all obligations of such
Person to reimburse or prepay any bank or other Person in respect of amounts paid under a letter
of credit, banker’s acceptance, or similar instrument, whether drawn or undrawn; (vi) all
obligations of such Person to purchase securities which arise out of or in connection with the
sale of the same or substantially similar securities; (vii) all obligations of such Person to
purchase, redeem, exchange, convert or otherwise acquire for value any capital stock of such
Person or any warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, except to the extent that such obligations remain performable solely at the option of
such Person; (viii) all obligations to repurchase assets previously sold (including any obligation
to repurchase any accounts or chattel paper

 

 

under any factoring, receivables purchase, or similar arrangement); (ix) obligations of such
Person under interest rate swap, cap, collar or similar hedging arrangements; and (x) all
obligations of others of any type described in clause (i) through clause (ix) above guaranteed by
such Person.

“Insolvency Proceeding” means with respect to a Person (a) any case, action or proceeding
before any court or other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors with respect to
such Person, or (b) any general assignment for the benefit of creditors, composition, marshalling
of assets for creditors, or other, similar arrangement in respect of such Person’s creditors
generally or any substantial portion of its creditors, undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code, but in each case, excluding any avoidance or similar
action against such Person commenced by an assignee for the benefit of creditors, bankruptcy
trustee, debtor in possession, or other representative of another Person or such other Person’s
estate.

“Instruments” means any “instrument,” as such term is defined in the UCC, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

“Intellectual Property” means all Copyrights, Trademarks, Patents, Licenses, trade
secrets, source codes, customer lists, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, skill, expertise, experience, processes, models, drawings,
materials, records and goodwill associated with the foregoing.

“Intellectual Property Security Agreement” means any Intellectual Property Security
Agreement executed and delivered by Borrower in favor of Lender, as the same may be amended,
supplemented, or restated from time to time.

“Inventory” means any “inventory,” as such term is defined in the UCC, wherever located,
now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires
any interest, and, in any event, shall include, without limitation, all inventory, goods and other
personal property that are held by or on behalf of Borrower for sale or lease or are furnished or
are to be furnished under a contract of service or that constitute raw materials, work in process or materials used or consumed or to be used or consumed in Borrower’s business, or the
processing, packaging, promotion, delivery or shipping of the same, and all finished goods, whether
or not the same is in transit or in the constructive, actual or exclusive possession of Borrower or
is held by others for Borrower’s account, including, without limitation, all goods covered by
purchase orders and contracts with suppliers and all goods billed and held by suppliers and all
such property that may be in the possession or custody of any carriers, forwarding agents,
truckers, warehousemen, vendors, selling agents or other Persons.

“Investment Property” means any “investment property,” as such term is defined in the UCC,
now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires
any interest.

“Letter of Credit Rights” means any “letter of credit rights,” as such term is defined in
the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest, including any right to payment under any letter of credit.

“License” means any Copyright License, Patent License, Trademark License or other license
of rights or interests now held or hereafter acquired by Borrower or in which Borrower now holds
or hereafter acquires any interest and any renewals or extensions thereof.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security,
security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or
arising by operation of law or otherwise, against any property, any conditional sale or other
title retention agreement, any lease in the nature of a security interest, and the filing of any
financing statement (other than a precautionary financing statement with respect to a lease that
is not in the nature of a security interest) under the UCC or comparable law of any jurisdiction.

“Loan” means an extension of credit by Lender under this Agreement.

“Loan Documents” means, individually and collectively, this Loan and Security Agreement,
each Supplement, each Note, the Intellectual Property Security Agreement, and any other security
or pledge agreements), and all other contracts, instruments, addenda and documents executed in
connection with

 

 

this Agreement or the extensions of credit which are the subject of this Agreement.

“Material Adverse Effect” or “Material Adverse Change” means (a) a material
adverse change in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of Borrower; (b) a material impairment of the
ability of Borrower to perform under any Loan Document; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against Borrower of any Loan Document.

