Document:

exv10w10

Exhibit 10.10

BASIC LEASE INFORMATION

	 	 	 
	Lease Date:

	 	August 10, 2006
	 
	 	 
	Tenant:

	 	Zonare Medical Systems,
Inc., a Delaware corporation
(“Tenant”)
	 
	 	 
	Tenant’s Notice Address
Before Commencement Date:

	 	1061 Terra Bella Avenue

Mountain View, CA 94043 
Attn: Linda Moore
	 
	 	 
	Tenant’s Notice Address on and
After Commencement Date:

	 	Attention Linda Moore at the Premises, unless Tenant gives
Landlord written notice of a
different notice address.
	 
	 	 
	Tenant’s Billing Address:

	 	The Premises 
Attn: Linda Moore
	 
	 	 
	Tenant Contact:

	 	Name: Linda Moore

 Phone Number: 650-230-2724

Fax Number: 650-230-2828

Email address: lmoore@zonare.com
	 
	 	 
	Landlord:

	 	Ravendale ERP LLC, a Delaware
limited liability company
(“Landlord”)
	 
	 	 
	Landlord’s Notice Address:

	 	Ravendale ERP LLC 

c/o Eagle Ridge
Partners 
5753 Wayzata Boulevard 
St.
Louis Park, MN 55416
	 
	 	 
	 

	 	With a copy to:
	 
	 	 
	 

	 	Ravendale ERP LLC 
c/o United Capital
Corporation 
Suite 501 

63 Bovet Road

San Mateo, CA 94402-3104
	 
	 	 
	Landlord’s Address for the
Payment of Rent:

	 	Ravendale ERP LLC 
c/o Barthe &
Wahrman PA 
Suite 510 
3601 Minnesota Drive

Bloomington, MN 55435
	 
	 	 
	Land:

	 	The parcel of land legally described
on the Exhibit A attached to this
Lease (the “Land”).
	 
	 	 
	Building:

	 	The single-story building containing
approximately 31,000 rentable
square feet of space at 420
N. Bernardo Avenue, Mountain View,
California (the “Building”) that is
located on the Land.
	 
	 	 
	Property:

	 	Collectively, the Building, the
Land, and all other buildings and
other improvements on the Land from
time to time, are the “Property”.

 

 

	 	 	 
	Premises:

	 	The Building, as outlined on the Exhibit B
attached to this Lease (the “Premises”)
	 
	 	 
	Permitted Use:

	 	General office use, research and development and
legal related uses only (the “Permitted Use”).
	 
	 	 
	Parking Density:

	 	3.9 spaces per 1,000 rentable square feet of the
Premises. Said parking shall be exclusive to
Tenant.
	 
	 	 
	Commencement Date:

	 	The “Scheduled Commencement Date” is October 1,
2006. The “Commencement Date” is the date that is
the later of the Scheduled Commencement Date or
the date on which Landlord tenders possession of
the Premises to Tenant in accordance with this
Lease.
	 
	 	 
	Initial Term Expiration Date:

	 	The “Initial Term Expiration Date” is June 30, 2012
	 
	 	 
	Term:

	 	The “Initial Term” is the period commencing on the
Commencement Date and ending on the Initial Term
Expiration Date. The “Term” is the Initial Term
together with the “Extension Term,” if
Tenant extends the Initial Term in accordance with
Section 3.B of this Lease, and together
with any other extension or renewal of the Term.
	 
	 	 
	Landlord’s Work:

	 	Before tendering possession of the
Premises to Tenant, Landlord shall, at
Landlord’s cost, substantially complete the
work described on Exhibit E (the “Landlord’s
Work”) in the Premises.
	 
	 	 
	HVAC and Roof — Capital
Repairs and Replacements
During the First Six Months
of the Term:

	 	Notwithstanding anything in Sections 10 and 11 of
this Lease to the contrary, during the 6-month
period commencing on the Commencement Date,
Landlord shall be responsible for performing, at
its sole cost without reimbursement through
Operating Expenses, all necessary capital repairs
and replacements to the roof and the heating,
ventilating, and air conditioning (“HVAC”) systems
in the Building. Tenant shall be responsible
for all ordinary servicing and
maintenance of the HVAC systems during the 6-month
period commencing on the Commencement Date, and
throughout the remainder of the Term, in
accordance with Section 11 of this Lease.
	 
	 	 
	Allowance:

	 	Landlord shall pay to Tenant an allowance
(the “Allowance”) of up to $155,000 to reimburse
Tenant for its reasonable out-of-pocket expenses
for moving expenses and purchasing and
installing furniture, workstations, cabling and
wiring in the Premises before and/or after
the Commencement Date, however, in no
event later than April 1, 2007 (the “Furniture
and Fixtures”). The Furniture and Fixtures
shall conform to Landlord’s Building

 

 

	 	 	 
	 

	 	standards, and, before purchasing or installing any of
the Furniture or Fixtures, Tenant must obtain
Landlord’s written approval of a detailed purchase order
or other description of the Furniture and Fixtures
that Tenant intends to purchase and install. All of the
Furniture and Fixtures shall remain the property of
Landlord and Tenant shall have no right to remove any of
the Furniture and Fixtures from the Premises, either
before or upon the expiration or cancellation of the
Term. Tenant shall, at it sole cost, keep the Furniture
and Fixtures in good condition and repair, subject only
to reasonable wear and tear, and casualty damage.
Landlord hereby approves the Furniture and Fixtures
described on the attached Exhibit D. If the cost of
moving and purchasing and installing the Furniture
and Fixtures exceeds $155,000, Tenant shall be
solely responsible for the cost in excess of $155,000.
Landlord shall pay the Allowance within 30 days after
receiving final paid invoices.
	 
	 	 
	Monument Sign:

	 	During the Term, Tenant, at Tenant’s sole cost, but
subject to governmental approval, shall have the right to
place its name on one plaque on the Building monument
sign in front of the Building (as it may be replaced from
time to time, the “Monument Sign”). The design, size,
and color of the signage with Tenant’s name to be
included on the Monument Sign, and the manner in
which it is attached to the Monument Sign, shall
be subject to the reasonable approval of Landlord and all
applicable governmental authorities. Tenant, at its
cost, shall be responsible for the maintenance,
repair or replacement of Tenant’s signage on the
Monument Sign, which shall be maintained in a manner
reasonably satisfactory to Landlord. Tenant’s right to
place its name on the Monument Sign, and the location of
Tenant’s name on the Monument Sign, shall be subject to
Landlord’s reasonable approval. Although the Monument
Sign will be maintained by Landlord, Tenant shall pay its
cost of any maintenance and repair associated with the
Monument Sign. Upon expiration or earlier termination
of the Lease or Tenant’s right to possession
of the Premises, Landlord at Tenant’s cost, within 30
days after demand, shall have the right to remove
Tenant’s signage from the Monument Sign and restore the
Monument Sign to the condition it

 

 

	 	 	 
	 

	 	was in prior to installation of Tenant’s signage,
ordinary wear and tear excepted.
	 
	 	 
	Net Rent:

	 	The “Net Rent Commencement Date” is the later of June 30,
2007 or the date 9 months after the Commencement
Date. Tenant shall pay net rent (“Net Rent”) to Landlord
in the following amounts during the following periods:

	 	 	 	 	 	 	 	 	 
	 	 	Monthly Net	 	 
	 	 	Rent per       	 	Monthly Net
	Period	 	Square Foot	 	Rent              

	Commencement Date
through Net Rent
Commencement Date
	 	$	0.00	 	 	$	0.00	 
	Net Rent
Commencement Date
through 06/30/08
	 	$	1.50	 	 	$	46,500	 
	07/01/08-06/30/09
	 	$	1.55	 	 	$	48,050	 
	07/01/09-06/30/10
	 	$	1.60	 	 	$	49,600	 
	07/01/10-06/30/11
	 	$	1.65	 	 	$	51,150	 
	07/01/11-06/30/12
	 	$	1.70	 	 	$	52,700	 

	 	 	 
	 

	 	Although no Net Rent is due for the period from the
Commencement Date through the Net Rent
Commencement Date, Tenant shall pay all Additional Rent due
with respect to the period from the
Commencement Date through the expiration of the Term.
	 
	 	 
	Security Deposit:

	 	Simultaneously with Tenant’s execution and delivery of this
Lease to Landlord, Tenant shall pay to Landlord a
$220,137 security deposit (the “Security Deposit”), which
Landlord shall hold pursuant to the terms of Section 19 of
this Lease. Provided that Tenant is not then in
default under this Lease, Landlord shall return
$155,000 of the Security Deposit, to the extent
not applied by Landlord pursuant to Section 19 of this
Lease, to Tenant upon the earlier to occur of (i) the closing
of an initial public offering of stock in Tenant or (ii)
December 31, 2008.
	 
	 	 
	Pre-Paid Rent:

	 	Simultaneously with Tenant’s execution and delivery of this
Lease to Landlord, Tenant shall pre-pay Net Rent and
Additional Rent in the amount of $58,751.

 

 

	 	 	 
	Tenant’s Proportionate Share

	 	100% (“Tenant’s Proportionate Share”)
	 
	 	 
	Tenant’s Broker:

	 	Robert M. Steinbock, CB Richard Ellis Inc.
	 
	 	 
	Guarantor(s):

	 	None

The Basic Lease Information is part of this Lease. To the extent anything in the Basic Lease
Information conflicts with the rest of the Lease, the Basic Lease Information controls.

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	1. PREMISES
	 	 	1	 
	2. POSSESSION AND LEASE COMMENCEMENT
	 	 	1	 
	3. TERM
	 	 	2	 
	4. USE
	 	 	3	 
	5. RULES AND REGULATIONS
	 	 	4	 
	6. RENT
	 	 	4	 
	7. OPERATING COSTS
	 	 	5	 
	8. INSURANCE AND INDEMNIFICATION
	 	 	9	 
	9. WAIVER OF CLAIMS
	 	 	11	 
	10. LANDLORD’S REPAIRS AND MAINTENANCE
	 	 	12	 
	11. TENANT’S REPAIRS AND MAINTENANCE
	 	 	12	 
	12. ALTERATIONS
	 	 	13	 
	13. SIGNS
	 	 	14	 
	14. INSPECTION/POSTING NOTICES
	 	 	15	 
	15. SERVICES AND UTILITIES
	 	 	15	 
	16. SUBORDINATION
	 	 	17	 
	17. FINANCIAL STATEMENTS
	 	 	17	 
	18. ESTOPPEL CERTIFICATE
	 	 	18	 
	19. SECURITY DEPOSIT
	 	 	18	 
	20. LIMITATION OF TENANT’S REMEDIES
	 	 	18	 
	21. ASSIGNMENT AND SUBLETTING
	 	 	19	 
	22. AUTHORITY
	 	 	21	 
	23. CONDEMNATION
	 	 	21	 
	24. CASUALTY DAMAGE
	 	 	22	 
	25. HOLDING OVER
	 	 	23	 
	26. DEFAULT
	 	 	24	 
	27. LIENS
	 	 	26	 
	28. TRANSFERS BY LANDLORD
	 	 	27	 
	29. LANDLORD’S RIGHT TO PERFORM TENANT’S COVENANTS
	 	 	27	 
	30. WAIVER
	 	 	27	 
	31. NOTICES
	 	 	27	 
	32. ATTORNEY FEES
	 	 	28	 
	33. SUCCESSORS AND ASSIGNS
	 	 	28	 
	34. FORCE MAJEURE
	 	 	28	 
	35. SURRENDER OF PREMISES
	 	 	28	 
	36. HAZARDOUS MATERIALS
	 	 	29	 
	37. MISCELLANEOUS
	 	 	30	 

 

 

LEASE

     This Lease, dated August 10, 2006, is between Ravendale ERP LLC., a Delaware limited liability
company (“Landlord”), and Zonare Medical Systems, Inc., a Delaware corporation (“Tenant”).

1. PREMISES

     Landlord hereby leases the Premises to Tenant, and Tenant hereby leases the Premises from
Landlord, upon the terms and conditions set forth in this Lease. The Premises and the Property
shall be conclusively deemed to contain the areas stated in the Basic Lease Information for all
purposes related to this Lease, regardless of any actual measurement.

2. POSSESSION AND LEASE COMMENCEMENT

     If for any reason Landlord cannot deliver possession of the Premises to Tenant on or before
the Scheduled Commencement Date, Landlord shall not be in default under this Lease nor liable for
any damages, and Tenant shall accept possession of the Premises when Landlord tenders possession
to Tenant. Notwithstanding the foregoing, if for any reason Landlord does not tender possession of
the Premises to Tenant on or before the “Outside Delivery Date” defined below, Tenant, as its sole
remedy, may terminate this Lease by giving Landlord written notice of termination within 10 days
after the Outside Delivery Date, in which case this Lease shall be null and void and of no further
force or effect and Landlord shall promptly refund any prepaid Rent and Security Deposit
previously advanced by Tenant under this Lease and the parties shall have no further
responsibilities or obligations to each other with respect to this Lease. The “Outside Delivery
Date” is October 1, 2006. Tenant shall not be liable for any “Rent”, as Section 6 of this Lease
defines that term, for any period before the Commencement Date. Tenant acknowledges that, except
for Landlord’s completion of the Landlord’s Work, the Premises in their present condition are
suitable for the Permitted Use and for Tenant’s intended operations in the Premises. Tenant
further acknowledges that no representation as to the condition or repair of the Premises nor
promises to alter, remodel or improve the Premises have been made by Landlord or any agents of
Landlord, except for Landlord’s obligation to complete the Landlord’s Work. Upon Landlord’s
request, Tenant shall promptly execute and return to Landlord a “Start-Up Letter” in which Tenant
shall agree, among other things, to acceptance of the Premises and to the determination of the
Commencement Date, in accordance with the terms of this Lease, but Tenant’s failure or refusal to
do so shall not negate Tenant’s acceptance of the Premises of affect the determination of the
Commencement Date. Notwithstanding the foregoing, provided that this Lease has been fully executed
and delivered by all parties and Tenant has delivered to Landlord all prepaid Rent, the Security
Deposit and insurance certificates this Lease requires, Landlord shall permit Tenant to have
access to the Premises for the purpose of installing the Furniture and Fixtures and any other
furniture, equipment, and other personal property in the Premises before the Commencement Date,
subject to all of the terms and conditions of this Lease, except that Tenant shall not be required
to pay Net Rent or Tenant’s Proportionate Share of
“Operating Expenses”, as Section 7 of this
Lease defines that term, with respect to any period before the Commencement Date, but Tenant shall
be liable for any utilities or special services it receives before the Commencement Date.

1

 

3. TERM

     A. Term. The Term shall commence on the Commencement Date and include the
period through the Initial Term Expiration Date, together with any renewal or extension of the
Term, subject to any earlier termination or cancellation of this Lease.

     B. Extension Option. Tenant shall have one option to extend the Term (the
“Extension Option”) for the period from July 1, 2012 to June 30, 2015 (the “Extension Term”)
by delivering written notice (a “Notice to Extend”) of its exercise of the Extension Option to
Landlord not earlier than June 30, 2011 and not later than September 30, 2011, as follows:

     (1) 
The Net Rent payable for each month during the Extension Term shall be the prevailing rental rate (the “Prevailing Rental Rate”) at the commencement of the
Extension Term for leases of space of equivalent quality, size, utility, and location
within
Mountain View, California, taking into account the length of the Extension Term and
Tenant’s credit standing, and based on a lease that is net to the same extent as this
Lease.
Within 30 days after receiving Tenant’s Notice to Extend,
Landlord shall deliver to Tenant written notice of the Prevailing Rental Rate (the “PRR Notice”) and shall advise
Tenant of the required increase in the Net Rent, if any, and the other terms and
conditions
offered. Tenant shall, within 10 days after receiving Landlord’s notice, notify
Landlord
in writing whether Tenant accepts or rejects Landlord’s
determination of the Prevailing
Rental Rate.

     (2) If Tenant timely accepts Landlord’s determination of the Prevailing Rental
Rate, or fails to timely notify Landlord in writing that Tenant accepts or rejects
Landlord’s determination of the Prevailing Rental Rate, time being of the essence, then,
on or before the commencement date of the Extension Term, Landlord and Tenant shall
execute an amendment to this Lease acknowledging the extension of the Term and the
adjustment of the Net Rent. Tenant shall have no further rights to extend or renew the
Term after the Extension Term. During the Extension Term Landlord shall lease to
Tenant the Premises in their then-current condition and Landlord shall have no
obligation
to provide to Tenant any moving allowance, construction allowance, or
tenant
inducement of any nature.

     (3) If Tenant timely rejects Landlord’s determination of the Prevailing Rental
Rate, then the Prevailing Rental Rate shall be determined as follows. Tenant shall
submit
to Landlord, within 30 days after receiving the PRR Notice, a notice (the “PRR
Objection Notice”) proposing a specific alternative Prevailing Rental Rate. If Landlord
and Tenant fail to agree on the Prevailing Rental Rate within 30 days after Landlord
receives the PRR Objection Notice, Landlord and Tenant each shall give notice to the
other of the name and address of an arbitrator designated by the party giving such
notice.
If either party fails to give notice of such designation within 30 days after Landlord

receives the PRR Objection Notice, the other party shall provide an additional notice to
such party requiring such party’s appointment of an arbitrator within 10 days after
receipt
of such second notice. If either party fails to give notice of such designation within
such
10-day period, the first arbitrator chosen shall make the determination alone. If two
arbitrators have been designated, both arbitrators shall, within 10 business days
following

2

 

the designation of the second arbitrator, make their determination of Prevailing Rental
Rate in writing and give notice to each other and to Landlord and Tenant. The two
arbitrators shall have 10 business days after the receipt of notice of each other’s
determinations to confer with each other and to attempt to reach agreement as to the
determination of Prevailing Rental Rate. If the two arbitrators agree on the Prevailing
Rental Rate, that rate shall be final and binding upon Landlord and Tenant, and each party
shall pay the fees of its own designated arbitrator. If the two arbitrators fail to agree
on the Prevailing Rental Rate by the end of the 10 business day period, then the two
arbitrators shall promptly designate a third arbitrator. If the two arbitrators fail to
agree upon the designation of a third arbitrator within ten days, then either party may
apply to the American Arbitration Association of any successor having jurisdiction for the
designation of such arbitrator. All arbitrators shall be real estate brokers with at least
15 years of continuous experience in the business of acting as commercial real estate
agents or brokers in the Silicon Valley area. The third arbitrator shall conduct such
hearing and investigations as he/she may deem appropriate and shall, within 30 days after
this designation, choose one of the determinations of the two arbitrators originally
selected by the parties, and that choice by the third arbitrator shall be binding upon
Landlord and Tenant. The losing party shall pay the fees of the arbitrators and the
reasonable legal fees of the winning party. The determination rendered in accordance with
the provisions of this Section 3.B(3) shall be final and binding in fixing the Prevailing
Rental Rate. The arbitrators shall not have the power to add to, modify or change any of
the provisions of this Lease.

     (4) The Extension Option and all of Tenant’s rights under this Section 3.B shall
automatically terminate immediately upon the occurrence of any of the following: (1) either
this Lease or Tenant’s right to possession of the Premises is terminated; (2) Tenant fails
to timely exercise the Extension Option, time being of the essence with respect to Tenant’s
exercise; (3) Tenant enters into any Transfer other than a Permitted Transfer or a sublease
of less than all of the Premises that Landlord has consented to in writing and that expires
on or before the expiration of the Initial Term; or (4) an Event of Default exists either
at the time Tenant delivers the Notice to Extend, or immediately before the scheduled
commencement of the Extension Term.

4. USE

     A. General. Tenant shall use the Premises only for the Permitted Use and for no other use or
purpose. Tenant shall be entitled to access to the Premises 24 hours per day, 7 days per week.
Each of Tenant and Tenant’s employees, agents, customers, visitors, invitees, licensees,
contractors, assignees, and subtenants is, individually, a “Tenant Party”, and collectively, they
are the “Tenant Parties”. Tenant shall control the Tenant Parties in such a manner that the Tenant
Parties cumulatively do not exceed the Parking Density at any time. Tenant and the Tenant Parties
shall have the exclusive right to use the parking areas, driveways and other common areas of the
Property, subject to the “Rules and Regulations”, as Section 5 of this Lease defines that term.
Landlord reserves the right, without notice or liability to Tenant, and without the same
constituting an actual or constructive eviction, to alter or modify the Property from time to time
and the amenities and facilities that Landlord may elect to provide from time to time; provided
that any such modification by Landlord shall not materially or

3

 

adversely prevent Tenant’s access to the Premises or Tenant’s Permitted Use of the Premises or
Tenant’s parking rights.

     B. Limitations. Tenant shall not permit any excessive odors, smoke, gas,
substances, excessive noise or excessive vibrations to emanate from the Premises or from any
portion of the common areas as a result of Tenant’s or any Tenant Party’s use, nor take any
action that would constitute a nuisance or would disturb, obstruct or endanger any other
tenants
or occupants of the neighboring properties. Tenant shall not use or allow the Premises to be
used
for any immoral, improper or unlawful purpose, nor shall Tenant cause or maintain or permit
any
nuisance in, on or about the Premises. Tenant shall not commit or suffer the commission of any
hazardous waste in, on or about the Premises. Tenant shall not allow any sale by auction upon
the Premises, or place any loads upon the floors, walls or ceilings that could endanger the
structure, or place any harmful substances in the drainage system of the Building. No waste,
materials or refuse shall be dumped upon or permitted to remain outside the Premises except in
trash containers placed inside exterior enclosures designated for that purpose by Landlord.

     C. Compliance with Laws. By entering the Premises, Tenant accepts the Premises
in the condition existing as of the date of such entry. Tenant shall at its sole cost and
expense
strictly comply with all existing or future applicable municipal, state and federal and other
governmental statutes, rules, requirements, regulations, laws and ordinances, including zoning
ordinances and regulations (collectively “Laws”). Tenant shall at its sole cost and expense
obtain any and all licenses or permits necessary for Tenant’s use of the Premises. Tenant
shall at
its sole cost and expense promptly comply with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted. Tenant shall not do or
permit
anything to be done in, on, under or about the Property or bring or keep anything which will
in
any way increase the rate of any insurance upon the Premises or
Property or upon any contents or cause a cancellation of said insurance or otherwise affect said insurance in any manner.
Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord), protect and
hold
Landlord harmless from and against any loss, cost, expense, damage, attorneys’ fees or
liability
arising out of the failure of Tenant to comply with any Law. Tenant’s obligations pursuant to
the
foregoing indemnity shall survive the expiration or earlier termination of this Lease.