“Note” means a promissory note substantially in the form attached to the Supplement as Exhibit
“A”, executed by Borrower evidencing each Loan.

“Obligations” means all debts, obligations and liabilities of Borrower to Lender currently
existing or now or hereafter’ made, incurred or created under, pursuant to or in connection with
this Agreement or any other Loan Document, whether voluntary or involuntary and however arising or
evidenced, whether direct or acquired by Lender by assignment or succession, whether due or not
due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether
Borrower may be liable individually or jointly, or whether recovery upon such debt may be or
become barred by any statute of limitations or otherwise unenforceable; and all renewals,
extensions and modifications thereof; and all attorneys’ fees and costs incurred by Lender in
connection with the collection and enforcement thereof as provided for in any Loan Document.

“Patent License” means any written agreement granting any right with respect to any
invention on which a Patent is in existence now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest

“Patents” means all of the following property now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest: (a) all letters patent of, or
rights corresponding thereto in, the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights corresponding thereto
in, the United States or any other country, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country; (b) all reissues,
continuations, continuations-in-part or extensions thereof; (c) all petty patents, divisional, and patents of addition; and (d) all patents to be issued under any such
applications.

“Permitted Lien” means:

     (a) involuntary Liens which, in the aggregate, would not have a Material Adverse Effect and
which in any event would not exceed, in the aggregate, the Threshold Amount;

     (b) Liens for current taxes or other governmental or regulatory assessments which are not
delinquent, or which are contested in good faith by the appropriate procedures and for which
appropriate reserves are maintained;

     (c) security interests on any property held or acquired by Borrower in the ordinary course of
business securing Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property; provided, that such Lien attaches solely to the
property acquired with ¦ such Indebtedness and that the principal amount of such Indebtedness does
not exceed one hundred percent (100%) of the cost of such property;

     (d) Liens in favor of Lender;

     (e) bankers’ liens, rights of setoff and similar Liens incurred on deposits made in the
ordinary course of business as long as an account control agreement for each account in which such
deposits are held in a form acceptable to Lender has been executed and delivered to Lender;

     (f) materialmen’s, mechanics’, repairmen’s, employees’ or other like Liens arising in the
ordinary course of business and which are not delinquent for more than 45 days or are being
contested in good faith by appropriate proceedings;

     (g) any judgment, attachment or similar Lien, unless the judgment it secures has not been
discharged or execution thereof effectively stayed and bonded against pending appeal within 10
days of the entry thereof;

     (h) licenses or sublicenses of Intellectual Property in accordance with Section 6.5 hereof;

     (i) Liens securing Subordinated Debt;

 

 

     (j) Liens which have been approved by Lender in writing prior to the Closing Date, as shown on
Schedule 6.2: and

     (k) Liens granted to VLL5 under the VLL5 Loan Agreement.

“Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability company, institution,
public benefit corporation, other entity or government (whether federal, state, county, city,
municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or
department thereof).

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any event, shall
include, without limitation, (a) any and all Accounts, Chattel Paper, Instruments, cash or other
forms of money or currency or other proceeds payable to Borrower from time to time in respect of
the Collateral, (b) any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to Borrower from time to time with respect to any of the Collateral, (c) any and all payments (in
any form whatsoever) made or due and payable to Borrower from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of governmental
authority), (d) any claim of Borrower against third parties (i) for past, present or future
infringement of any Copyright, Patent or Patent License or (ii) for past, present or future
infringement or dilution of any Trademark or Trademark License or for injury to the goodwill
associated with any Trademark, Trademark registration or Trademark licensed under any Trademark
License and (e) any and all other amounts from time to time paid or payable under or in connection
with any of the Collateral.

“Qualified Public Offering” means the closing of a firmly underwritten public offering of
Borrower’s common stock with aggregate proceeds of not less than $20,000,000 (prior to
underwriting expenses and commissions).

“Receivables” means all of Borrower’s Accounts, Instruments, Documents, Chattel Paper,
Supporting Obligations, and letters of credit and Letter of Credit Rights.