5. RULES AND REGULATIONS

     Tenant shall cause the Tenant Parties to comply with the rules and regulations attached to
this Lease as Exhibit C and any other rules and regulations and any modifications or additions
that Landlord may from time to time prescribe in writing for the purpose of maintaining the proper
care, cleanliness, safety, traffic flow, and general order of the Premises and the Property (the
“Rules and Regulations”).

6. RENT

     A. Net Rent. Tenant shall pay to Landlord, without notice or demand throughout the Term, the
Net Rent, payable in monthly installments due in advance on or before the first day of each
calendar month, in lawful money of the United States, without any deduction, credit, or offset
whatsoever, to such place and to such entity as Landlord may from time to lime designate in
writing. No Net rent is due for the period from the Commencement Date through June 30,

4

 

2007, but Tenant shall pre-pay the Net Rent due for July 2007 upon Tenant’s execution and delivery
of this Lease.

     B. Additional Rent. All amounts of any nature other than Net Rent that this Lease
obligates Tenant to pay to or for the benefit of Landlord, including, but not limited to,
Tenant’s
Proportionate Share of Operating Costs, are additional rent (“Additional Rent”).

     C. Rent. Collectively, Net Rent and Additional Rent are the “Rent”. Landlord has
the same rights under California law for any non-payment of Additional Rent as Landlord would
have for non-payment of Net Rent, but this Lease’s use of the term “Additional Rent” is not
intended to characterize any charge included in Additional Rent as rent for the purpose of the
imposition of any rent or similar tax. Notwithstanding anything in this Lease to the
contrary,
Tenant’s obligations to pay Rent are be independent from any of
Landlord’s obligations, warranties, and/or representations, express or implied, in or related to this Lease.

7. OPERATING COSTS

     A. Operating Costs. In addition to Net Rent, Tenant shall pay Operating Costs in accordance
with this Section 7. Notwithstanding that no Net Rent is due for the period from the Commencement
Date through June 30, 2007, Tenant shall commence paying Operating Costs on the Commencement Date.
“Operating Costs” means all actual expenses and costs of every kind and nature that Landlord pays
or becomes obligated to pay, because of or in connection with the ownership, management,
maintenance, repair, preservation, and/or operation of the Property and its supporting facilities
and such additional facilities as of the Commencement Date and in subsequent years as may be
determined by Landlord to be necessary or desirable to the Property (as determined in a reasonable
manner) other than those expenses and costs that are specifically attributable to Tenant or that
are expressly made the financial responsibility of Landlord. Operating Costs include, but are not
limited to, the following:

     (1) Taxes. All real property taxes and assessments, possessory interest taxes, sales
taxes, personal property taxes, business or license taxes or fees, gross receipts taxes,
service payments in lieu of such taxes or fees, annual or periodic license or use fees,
excises, transit charges, and other impositions, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind (including fees “in-lieu” of any
such tax or assessment) that are now or hereafter assessed, levied, charged, confirmed, or
imposed by any public authority upon the Property, its operation, or all or any part of the
Rent, or any tax, assessment or fee imposed in substitution, partially or totally, of any
of the above. Operating Costs shall also include any taxes, assessments, reassessments, or
other fees or impositions with respect to the development, leasing, management,
maintenance, alteration, repair, use or occupancy by Tenant of all or any part of the
Premises or Property, including, without limitation, by or for Tenant, and all increases or
reassessments, whether the increases or reassessments result from increased rate and/or
valuation (whether upon a transfer of all or any part of the Property or any interest in
the Property or for any other reason). Operating Costs shall not include inheritance or
estate taxes imposed upon or assessed against the interest of any person in the Property,
or taxes computed upon the basis of the net income of any owner of any interest in the
Property. If it is unlawful for Tenant to reimburse Landlord for all or any part of such
taxes, the

5

 

monthly rental payable to Landlord under this Lease shall be revised to net Landlord the same net
rental after imposition of any such taxes by Landlord as would have been payable to Landlord prior
to the payment of any such taxes. Notwithstanding anything to the contrary in this Section 7,
Operating Costs shall not include and Tenant shall not be required to pay any portion of any tax or
assessment, including any increase in any tax or assessment: (a) levied on Landlord’s rental
income, unless such tax or assessment is imposed in lieu of real property taxes; (b) in excess of
the amount that would be payable if such tax or assessment were paid in installments over the
longest permitted term; (c) imposed on land and improvements other than the Property; or (d)
attributable to Landlord’s gift, transfer, or state taxes.

     (2) Insurance. All insurance premiums and costs, including, but not limited
to, any deductible amounts, premiums and other costs of insurance incurred by Landlord,
including for the insurance coverage set forth in Section 8.A of this Lease.

     (3) Maintenance.

     (a) Repairs, replacements, and general maintenance of and for the
Property and facilities of and comprising the Property, including, but not limited
to, the roof and roof membrane, mechanical rooms, alarm systems, pest
extermination, landscaped areas, parking and service areas, driveways, sidewalks,
truck staging areas, fire sprinkler systems, sanitary and storm sewer lines, utility
services, heating/ventilation/air conditioning systems, electrical, mechanical or
other systems, telephone equipment and wiring servicing, plumbing, lighting, and
any other items or areas that affect the operation or appearance of the Property,
which determination shall be at Landlord’s reasonable discretion, except for those
items to the extent paid for by the proceeds of insurance.

     (b) Repairs, replacements, and general maintenance shall include the
cost of any improvements made to or assets acquired for the Property that (i) in
Landlord’s discretion may reduce any other Operating Costs, including present or
future repair work, (ii) are reasonably necessary for the health and safety of the
occupants of the Property, (iii) are reasonably necessary for the operation of
building systems, services and equipment, and/or (iv) are required to comply with
any Law. The cost of any capital improvements shall be amortized over such
reasonable period as Landlord shall determine, together with interest on the
unamortized balance at the “Prime Rate” announced by the Wall Street Journal in
its Money Rates section at the time such improvements or capital assets are
constructed or acquired, or in the absence of such prime rate, then at the U.S.
Treasury six-month market note (or bond, if so designated) rate as published by
any national financial publication selected by Landlord, plus 2 percentage points,
but in no event more than the maximum rate permitted by law.

     (c) Payment under or for any easement, license, permit, operating
agreement, declaration, restrictive covenant, or instrument relating to
the
Property.

6

 

     (d) All expenses and rental related to services and costs of supplies,
materials and equipment used in operating, managing and maintaining the
Premises and Property, the equipment therein and the adjacent sidewalks,
driveways, parking and service areas, including, without limitation, expenses
related to service agreements regarding security, fire and other alarm systems,
janitorial services to the extent not addressed in Section 11 of this Lease,
window
cleaning, building exterior maintenance, landscaping and expenses related to
the
administration, management and operation of the Property, excluding
salaries, wages and benefits and management office rent.

     (e) The cost of supplying any services and utilities that benefit all or a
portion of the Premises or Property to the extent not addressed in Section 15
of
this Lease.

     (f) A management and accounting cost recovery fee equal to 3% of Net Rent (the
“Management Fee”); provided, however, that notwithstanding anything to the contrary
in this Lease, for purposes of computing the Additional Rent payable by Tenant
pursuant to this Section 7.A, Tenant’s Proportionate Share of the Management Fee
shall be equal to 100% of such Management Fee.

Operating Costs shall not include the cost of providing tenant improvements or other specific
costs incurred for the account of, separately billed to and paid by specific tenants of the
Property, the initial construction cost of the Property, or debt service on any mortgage or deed
of trust recorded with respect to the Property other than pursuant to Section 7.A(3)(b) of this
Lease.

Notwithstanding anything to the contrary in this Section 7, “Operating Costs” shall not include
and Tenant shall in no event have any obligation to perform or to pay directly, or to reimburse
Landlord for, all or any portion of the following repairs, maintenance, improvements,
replacements, premiums, claims, losses, fees, charges, costs and expenses (collectively, “Costs”):
(a) Costs occasioned by the act, omission or violation of any law by Landlord, any other occupant
of the Property, or their respective agents, employees or contractors; (b) Costs occasioned by
casualties or by the exercise of the power of eminent domain; (c) Costs to correct any
construction defect in the Premises or the Property or to comply with any covenant, condition,
restriction, underwriter’s requirement or law applicable to the Premises or the Property on the
Commencement Date; (d) Costs of any renovation, improvement, painting, or redecorating of any
rentable portion of the Property; (e) Costs incurred in connection with negotiations or disputes
with any other occupant of the Property and Costs arising from the violation by Landlord or any
other occupant of the Property of the terms and conditions of any lease or other agreement; (f)
Costs incurred in connection with the presence of any Hazardous Material, except to the extent
caused by the release or emission of the Hazardous Material in question by Tenant, and except
Costs of using, handling, and disposing of Hazardous Materials in the ordinary course of
maintaining and repairing the Property, including but not limited to cleaning chemicals,
construction materials, batteries, and fluorescent tubes; (h) expense reserves; and (i) wages,
compensation, and labor burden for any employee to the extent such employee’s time is not devoted
to the Property.

7

 

The above enumeration of services and facilities shall not be deemed to impose an obligation on
Landlord to make available or provide such services or facilities except to the extent, if any,
that Landlord has specifically agreed elsewhere in this Lease to make the same available or provide
the same. Without limiting the generality of the foregoing, Tenant acknowledges and agrees that it
shall be responsible for providing adequate security for its use of the Premises and the Property
and that Landlord shall have no obligation or liability with respect thereto, except to the extent,
if any, that Landlord has specifically agreed elsewhere in this Lease to provide the same.

     B. Payment of Estimated Operating Costs. “Estimated Operating Costs” for any
particular year means Landlord’s estimate of the Operating Costs for such fiscal year made with
respect to such fiscal year as provided in this Section 7.B. Landlord shall have the right from
time to time to revise its fiscal year and interim accounting periods so long as the periods as so
revised are reconciled with prior periods in a reasonable manner. During the last month of each
fiscal year during the Term, or as soon thereafter as practicable, Landlord shall give Tenant
written notice of the Estimated Operating Costs for the ensuing fiscal year. Tenant shall pay
Tenant’s Proportionate Share of the Estimated Operating Costs with installments of Net Rent for
the fiscal year to which the Estimated Operating Costs applies in monthly installments on the
first day of each calendar month during such year, in advance. If at any time during the course of
the fiscal year, Landlord determines that Operating Costs are projected to vary from the
then-Estimated Operating Costs by more than 5%, Landlord may, by written notice to Tenant, revise
the Estimated Operating Costs for the balance of such fiscal year, and Tenant’s monthly
installments for the remainder of such year shall be adjusted so that by the end of such fiscal
year Tenant has paid to Landlord Tenant’s Proportionate Share of the revised Estimated Operating
Costs for such year.