“Records” means all Borrower’s computer programs, software, hardware, source codes and
data processing information, all written documents, books, invoices, ledger sheets, financial information and
statements, and all other writings concerning Borrower’s business.

“Related Person” means any Affiliate of Borrower, or any officer, employee, director or
equity security holder of Borrower or any Affiliate.

“Rights to Payment” means all Borrower’s accounts, instruments, contract rights, documents,
chattel paper and all other rights to payment, including, without limitation, the Accounts, all
negotiable certificates of deposit and all rights to payment under any Patent License, any
Trademark License, or any commercial or standby letter of credit

“Security Documents” means this Loan and Security Agreement, the Supplement hereto, the
Intellectual Property Security Agreement, and any and all account control agreements, collateral
assignments, chattel mortgages, financing statements, amendments to any of the foregoing and other
documents from time to time executed or filed to create, perfect or maintain the perfection of
Lender’s Liens on the Collateral.

“Shares” means: (a) one hundred percent (100%) of the issued and outstanding capital
stock, membership units or other securities owned or held of record by Borrower in any domestic
Subsidiary, and (b) 65% of the issued and outstanding capital stock, membership units or other
securities entitled to vote owned or held of record by Borrower in any Subsidiary that is a
controlled foreign corporation (as defined in the Internal Revenue Code).

“Subordinated Debt” means Indebtedness (i) approved by Lender; and (ii) where the holder’s
right to payment of such Indebtedness, the priority of any Lien securing the same, and the rights
of the holder thereof to enforce remedies against Borrower following default have been made
subordinate to the Liens of Lender and to the prior payment to Lender of the Obligations, pursuant
to a written subordination agreement approved by Lender in its sole but reasonable discretion.

“Subsidiary” means any Person a majority of the equity ownership or voting stock of which
is at the time owned by Borrower.

“Supplement” means that certain supplement to the Loan and Security Agreement, as the same
may be amended or restated from time to time, and any other supplements entered into between
Borrower and

 

 

Lender, as the same may be amended or restated from time to time.

“Supporting Obligations” means any “supporting obligations,” as such term is defined in the
UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest.

“Termination Date” has the meaning specified in the Supplement

“Threshold Amount” means Two Hundred Fifty Thousand Dollars ($250,000).

“Trademark License” means any written agreement granting any right to use any Trademark or
Trademark registration now owned or hereafter acquired by Borrower or in which Borrower now holds
or hereafter acquires any interest.

“Trademarks” means all of the following property now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest: (a) all trademarks,
tradenames, corporate names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have appeared or appear,
designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and any applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof and (b) reissues, extensions or renewals
thereof.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect
in the State of California; provided, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of California, the term “UCC” shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions. Unless otherwise defined herein, terms that
are defined in the UCC and used herein shall have the meanings given to them in the UCC.

“VLL5” means Venture Lending & Leasing V, Inc., a Maryland corporation, together with its
successors and assigns.

“VLL5 Agreement” means that certain Loan and Security Agreement dated as of the date
hereof, between Borrower, as borrower, and VLL5, as lender.

[Signature page follows]

 

 

[Signature page to Loan and Security Agreement]

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

	 	 	 	 	 	 	 
	BORROWER:

NANOSPHERE, INC.

 	 	 
	By:  	  

 	 	 
	 	Name:  	William P. Moffitt  	 	 
	 	Title:  	Chief Executive Officer 	 	 
	 
	LENDER:

VENTURE LENDING & LEASING IV, INC.

 	 	 
	By:  	 
 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

[Schedules to Loan and Security Agreement follow]

 

 

[Signature page to Loan and Security Agreement]

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

	 	 	 	 	 	 	 
	BORROWER:

NANOSPHERE, INC.

 	 	 
	By:  	   

 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	LENDER:

VENTURE LENDING & LEASING IV, INC.

 	 	 
	By:  	
 	 	 
	 	Name:  	Ronald W. Swenson	 	 
	 	Title:  	Chief Executive Officer	 	 
	 

[Schedules to Loan and Security Agreement follow]

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