     C. Computation of Operating Cost Adjustment. “Operating Cost Adjustment”
means the difference between Estimated Operating Costs and actual Operating Costs for any fiscal
year determined as provided in this Section 7.C. Within 120 days after the end of each fiscal
year, or as soon thereafter as practicable, Landlord shall deliver to Tenant a statement of actual
Operating Costs for the fiscal year just ended, accompanied by a computation of Operating Cost
Adjustment. If such statement shows that Tenant’s payment based upon Estimated Operating Costs is
less than Tenant’s Proportionate Share of Operating Costs, then Tenant shall pay to Landlord the
difference within 20 days after receipt of such statement. If such statement shows that Tenant’s
payments of Estimated Operating Costs exceed Tenant’s Proportionate Share of Operating Costs, then
(provided that Tenant is not in default under this Lease) Landlord shall pay to Tenant the
difference within 20 days after delivery of such statement to Tenant. If this Lease has been
terminated or the Term has expired before the date of such statement, the Operating Cost
Adjustment shall be paid by the appropriate party within 20 days after the date of delivery of the
statement. If the Term commences or terminates at any time other than the first day of the fiscal
year, Tenant’s Proportionate Share of the Operating Cost Adjustment shall be prorated based on a
month of 30 days and the number of calendar months during such fiscal year that this Lease is in
effect. Notwithstanding anything to the contrary in Section 7.A or 7.B, Landlord’s failure to
provide any notices or statements within the time periods specified in those paragraphs shall in
no way excuse Tenant from its obligation to pay Tenant’s Proportionate Share of Operating Costs.

8

 

     D. Net Lease. This shall be a triple net lease and Net Rent shall be paid to Landlord
absolutely net of all costs and expenses, except as specifically provided to the contrary in
this
Lease. The provisions for payment of Operating Costs and the Operating Cost Adjustment are
intended to pass on to Tenant and reimburse Landlord for all costs and expenses of the nature
described in Section 7.A. incurred in connection with the ownership, management, maintenance,
repair, preservation, replacement and operation of the Property and its supporting facilities
and
such additional facilities now and in subsequent years as may be
determined by Landlord to be necessary or desirable to the Property.

     E. Tenant Audit. If Tenant disputes the amount set forth in any statement provided
by Landlord under Section 7.B. or 7.C., Tenant shall have the right, not later than 60 days
following receipt of such statement, to cause Landlord’s books and records with respect to
Operating Costs for such fiscal year to be audited by certified public accountants selected by
Tenant. The Operating Cost Adjustment shall be appropriately adjusted on the basis of such
audit. If the audit discloses a liability for a refund in excess of five 5% of Tenant’s
Proportionate
Share of the Operating Costs previously reported, Landlord shall pay for the audit; otherwise
Tenant shall pay for the audit. If Tenant does not request an audit in accordance with this
Section 7.E. within 60 days after receipt of Landlord’s statement provided pursuant to Section
7.B. or 7.C., such statement shall be final and binding for all purposes related to this
Lease.
Tenant acknowledges and agrees that any information revealed in the above described audit may
contain proprietary and sensitive information and that significant damage could result to
Landlord if such information were disclosed to any party other than Tenant’s auditors. Tenant
shall not in any manner disclose, provide or make available any information revealed by the
audit to any person or entity without Landlord’s prior written consent; provided, however,
that
Tenant may disclose such information to its accountants, attorneys, auditors and as required
by
law or court order. Tenant may only use the information disclosed by the audit for the
purpose
of evaluating Landlord’s books and records in connection with this Section 7.E.

8. INSURANCE AND INDEMNIFICATION

     A. Landlord’s Insurance. All insurance maintained by Landlord shall be for the sole
benefit of Landlord and under Landlord’s sole control.

     (1) Property Insurance. Landlord shall maintain property insurance insuring
the Building and Landlord’s Work against damage or destruction due to risk including
fire, vandalism, and malicious mischief in an amount not less than the replacement
cost,
in the form and with deductibles and endorsements as selected by Landlord. At its
election, Landlord may (but shall have no obligation to) obtain earthquake, pollution,
and/or flood insurance in amounts selected by Landlord.

     (2) Optional Insurance. Landlord, at Landlord’s option, may also (but shall
have no obligation to) carry (i) insurance against loss of rent, in an amount equal to
the
amount of Net Rent and Additional Rent that Landlord could be required to abate to all
Property tenants in the event of condemnation or casualty damage for a period of 12
months; and (ii) liability insurance and such other insurance as Landlord may deem
prudent or advisable, including, without limitation, liability insurance in such
amounts
and on such terms as Landlord shall determine. Landlord shall not be obligated to
insure,

9

 

and shall have no responsibility whatsoever for any damage to, any furniture, machinery,
goods, inventory or supplies, or other personal property or fixtures that Tenant may keep
or maintain in the Premises, or any leasehold improvements, additions or alterations within
the Premises.

     B. Tenant’s Insurance. Tenant shall procure at Tenant’s sole cost and expense and keep
in effect throughout the Term the following:

     (1) Property Insurance. Property insurance covering all of Tenant’s business and trade
fixtures, equipment, movable partitions, furniture, merchandise and other personal property
within the Premises.

     (2) Liability Insurance. Commercial general liability insurance covering bodily injury
and property damage liability occurring in or about the Premises or arising out of the use
and occupancy of the Premises and the Property, and the business operated by Tenant or by
any other occupant of the Premises. Such insurance shall include contractual liability
coverage insuring all of Tenant’s indemnity obligations under this Lease. Such coverage
shall have a minimum combined single limit of liability of at least $2,000,000.00, and a
minimum general aggregate limit of $2,000,000.00, with an “Additional Insured — Managers or
Lessors of Premises Endorsement.” All such policies shall be written to apply to all bodily
injury (including death), property damage or loss, personal and advertising injury and
other covered loss, however occasioned, occurring during the policy term, shall be endorsed
to add Landlord (or its successors and assignees), the managing agent for the Property (or
any successor), as an additional insured, and shall provide that such coverage shall be
“primary” with any insurance maintained by Landlord, which shall be excess insurance only.
All such insurance shall provide for the severability of interests of insureds; and shall
be written on an “occurrence” basis, which shall afford coverage for all claims based on
acts, omissions, injury and damage, which occurred or arose (or the onset of which occurred
or arose) in whole or in part during the policy period.

     (3) Workers’ Compensation and Employers’ Liability Insurance.
Workers’ Compensation Insurance as required by any Law.

     (4) Alterations Requirements. If Tenant desires to perform any Alterations, Tenant
shall deliver to Landlord, prior to commencing such Alterations, (i) evidence satisfactory
to Landlord that Tenant (or its general contractor) carries “Builder’s Risk” insurance
covering construction of such Alterations in an amount and form approved by Landlord, and
(ii) such other insurance Landlord reasonably requires.

     (5) General Insurance Requirements. All coverages described in this Section 8.B shall
be endorsed to (i) provide Landlord with 30 days’ notice of cancellation; and (ii) , with
respect to property insurance, waive all rights of subrogation by the insurance carrier
against Landlord. If at any time during the Term the amount or coverage of insurance that
this Section 8.B requires Tenant to is, in Landlord’s reasonable judgment, materially less
than the amount or type of insurance coverage typically carried by owners or tenants of
properties located in the general area in which

10

 

the Premises are located that are similar to and operated for similar purposes as the
Premises or if Tenant’s use of the Premises changes with or without Landlord’s consent,
Landlord shall have the right to require Tenant to increase the amount or change the types
of insurance coverage this Section 8.B requires. All insurance policies this Lease requires
Tenant to carry shall be written by companies rated A: VIII or better in “Best’s Insurance
Guide” and authorized to do business in the State of California. Tenant shall deliver to
Landlord on or before the Commencement Date, and thereafter at least 30 days before the
expiration dates of the expired policies, certified copies of Tenant’s insurance policies,
or a certificate evidencing the same issued by the insurer; and, if Tenant fails to procure
such insurance, or to deliver such policies or certificates, Landlord may, at Landlord’s
option and in addition to Landlord’s other remedies in the event of a default by Tenant
under this Lease, procure the same for the account of Tenant.

     C. Indemnification. Tenant shall indemnify, defend by counsel reasonably acceptable to
Landlord, protect and hold Landlord (or any successor), and each of its directors, shareholders,
partners, lenders, members, managers, contractors, affiliates, and employees (collectively,
“Landlord Indemnitees”) harmless from and against any and all claims, liabilities, losses, costs,
loss of rents, liens, damages, injuries or expenses, including reasonable attorneys’ and
consultants’ fees and court costs, demands, causes of action, or judgments, to the extent arising
out of or related to: (1) claims of injury to or death of persons or damage to property or
business loss occurring or resulting directly or indirectly from the use or occupancy of the
Premises or Property by Tenant or any Tenant Party, or from activities or failures to act of
Tenant or any Tenant Party, regardless of whether the Landlord Indemnitees are or are claimed to
be responsible for such claims, but only to the extent that such claims are covered by insurance
that Tenant maintains, or would be covered by insurance this Lease obligates Tenant to maintain;
(2) claims arising from work or labor performed, or for materials or supplies furnished to or at
the request of Tenant in connection with performance of any work done for the account of Tenant
within the Premises or Property, except for Landlord’s Work; (3) claims arising from any breach or
default on the part of Tenant in the performance of any covenant contained in this Lease; and (4)
claims arising from the negligence or willful misconduct of Tenant or any Tenant Party. Landlord
shall not be liable to Tenant and Tenant hereby waives all claims against Landlord for any injury
to or death of or damage to any person or property or business loss in or about the Premises or
Property by or from any cause whatsoever and, without limiting the generality of the foregoing,
whether caused by or from any water leakage of any character from the roof, walls, basement or
other portion of the Premises or Property, or caused by gas, fire, oil or electricity in, on or
about the Premises or Property, acts of God or of third parties, or any matter outside of the
reasonable control of Landlord, except to the extent due to Landlord’s willful misconduct. The
provisions of this Section shall survive the expiration or earlier termination of this Lease.

9. WAIVER OF CLAIMS

     Notwithstanding anything to the contrary in this Lease, each of Landlord and Tenant hereby
waives any claim it might have against the other for any loss or cost (a “Loss”) to the extent the
waiving party is insured against the Loss (or is required to be insured against the Loss under
this Lease) under any property damage insurance policy covering the Property, the Premises,
Landlord’s or Tenant’s fixtures, personal property, leasehold improvements, or

11

 

business, regardless of whether the negligence of the other party caused or is claimed to have
caused such Loss. Also notwithstanding anything to the contrary in this Lease, (i) Tenant hereby
waives any claim it might have against Landlord for any Loss arising from any occurrence in the
Premises to the extent Tenant is insured against such Loss, or this Lease requires Tenant to insure
against such Loss, under any liability insurance policy, regardless of whether Landlord’s
negligence caused or is claimed to have caused such Loss, and (ii) Landlord hereby waives any claim
it might have against Tenant for any Loss arising from any occurrence on the Land outside of the
Premises to the extent Landlord is insured against such Loss, or this Lease requires Landlord to
insure against such Loss, under any liability insurance policy, regardless of whether Tenant’s
negligence caused or is claimed to have caused such Loss. All of Landlord’s and Tenant’s repair and
indemnity obligations under this Lease shall be subject to the waiver contained in this Section 9.

10. LANDLORD’S REPAIRS AND MAINTENANCE

     Landlord, shall, at Landlord’s sole cost and expense, subject to reimbursement for costs
properly included in Operating Costs: (i) maintain, repair, and replace, subject to reasonable
wear and tear, the driveways, drive aisles, parking areas, sidewalks, curbs, exterior lighting,
landscaping, and other exterior common areas on the Property; (ii) maintain, repair, and replace,
subject to reasonable wear and tear, the roof and the exterior surface of the exterior walls of
the Building; (iii) perform all necessary capital repairs and replacements with respect to the
roof-top HVAC units serving the Building, provided that Landlord has no obligation to monitor the
condition or repair of the HVAC systems, and Tenant must notify Landlord of any capital repairs or
replacements Tenant believes are necessary; and (iv) maintain, repair, and replace, subject to
reasonable wear and tear, the structural soundness of the roof, foundations, and exterior walls of
the Building, provided that in this sentence the term “exterior walls” does not include, and
Landlord has no obligation to maintain, repair, or replace, any windows, glass or plate glass,
doors, dock bumpers, dock plates, dock levelers, or any entries or other exterior improvements
installed by or for Tenant. Notwithstanding the preceding sentence, Tenant shall, upon demand,
reimburse Landlord for any damage caused by or repairs required by the negligence or deliberate
acts of Tenant or any Tenant. Tenant shall immediately give Landlord written notice of any defect
or need of repairs in such components of the Property for which Landlord is responsible, after,
which Landlord shall have a reasonable opportunity and the right to enter the Premises at all
reasonable times to perform repairs, subject to Section 14 of this Lease. Landlord’s liability
with respect to any defects, repairs, or maintenance for which Landlord is responsible under this
Lease shall be limited to the cost of such repairs or maintenance, and there shall be no abatement
of Rent and no liability of Landlord by reason of any injury to or interference with Tenant’s
business arising from the making of repairs, alterations or improvements in or to any portion of
the Premises, the Property or to fixtures, appurtenances or equipment in the Building, except as
provided in Section 24 of this Lease.

11. TENANT’S REPAIRS AND MAINTENANCE

     Tenant shall, at all times during the Term, at Tenant’s sole cost and expense, maintain all
parts of the Premises and any other parts of the Property that are within Tenant’s exclusive
control in a first-class, good, clean, and secure condition and promptly make all necessary
repairs and replacements, as determined by Landlord, except that Tenant must notify Landlord of
any

12

 

capital repairs or replacements it believes are required with respect to the roof-top HVAC units,
but Tenant shall not be obligated to perform any capital repairs or replacements of the roof-top
HVAC units serving the Building. Tenant’s obligations under this Section 11 include, without
limitation, doing all of the following at Tenant’s sole cost and expense: (i) maintaining,
repairing, and replacing all windows, glass, doors, walls (except for the structural elements of
any walls that Section 10 obligates Landlord to maintain), including demising walls, and wall
finishes, floors and floor coverings, ceilings, truck doors, hardware, dock bumpers, dock plates
and levelers, mechanical systems, plumbing fixtures, downspouts, smoke hatches, roof vents,
electrical and lighting systems, fire sprinklers, HVAC systems (except that Tenant has no
obligation to perform any capital repairs or replacements to the roof-top HVAC units serving the
Building), and entries with materials and workmanship of the same character, kind and quality as
the original; (ii) entering into and maintaining in effect, from the Commencement Date and through
the expiration of the Term, a preventative maintenance and service contract with a qualified
maintenance contractor who is reasonably acceptable to Landlord for the regularly-scheduled
servicing of all HVAC systems and equipment in or serving the Premises that requires that filters
be replaced at least quarterly or more often if suggested by the operation or maintenance manual
for the applicable equipment, and that is otherwise on terms reasonably acceptable to Landlord;
(iii) entering into and maintaining in effect from the Commencement Date through the expiration of
the Term a contract or contracts with a qualified contractor who is reasonably acceptable to
Landlord for the regularly-scheduled maintenance, servicing, and inspection of all sprinklers and
all fire and life safety alarms and systems in or serving the Premises that requires inspections at
least quarterly or more often if required by any governmental authority with jurisdiction, and that
requires the contractor to submit to all applicable governmental authorities all required
certificates of inspection or compliance, and that is otherwise on terms reasonably acceptable to
Landlord; (iv) ensuring that all certificates of inspection or compliance relating to the
sprinklers, fire alarms, and other life-safety systems and equipment in or serving the Premises
that any governmental authority requires are timely and properly submitted; and (v) delivering to
Landlord copies of all contracts and certificates that the preceding clauses require Tenant to
maintain or cause to be submitted, together with any additional evidence of compliance Landlord
reasonably requests. Notwithstanding the preceding sentences, Landlord may, upon notice to Tenant,
on Tenant’s behalf, enter into any one or more of the contracts clauses (ii) and (iii) of the
preceding sentence require on, and/or perform the work those clauses require, and in either case
charge Tenant the cost of the work and/or contract along with a reasonable amount for Landlord’s
overhead. Tenant is solely responsible for all of the maintenance, repairs, and replacements this
Section 11 obligates Tenant to perform, and Tenant is not Landlord’s agent or contractor with
respect to any of such maintenance, repairs, or replacements.

12. ALTERATIONS

     Tenant shall not make, or allow to be made, any alterations, physical additions, improvements
or partitions, including without limitation the attachment of any fixtures or equipment, in, about
or to the Premises (“Alterations”), except for minor non-structural alterations costing less than
$30,000 per year, without obtaining the prior written consent of Landlord, which consent shall not
be unreasonably withheld with respect to proposed Alterations that: (a) comply with all applicable
Laws; and (b) are, in Landlord’s opinion, compatible with the Building and its mechanical,
plumbing, electrical, HVAC systems, and will not cause the

13

 

Building or such systems to be required to be modified to comply with any Laws (including, without
limitation, the Americans With Disabilities Act). Specifically, but without limiting the generality
of the foregoing, Landlord shall have the right of written consent for all plans and specifications
for the proposed Alterations, construction means and methods, any contractor or subcontractor to be
employed on the work of Alterations, and the time for performance of such work, and may impose
reasonable rules and regulations for contractors and subcontractors performing such work. Tenant
shall also supply to Landlord any documents and information reasonably requested by Landlord in
connection with Landlord’s consideration of a request for approval under this Lease, including
without limitation, copies of all appropriate permits and licenses. Tenant shall complete all
Alterations in a first-class, good, and workmanlike manner, and shall comply with all applicable
Laws and Section 27 of this Lease. Tenant shall at Tenant’s sole expense, perform any additional
work required under applicable Laws due to any Alterations. No review or consent by Landlord of or
to any proposed Alteration or additional work shall constitute a waiver of Tenant’s obligations
under this Section 12. Tenant shall reimburse Landlord for all reasonable out-of-pocket costs that
Landlord may incur in connection with granting approval to Tenant for any such Alterations,
including any reasonable costs or expenses that Landlord may incur in electing to have outside
architects and engineers review said plans and specifications, and shall pay Landlord an
administration fee of 5% of the cost of the Alterations. All such Alterations shall remain the
property of Tenant until the expiration or earlier termination of this Lease, at which time they
shall be and become the property of Landlord; provided, however, that Landlord may, at Landlord’s
option, require that Tenant, at Tenant’s expense, remove any or all Alterations made by Tenant and
restore the Premises by the expiration or earlier termination of this Lease, to their condition
existing prior to the construction of any such Alterations. Tenant shall perform all such removals
and restoration in a first-class and good and workmanlike manner without causing any damage to the
Premises or Property whatsoever. If Tenant fails to remove such Alterations or Tenant’s trade
fixtures or furniture or other personal property, Landlord may keep and use them or remove any of
them and cause them to be stored or sold in accordance with applicable law at Tenant’s sole
expense. In addition to and wholly apart from Tenant’s obligation to pay Tenant’s Proportionate
Share of Operating Costs, Tenant shall be responsible for and shall pay prior to delinquency any
taxes or governmental service fees, possessory interest taxes, fees or charges in lieu of any such
taxes, capital levies, or other charges imposed upon, levied with respect to or assessed against
its fixtures or personal property, on the value of Alterations within the Premises, and on Tenant’s
interest pursuant to this Lease, or any increase in any of the foregoing based on such Alterations.
To the extent that any such taxes are not separately assessed or billed to Tenant, Tenant shall pay
the amount as invoiced to Tenant by Landlord. In compliance with Section 27 of this Lease, at least
10 business days before beginning construction of any Alteration, Tenant shall give Landlord
written notice of the expected commencement date of that construction to permit Landlord to post
and record a notice of non-responsibility.

13. SIGNS

     Except for the Monument Sign, as described in the Basic Lease Information, Tenant shall not
place, install, affix, paint or maintain any signs, notices, graphics or banners whatsoever or any
window decor that is visible in or from public view or corridors, the common areas or the exterior
of the Premises or the Property, in or on any exterior window or window fronting upon any common
areas or service area or upon any truck doors or man doors without Landlord’s

14

 

prior written approval, provided that Tenant’s name shall be included in any Building-standard door
and directory signage, if any, in accordance with Landlord’s Building signage program, including
without limitation, payment by Tenant of any fee charged by Landlord for maintaining such signage.
Any installation of signs, notices, graphics, or banners on or about the Premises or Property
approved by Landlord shall be subject to any Laws and to any other requirements imposed by
Landlord. Tenant shall remove all such signs or graphics by the expiration or any earlier
termination of this Lease, and Tenant shall repair all damage resulting from such removal,
including without limitation discoloration caused by the installation or removal of its signs or
graphics.

14. INSPECTION/POSTING NOTICES

     After reasonable notice, except in emergencies where no such notice shall be required,
Landlord and Landlord’s agents and representatives, shall have the right to enter the Premises to
inspect the same, to clean, to perform such work as may be permitted or required under this Lease,
to make repairs, improvements or alterations to the Premises or Property or to other tenant spaces
therein, to deal with emergencies, to post such notices as may be permitted or required by law to
prevent the perfection of liens against Landlord’s interest in the Property or to exhibit the
Premises to prospective tenants, purchasers, encumbrances or to others, or for any other purpose
as Landlord may deem necessary or desirable; provided, however, that Landlord shall use reasonable
efforts not to unreasonably interfere with Tenant’s business operations and Landlord shall comply
with Tenant’s reasonable security measures. Notwithstanding the foregoing, except (i) to the
extent requested by Tenant, (ii) in connection with scheduled maintenance programs, and/or (iii)
in the event of an emergency, Landlord shall provide to Tenant reasonable prior notice (either
written or oral) before Landlord enters the Premises to perform any repairs. Tenant shall not be
entitled to any abatement of Rent by reason of the exercise of any such right of entry. Tenant
waives any claim for damages for any injury or inconvenience to or interference with Tenant’s
business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby. Landlord shall at all times have and retain a key with which to unlock all of the doors
in, upon and about the Premises, excluding Tenant’s vaults and safes or special security areas
(designated in advance), and Landlord shall have the right to use any and all means which Landlord
may deem necessary or proper to open said doors in an emergency, in order to obtain entry to any
portion of the Premises, and any entry to the Premises obtained by Landlord by any of said means,
or otherwise, shall not be construed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an eviction, actual or constructive, of Tenant from all or any part of the
Premises. At any time within 6 months prior to the expiration of the Term or following any earlier
termination of this Lease or agreement to terminate this Lease, Landlord shall have the right to
erect on the Premises and/or Property a suitable sign indicating that the Premises are available
for lease.

15. SERVICES AND UTILITIES

     A. Landlord-Provided Services and Utilities. Landlord shall provide water and sewer service
for reasonable and normal drinking and lavatory use, and the cost of sewer and water service shall
be included in Operating Costs.

15

 

     B. Tenant-Provided Services and Utilities. Tenant shall contract for and pay
directly when due, for all electricity, gas, telephone and telecommunications services,
cleaning
and janitorial services, garbage removal, and any other utilities and services used on or from
the
Premises that Section 15.A does not obligate Landlord to provide, together with any taxes,
penalties, surcharges or similar fees, and maintenance charges for utilities. Tenant shall
also
furnish and install all replacement electric light bulbs, ballasts, and tubes.

     C. Excess Usage. Landlord shall have no obligation to provide additional electricity
or any other utility service, but if Landlord elects to provide any such service at Tenant’s
request,
Tenant shall pay upon demand to Landlord, a reasonable charge for providing the service as
equitably determined by Landlord. Tenant shall not, without Landlord’s written consent, use
any
water, electricity, gas, or other resource that will require additions or alterations to or
interfere
with the Building’s water, electrical, or gas distribution systems; nor connect with electric
current, except through existing electrical outlets in the Premises or water pipes, any
apparatus,
equipment or device for the purpose of using electrical current, water, or any other resource.
Tenant shall pay directly to Landlord upon demand as an addition to and separate from payment
of Operating Costs the cost of all such additional resources, energy, utility service and
meters
(and of installation, maintenance and repair thereof and of any additional circuits or other
equipment necessary to furnish such additional resources, energy, utility or service).
Landlord
may add to the separate or metered charge a recovery of additional expense incurred in
keeping
account of the excess water, electric current or other resource so consumed. Landlord shall
in no
case be liable for any damages directly or indirectly resulting from nor shall the Rent be
abated
by reason of: (a) the installation, use or interruption of use of any equipment used in
connection
with the furnishing of any such utilities or services, or any change in the character or
means of
supplying or providing any such utilities or services or any supplier thereof; (b) the
failure to
furnish or delay in furnishing any such utilities or services when such failure or delay is
caused
by acts of God or the elements, labor disturbances of any character, or otherwise, or because
of
any interruption of service due to Tenant’s use of water, electric current or other resource
in
excess of that being supplied or furnished for the use of the Premises as of the date Tenant
takes
possession of the Premises; (c) the inadequacy, limitation, curtailment, rationing, or
restriction
on use of water, electricity, gas, or any other form of energy or any other service or
utility
whatsoever serving the Premises otherwise; (d) the partial or total unavailability of any
such
utilities or services to the Premises or the Property or the diminution in the quality or
quantity
thereof, whether by Law or otherwise; or (e) any interruption in Tenant’s business operations
as
a result of any such occurrence; nor shall any such occurrence constitute an actual or
constructive eviction of Tenant or a breach of an implied warranty by Landlord. Landlord
shall
further have no obligation to protect or preserve any apparatus, equipment, or device
installed by
Tenant in the Premises. Landlord shall be entitled to cooperate voluntarily and in a
reasonable
manner with the efforts of national, state, or local governmental agencies or utility
suppliers in
reducing energy or other resource consumption. The obligation to make services available
under
this Section 15.C shall be subject to the limitations of any such voluntary, reasonable
program.
In addition, Landlord reserves the right to change the supplier or provider of any such
utility or
service from time to time. Tenant shall cooperate with Landlord and any supplier or provider
of
such services designated by Landlord from time to time to facilitate the delivery of such
services
to Tenant at the Premises and to the Property, including without limitation allowing Landlord
and Landlord’s suppliers or providers, and their respective agents and contractors,
reasonable

16

 

access to the Premises for the purpose of installing, maintaining, repairing, replacing or
upgrading such service or any equipment or machinery associated therewith.

     D. Interruption. Notwithstanding anything to the contrary in this Section 15, (i) if all or a
material part of the Premises become untenantable for Tenant’s use for 7 consecutive days as a
consequence of cessation of utilities or other services, interference with access to the Premises,
legal restrictions or the presence of any Hazardous Material that does not result from Tenant’s
release or emission of such Hazardous Material, Tenant shall be entitled to an equitable abatement
of Rent, not to exceed the rent loss insurance Landlord maintains, or that would be available under
a policy covering 12 months’ of rent loss.

16. SUBORDINATION

     Without the necessity of any additional document being executed by Tenant for the purpose of
effecting a subordination, this Lease shall be and is hereby declared to be subject and
subordinate at all times to: (a) all ground leases or underlying leases that may now exist or
hereafter affect all or any part of the Property; and (b) any mortgage or deed of trust that may
now exist or hereafter be placed upon all or any part of the Property, or said ground leases or
underlying leases, or Landlord’s interest or estate, in any such lease, mortgage or deed of trust.
Notwithstanding the foregoing, Landlord and/or the mortgagee or the beneficiary of such lease,
mortgage or deed of trust shall have the right to subordinate or cause to be subordinated any such
leases or any such lines to this Lease. If any ground lease or underlying lease terminates for any
reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is
made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the
tenant of the successor-in-interest to Landlord provided that the new owner assumes the
obligations of the Landlord under this Lease. Within 10 days after request by Landlord, Tenant
shall execute and deliver any additional documents evidencing Tenant’s attornment or the
subordination of this Lease with respect to any such ground leases or underlying leases or any
such mortgage or deed of trust, in the form reasonably requested by Landlord or by any ground
landlord, mortgagee, or beneficiary under a deed of trust, subject to such nondisturbance
requirement. If requested in writing by Tenant, Landlord shall use commercially reasonable efforts
to obtain a subordination, nondisturbance and attornment agreement for the benefit of Tenant
reflecting the foregoing from any ground landlord, mortgagee or beneficiary, at Tenant’s expense,
subject to such other terms and conditions as the ground landlord, mortgagee or beneficiary may
require. Upon request of Landlord, Tenant will execute the mortgagee’s form of non-disturbance,
subordination and attornment agreement and return the same to Landlord for execution by the
mortgagee.

17. FINANCIAL STATEMENTS

     At the request of Landlord from time to time, Tenant shall provide to Landlord Tenant’s and
any guarantor’s current financial statements or other information discussing financial worth of
Tenant and any guarantor, which Landlord shall use solely for purposes of this Lease and in
connection with the ownership, management, financing, and disposition of the Property.

17

 

18. ESTOPPEL CERTIFICATE

     Tenant shall, from time to time, within 10 business days after Landlord’s request, deliver to
Landlord, and/or Landlord’s designee, an estoppel certificate stating that this Lease is in full
force and effect, that this Lease has not been modified (or stating all modifications, written or
oral, to this Lease), the date to which Rent has been paid, the unexpired portion of this Lease,
that there are no current defaults by Landlord or Tenant under this Lease (or specifying any such
defaults), that the leasehold estate granted by this Lease is the sole interest of Tenant in the
Premises and the Property, and such other matters pertaining to this Lease that Landlord or any
mortgagee, beneficiary, purchaser or prospective purchaser of all or any part of the Property may
request. Tenant’s failure to execute and deliver any such certificate that Landlord requests shall
constitute an acceptance of the Premises and acknowledgment by Tenant that the statements it
contains are true and correct without exception. Landlord and Tenant intend that any statement
delivered pursuant to this Section may be relied upon by any mortgagee, beneficiary, purchaser, or
prospective purchaser of all or any part of the Property. Tenant agrees that its obligation to
furnish such estoppel certificates in a timely fashion is a material inducement for Landlord’s
execution of this Lease, and that it shall be an Event of Default (without any cure period that
Section 26 of this Lease might provide) if Tenant fails to fully comply or makes any material
misstatement in any such certificate.

19. SECURITY DEPOSIT

     Landlord shall hold the Security Deposit, without any obligation to pay interest, as security
for the performance of Tenant’s covenants and obligations under this Lease. The Security Deposit
is not an advance rent deposit or a measure of damages incurred by Landlord in case of Tenant’s
default. Upon the occurrence of any Event of Default Landlord may from time to time, without
prejudice to any other remedy provided in this Lease or by law, use the Security Deposit as a
credit to the extent necessary to credit against any past due Rent and any other damage, injury,
expense, or liability caused by such Event of Default, and Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the Security Deposit to its original amount.
Landlord shall return any remaining unapplied balance of the Security Deposit to Tenant within 30
days after the expiration or termination of this Lease, reduced by such amounts as may be required
by Landlord to remedy defaults on the part of Tenant in the payment of Rent or other obligations
of Tenant under this Lease. Tenant hereby grants Landlord a security interest in the Security
Deposit in accordance with applicable provisions of the California Commercial Code. Landlord may
use and commingle the Security Deposit with other funds of Landlord. Tenant hereby waives the
provisions of Section 1950.7 of the California Civil Code (excluding the second sentence of
subsection (b)), and all other provisions of any Laws, now or hereinafter in force, that restrict
the amount or types of claim that a landlord may make upon a security deposit or impose upon a
landlord (or its successors) any obligation with respect to the handling or return of security
deposits.

20. LIMITATION OF TENANT’S REMEDIES

     The obligations and liability of Landlord to Tenant for any default by Landlord under this
Lease are not personal obligations of the individual or other partners of Landlord or its or their
partners, directors, officers, or shareholders, and Tenant agrees that Landlord’s liability is
limited

18

 

to an amount equal to Landlord’s interest in the Property and Tenant shall not seek recourse
against the assets of the individual or other partners of Landlord or its or their partners,
directors, officers or shareholders. Under no circumstances shall Tenant have the right to offset
against or recoup Rent except as expressly provided in this Lease, which Rent shall be absolutely
due and payable in accordance with the terms of this Lease. In no case shall Landlord be liable to
Tenant for any lost profits, damage to business, or any form of special, indirect or consequential
damage on account of any breach of this Lease or otherwise, notwithstanding anything to the
contrary contained in this Lease.

21. ASSIGNMENT AND SUBLETTING

A. General.

     (1) General. This Lease has been negotiated to be and is granted as an accommodation
to Tenant. Tenant shall not assign or pledge this Lease or sublet all or any part of the
Premises, whether voluntarily or by operation of law, or permit the use or occupancy of all
or any part of the Premises by anyone other than Tenant, or suffer or permit any such
assignment, pledge, subleasing or occupancy, without Landlord’s prior written consent
except as provided in this Section 21. If Tenant desires to assign this Lease or sublet any
or all of the Premises, Tenant shall give Landlord written notice (the “Transfer Notice”)
at least 45 days before the anticipated effective date of the proposed assignment or
sublease, which shall contain all of the information reasonably requested by Landlord to
address Landlord’s decision criteria specified hereinafter. Landlord shall then have 15
days following receipt of the Transfer Notice to notify Tenant in writing that Landlord
elects either: (i) to terminate this Lease as to the space so affected as of the date so
requested by Tenant if the proposed transfer is for an assignment of the Lease or a
sublease of substantially all of the Premises for substantially the entire remaining Term;
or (ii) to consent to the proposed assignment or sublease, subject, however, to Landlord’s
prior written consent of the proposed assignee or subtenant and of any related documents or
agreements associated with the assignment or sublease. If Landlord fails to notify Tenant
in writing of such election within said period, Landlord shall be deemed to have waived
option (i) above, but written consent by Landlord of the proposed assignee or subtenant
shall still be required. If Landlord does not exercise option (i) above, Landlord’s consent
to a proposed assignment or sublease shall not be unreasonably withheld. Consent to any
assignment or subletting shall not constitute consent to any subsequent transaction to
which this Section 21 applies.

     (2) Conditions of Landlord’s Consent. Without limiting the other instances in which it
may be reasonable for Landlord to withhold Landlord’s consent to an assignment or
subletting, it shall be reasonable for Landlord to withhold Landlord’s consent in the
following instances: if the proposed assignee does not agree to be bound by and assume the
obligations of Tenant under this Lease in form and substance satisfactory to Landlord; the
use of the Premises by such proposed assignee or subtenant would not be a Permitted Use or
would violate any exclusivity or other arrangement that Landlord has with any other tenant
or occupant or any Law or would increase the Parking Density; the proposed assignee or
subtenant is not of sound financial condition as determined by Landlord in Landlord’s
reasonable discretion, provided, with respect to a

19

 

subtenant, Landlord shall apply a standard of whether the proposed subtenant is financially
able to meet its sublease obligations, including its obligation to pay rent under the
sublease, as they become due; the proposed assignee or subtenant is a governmental agency;
the proposed assignee or subtenant does not have a good reputation as a tenant of property
or a good business reputation; the proposed assignee or subtenant is a person with whom
Landlord is actively negotiating to lease space in the Property or is a present tenant of
the Property with whom Landlord is actively negotiating to lease additional space; the
assignment or subletting would entail any Alterations which would lessen the value of the
leasehold improvements in the Premises or use of any Hazardous Materials or other noxious
use or use which may disturb other tenants of the Property; or Tenant is in default of any
obligation of Tenant under this Lease beyond applicable notice and cure periods. Failure by
or refusal of Landlord to consent to a proposed assignee or subtenant shall not cause a
termination of this Lease. Upon a termination under Section 21.A.(l)(i), Landlord may lease
the Premises to any party, including parties with whom Tenant has negotiated an assignment
or sublease, without incurring any liability to Tenant. At the option of Landlord, a
surrender and termination of this Lease shall operate as an assignment to Landlord of some
or all subleases or subtenancies. Landlord shall exercise this option by giving notice of
that assignment to such subtenants on or before the effective date of the surrender and
termination. In connection with each request for assignment or subletting, Tenant shall pay
to Landlord Landlord’s standard fee for approving such requests, as well as all costs
incurred by Landlord or any mortgagee or ground lessor in approving each such request and
effecting any such transfer, including, without limitation, reasonable attorneys’ fees.

     B. Bonus Rent. Any rent or other consideration realized by Tenant and attributable
to any such sublease or assignment in excess of the Rent payable under this Lease, after
amortization of a reasonable brokerage commission and other reasonable and customary
expenses directly incurred by Tenant attributable to the sublease or assignment, shall be
divided
and paid, 25% to Tenant, 75% to Landlord.

     C. Liability. No assignment or subletting by Tenant, permitted or otherwise, shall
relieve Tenant of any obligation under this Lease or any guarantor of this Lease of any
liability
under its guaranty or alter the primary liability of the Tenant named in this Lease for the
payment
of Rent or for the performance of any other obligations to be performed by Tenant, including
obligations contained in Section 25 of this Lease with respect to any assignee or subtenant.
Landlord may collect rent or other amounts from any assignee, subtenant, or other occupant of
the Premises, permitted or otherwise, and apply the net rent collected to the Rent payable
under
this Lease, but no such collection shall be deemed to be a waiver of this Section 21, or the
acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of the obligations of Tenant under this Lease or any guarantor
of
this Lease of any liability under its guaranty. Any assignment or subletting that this
Section 21
prohibits shall be void.

     D. Permitted Transfer. So long as Tenant is not entering into the Permitted
Transfer for the purpose of avoiding or otherwise circumventing the other terms of this
Section
21, Tenant may assign its entire interest under this Lease or sublease all or a portion of
the
Premises, without the consent of Landlord and without triggering any termination right or

20

 

payment obligation, to (i) an affiliate, subsidiary, or parent of Tenant, or a corporation,
partnership or other legal entity wholly owned by Tenant (collectively, an “Affiliated Party”),
(ii) a successor to Tenant by purchase, merger, consolidation or reorganization or (iii) a
purchaser of substantially all of Tenant’s assets, provided that all of the following conditions
are satisfied (each such Transfer a “Permitted Transfer”): (1) Tenant is not in default under this
Lease beyond applicable notice and cure periods; (2) the transferee’s use will comply with the
Permitted Use; (3) Tenant shall give Landlord written notice at least 5 days prior to the effective
date of the proposed Permitted Transfer; and (4) with respect to a purchase, merger, consolidation
or reorganization or any Permitted Transfer that results in Tenant ceasing to exist as a separate
legal entity, Tenant’s successor shall have a net worth at least equal to Tenant’s net worth as of
the day before the proposed purchase, merger, consolidation or reorganization. Tenant’s notice to
Landlord shall include information and documentation showing that each of the above conditions has
been satisfied. If requested by Landlord, Tenant’s successor shall sign a commercially reasonable
form of assumption agreement. As used in this Section 21, (A) “parent” shall mean a company that
owns a majority of Tenant’s voting equity; (B) “subsidiary” shall mean an entity wholly owned by
Tenant or at least 51% of whose voting equity is owned by Tenant; and (C) “affiliate” shall mean an
entity controlled, controlling or under common control with Tenant.

22. AUTHORITY

     Landlord represents and warrants that it has full right and authority to enter into this
Lease and to perform all of Landlord’s obligations under this Lease and that all persons signing
this Lease on its behalf are authorized to do. Tenant represents and warrants that Tenant has full
right and authority to enter into this Lease, and to perform all of Tenant’s obligations under
this Lease, and that all persons signing this Lease on its behalf are authorized to do so.

23. CONDEMNATION

     A. Condemnation Resulting In Termination. If the whole or any substantial part
of the Premises should be taken or condemned for any public use under any Law, or by right of
eminent domain, or by private purchase in lieu of condemnation, and the taking would prevent
or
materially interfere with the Permitted Use of the Premises, either party shall have the
right to
terminate this Lease at its option. If any material portion of the Property is taken or
condemned
for any public use under any Law, or by right of eminent domain, or by private purchase in
lieu
of condemnation, Landlord may terminate this Lease at its option. In either of such events,
the
Rent shall be abated during the unexpired portion of this Lease, effective when the physical
taking of said Premises shall have occurred.

     B. Condemnation Not Resulting In Termination. If a portion of the Property is
taken or condemned for any public use under any Law, or by right of eminent domain, or by
private purchase in lieu of condemnation, and the taking prevents or materially interferes
with
the Permitted Use of the Premises, and this Lease is not terminated pursuant to Section 23.A
of
this Lease, the Rent payable during the unexpired portion of the Term shall be reduced,
beginning on the date when the physical taking shall have occurred, to such amount as may be
fair and reasonable under all of the circumstances, but only after giving Landlord credit for
all
sums received or to be received by Tenant by the condemning authority. Notwithstanding

21

 

anything to the contrary in this Section 23.B, if the temporary use or occupancy of any part of
the Premises is taken or appropriated under power of eminent domain during the Term, this Lease
shall be and remain unaffected by such taking or appropriation and Tenant shall continue to pay in
full all Rent; in the event of any such temporary appropriation or taking, Tenant shall be
entitled to receive that portion of any award that represents compensation for the use of or
occupancy of the Premises during the Term.

     C. Award. Landlord shall be entitled to (and Tenant shall assign to Landlord) any
and all payment, income, rent, award or any interest therein whatsoever that may be paid or
made in connection with such taking or conveyance and Tenant shall have no claim against
Landlord or otherwise for any sums paid by virtue of such proceedings, whether or not
attributable to the value of any unexpired portion of this Lease, except as expressly
provided in
this Lease. Notwithstanding the foregoing, any compensation for Tenant’s personal property,
moving costs shall be and remain the property of Tenant.

     D. Waiver of CCP Section 1265.130. Each party hereby waives the provisions of
California Civil Code Procedure Section 1265.130 allowing either party to petition the
superior
court to terminate this Lease as a result of a partial taking.

24. CASUALTY DAMAGE

     A. General. If the Premises or Building are damaged or destroyed by fire, tornado,
or other casualty (collectively, “Casualty”), Tenant shall give immediate written notice to
Landlord. Within 30 days after Landlord’s receipt of such notice, Landlord shall notify
Tenant
whether in Landlord’s estimation material restoration of the Premises can reasonably be made
within 180 days from the date of such notice and receipt of required permits for such
restoration.
Landlord’s determination shall be binding on Tenant.

     B. Within 180 Days. If the Premises or Building are damaged by Casualty to such
extent that material restoration can in Landlord’s estimation be reasonably completed within
180
days after the date of such notice and receipt of required permits for such restoration, this
Lease
shall not terminate. Provided that insurance proceeds are received by Landlord to fully
repair the
damage, Landlord shall proceed to rebuild and repair the Premises diligently and in the
manner
determined by Landlord, except that Landlord shall not be required to rebuild, repair or
replace
any part of any Alterations that may have been placed on or about the Premises or paid for by
Tenant. Rent payable during the period of repair shall be abated equitably.

     C. Greater than 180 Days. If the Premises or Building are damaged by Casualty to
such extent that rebuilding or repairs cannot in Landlord’s estimation be reasonably
completed
within 180 days after the date of such notice and receipt of required permits for such
rebuilding
or repair, then either Landlord or Tenant shall have the option to terminate this Lease
effective
upon the date of the occurrence of such damage, in which event the Rent shall be abated
during
the unexpired portion of this Lease. If Landlord elects to terminate, Landlord must give
Tenant
written notice of its election within 30 days after Landlord’s receipt of notice of the
damage or
destruction. If Tenant elects to terminate, Tenant must give Landlord written notice of its
election within 30 days after Landlord’s notice to Tenant of its determination that the
rebuilding
or repairs cannot reasonably be completed within 180 days. If neither party exercises its
right to

22

 

terminate, Landlord shall rebuild or repair the Premises using commercially reasonable diligent
efforts. Notwithstanding the above, Landlord shall not be required to rebuild, repair or replace
any part of any Alterations (other than Landlord’s Work) that may have been placed, on or about
the Premises or paid for by Tenant. Rent payable during the period of repair shall be abated
equitably.

     D. Casualty During Final Year. Landlord, by notice to Tenant within 30 days after
the date Landlord receives notice of the Casualty, shall have the right to terminate this
Lease if:
(1) the Premises have been materially damaged and less than 6 months remain in the Term on
the
date of the Casualty or (2) a material uninsured loss to the Property occurs. In addition to
Landlord’s right to terminate under this Section 24.D, Tenant shall have the right to
terminate
this Lease if: (a) a material portion of the Premises has been damaged by a Casualty during
the
last 6 months of the Term and such damage cannot reasonably be repaired within 60 days after
receipt of the required permits for restoration; and (b) Tenant provides Landlord with
written
notice of its intent to terminate within 10 days after the date of notification of Landlord’

estimation of the time necessary to restore.

     E. Insurance Proceeds. Notwithstanding anything in this Lease to the contrary, if
the Premises or Building are damaged or destroyed and are not fully covered by the insurance
proceeds received by Landlord or if the holder of any indebtedness secured by a mortgage or
deed of trust covering the Premises requires that the insurance proceeds be applied to such
indebtedness, then in either case Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within 30 days after the date of notice to
Landlord that the damage or destruction is not fully covered by insurance or such requirement
is
made by any such holder, as the case may be, whereupon this Lease shall terminate.

     F. Waiver. This Section 24 shall be Tenant’s sole and exclusive remedy in the
event of damage or destruction to the Premises or the Property. As a material inducement to
Landlord to enter into this Lease, Tenant hereby waives any rights it may have under Sections
1932, 1933(4), 1941 or 1942 of the Civil Code of California, or any similar or successor
statute,
with respect to any destruction of the Premises, Landlord’s obligation for tenantability of
the
Premises and Tenant’s right to make repairs and deduct the expenses of such repairs, or under

any similar law, statute or ordinance now or hereafter in effect.

     G. Tenant’s Personal Property. In the event of any damage or destruction of the
Premises or the Property, under no circumstances shall Landlord be required to repair any
injury
or damage to, or make any repairs to or replacements of, Tenant’s personal property.

25. HOLDING OVER

     Unless Landlord expressly consents in writing to Tenant’s holding over, Tenant shall be
unlawfully and illegally in possession of the Premises, whether or not Landlord accepts any rent
from Tenant or any other person while Tenant remains in possession of all or any part of the
Premises without Landlord’s written consent. If Tenant retains possession of all or any part of
the Premises without Landlord’s consent following the expiration of this Lease or sooner
termination for any reason, then Tenant shall pay to Landlord for each day of such retention 150%
of the amount of daily rental as of the last month prior to the date of expiration or earlier

23

 

termination. Tenant shall also indemnify, defend, protect and hold Landlord harmless from any loss,
liability or cost, including consequential and incidental damages and reasonable attorneys’ fees,
incurred by Landlord resulting from delay by Tenant in surrendering the Premises, including,
without limitation, any claims made by the succeeding tenant founded on such delay. Acceptance of
Rent by Landlord following expiration or earlier termination of this Lease, or following demand by
Landlord for possession of the Premises, shall not constitute a renewal of this Lease, and nothing
in this Section 25 shall waive Landlord’s right of reentry or any other right. Additionally, if
upon expiration or earlier termination of this Lease, or following demand by Landlord for
possession of the Premises, Tenant has not fulfilled its obligation with respect to repairs and
cleanup of the Premises or any other Tenant obligations as set forth in this Lease within
applicable notice and cure periods, then Landlord shall have the right to perform any such
obligations as it deems necessary at Tenant’s sole cost and expense, and any time required by
Landlord to complete such obligations shall be considered a period of holding over and the terms of
this Section 25 shall apply. This Section 25 shall survive any expiration or earlier termination of
this Lease.

26. DEFAULT

     A. Events of Default. The occurrence of any of the following shall constitute an
event of default on the part of Tenant:

     (1) Abandonment. Abandonment of the Premises for a continuous period in excess of 5
days. Tenant hereby waives any right to notice Tenant may have under Section 1951.3 of the
Civil Code of the State of California, the terms of this Section 26.A being deemed such
notice to Tenant as required by said Section 1951.3

     (2) Nonpayment of Rent. Tenant’s failure to pay any Rent within 5 days after Tenant’s
receipt of written notice from Landlord that such Rent is past due.

     (3) Other Obligations. Failure to perform any obligation, agreement or covenant under
this Lease other than those matters specified in subparagraphs (1) and (2) of this Section
26.A, and in Sections 8, 16 and 18, within 30 days’ written notice to Tenant. However, if
Tenant’s failure to comply is curable but cannot reasonably be cured within 30 days, Tenant
shall be allowed additional time as is reasonably necessary (but not more than an
additional 60 days) to cure the failure so long as: (a) Tenant commences to cure the
failure within 30 days, and (b) Tenant diligently pursues a cure to completion. However, if
Tenant’s failure to comply creates a hazardous condition, the failure must be cured
immediately upon notice to Tenant.

     B. Remedies Upon Default. Upon the occurrence of any Event of Default,
Landlord shall have the option to pursue any one or more of the following remedies without
any
notice or demand whatsoever:

     (1) Termination. Landlord shall have the right to give a written termination notice to
Tenant, and on the date specified in such notice, Tenant’s right to possession shall
terminate, and this Lease shall terminate unless on or before such date all Rent in arrears
and all costs and expenses incurred by or on behalf of Landlord have been paid by

24

 

Tenant and all other events of default of this Lease by Tenant at the time existing have
been fully remedied to the satisfaction of Landlord. At any time after such termination,
Landlord may recover possession of the Premises and expel and remove Tenant and any other
person from the Premises, including any subtenant or subtenants, notwithstanding Landlord’s
consent to any sublease, by any lawful means, and again repossess and enjoy the Premises
without prejudice to any of the remedies that Landlord may have under this Lease, or at law
or equity by any reason of Tenant’s default or of such termination. Landlord hereby
reserves the right, but shall not have the obligation, to recognize the continued
possession of any subtenant. The delivery or surrender to Landlord by or on behalf of
Tenant of keys, entry codes, or other means to bypass security at the Premises shall not
terminate this Lease.

     (2) Continuation After Default. Even though an Event of Default may have occurred,
this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s
right to possession under Section 26.B(l) of this Lease. Landlord shall have the remedy
described in California Civil Code Section 1951.4 (“Landlord may continue this Lease in
effect after Tenant’s breach and abandonment and recover Rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations”), or any
successor code section. Accordingly, if Landlord does not elect to terminate this Lease on
account of any Event of Default by Tenant, Landlord may enforce all of Landlord’s rights
and remedies under this Lease, including the right to recover Rent as it becomes due. Acts
of maintenance, preservation or efforts to lease the Premises or the appointment of a
receiver under application of Landlord to protect Landlord’s interest under this Lease or
other entry by Landlord upon the Premises shall not constitute an election to terminate
Tenant’s right to possession.

     C. Damages After Default. If Landlord terminates this Lease pursuant to Section
26.B.(1), Landlord shall have the rights and remedies of a Landlord provided by Section
1951.2
of the Civil Code of the State of California, or any successor code sections. Upon such
termination, in addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from Tenant: (1) the
worth at the time of award of the unpaid Rent and other amounts that had been earned at the
time
of termination, (2) the worth at the time of award of the amount by which the unpaid Rent and
other amounts that would have been earned after the date of termination until the time of
award
exceeds the amount of such Rent loss that Tenant proves could have been reasonably avoided;
(3) the worth at the time of award of the amount by which the unpaid Rent and other amounts
for
the balance of the Term after the time of award exceeds the amount of such Rent loss that the
Tenant proves could be reasonably avoided; and (4) any other amount and court costs necessary
to compensate Landlord for all detriment proximately caused by Tenant’s failure to perform
Tenant’s obligations under this Lease or that, in the ordinary course of things, would be
likely to
result therefrom. The “worth at the time of award” as used in (1) and (2) above shall be

computed at the Applicable Interest Rate (defined below). The “worth at the time of award” as
used in (3) above shall be computed by discounting such amount at the Federal Discount Rate
of
the Federal Reserve Bank of San Francisco at the time of award plus 1%.

     D. Late Charge. In addition to its other remedies, Landlord shall have the right
without notice or demand to add to the amount of any monthly installments of Rent that Tenant

25

 

does not pay on or before the first day of each calendar month, an amount equal to 5% of the
delinquent amount to compensate Landlord for the loss of the use of the amount not paid and the
administrative costs caused by the delinquency, the parties agreeing that Landlord’s damage by
virtue of such delinquencies would be extremely difficult and impracticable to compute and the
amount stated in this Section 26.D represents a reasonable estimate of Landlord’s damages. Any
waiver by Landlord of any late charges or failure to claim the same shall not constitute a waiver
of other late charges or any other remedies available to Landlord.

     E. Interest. Interest shall accrue on all sums not paid when due at the lesser of 12%
per annum or the maximum interest rate allowed by law (the “Applicable Interest Rate”) from
the due date until paid.

     F. Remedies Cumulative. All of Landlord’s rights, privileges and elections or
remedies are cumulative and not alternative, to the extent permitted by law.

     G. Replacement of Statutory Notice Requirements. When this Lease requires
service of a notice, that notice shall replace rather than supplement any equivalent or
similar
statutory notice, including any notice required by California Code of Civil Procedure Section
1161 or any similar or successor statute provided that such notice is in the form required by
such
statute.

27. LIENS

     Tenant shall at all times keep the Premises and the Property free from liens arising out of
or related to work or services performed, materials or supplies furnished or obligations incurred
by or on behalf of Tenant or in connection with work made, suffered or done by or on behalf of
Tenant in or on the Premises or Property. If Tenant does not, within 20 days following the
imposition of any such lien, cause the same to be released of record by payment or posting of a
proper bond, Landlord shall have, in addition to all other remedies provided in this Lease and by
law, the right, but not the obligation, to cause the same to be released by such means as Landlord
shall deem proper, including payment of the claim giving rise to such lien. All sums paid by
Landlord on behalf of Tenant and all expenses incurred by Landlord in connection therefor shall be
payable to Landlord by Tenant on demand with interest at the Applicable Interest Rate. Landlord
shall have the right at all times to post and keep posted on the Premises any notices permitted or
required by law, or which Landlord shall deem proper, for the protection of Landlord, the
Premises, the Property and any other party having an interest therein, from mechanics’ and
materialmen’s liens, and Tenant shall give Landlord not less than 10 business days prior written
notice of the commencement of any work in the Premises or Property that could lawfully give rise
to a claim for mechanics’ or materialmen’s liens to permit Landlord to post and record a timely
notice of non-responsibility, as Landlord may elect to proceed or as the law may from time to time
provide, for which purpose, if Landlord shall so determine, Landlord may enter the Premises.
Tenant shall not remove any such notice posted by Landlord without Landlord’s consent, and in any
event not before completion of the work which could lawfully give rise to a claim for mechanics’
or materialmen’s liens.

26

 

28. TRANSFERS BY LANDLORD

     In the event of a sale or conveyance by Landlord of the Property or a foreclosure by any
creditor of Landlord, the transfer, upon the written assumption of this Lease by such transferee,
shall operate to release Landlord from any liability or obligation under this Lease with respect to
any period on or after the date of the transfer. In such event, Tenant agrees to look solely to the
responsibility of the successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of “Landlord” to be performed after the passing of title to
Landlord’s successor-in-interest. This Lease shall not be affected by any such sale and Tenant
agrees to attorn to the purchaser or assignee.

29. LANDLORD’S RIGHT TO PERFORM TENANT’S COVENANTS

     All covenants and agreements to be performed by Tenant under this Lease shall be performed by
Tenant at Tenant’s sole cost and expense and without any abatement of Rent. If Tenant fails to pay
any sum of money, other than Net Rent, that this Lease obligates Tenant to pay or fails to perform
any other obligation of Tenant under this Lease, including Tenant’s obligations under Section 11 of
this Lease, and such failure continues for 15 days after notice by Landlord, in addition to the
other rights and remedies of Landlord, Landlord may make any such payment and perform any such act
on Tenant’s part. In the case of an emergency, no prior notification by Landlord shall be required.
Landlord may take such actions without any obligation and without releasing Tenant from any of
Tenant’s obligations. Tenant shall pay to Landlord on demand all sums that Landlord so pays and all
incidental costs Landlord incurs, with interest at the Applicable Interest Rate, from the date
Landlord makes the payment.

30. WAIVER

     If either Landlord or Tenant waives the performance of any term, covenant or condition
contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant or condition contained in this Lease, or constitute a
course of dealing contrary to the expressed terms of this Lease. The acceptance of Rent by
Landlord shall not constitute a waiver of any preceding breach by Tenant of any term, covenant, or
condition of this Lease, regardless of Landlord’s knowledge of such preceding breach at the time
Landlord accepted such Rent. Failure by Landlord to enforce any of the terms, covenants, or
conditions of this Lease for any length of time shall not be deemed to waive or decrease the right
of Landlord to insist thereafter upon strict performance by Tenant. Landlord may only waive any
term, covenant, or condition contained in this Lease by a written document signed by Landlord,
based upon full knowledge of the circumstances.

31. NOTICES

     Each provision of this Lease or of any applicable governmental laws, ordinances, regulations
and other requirements with reference to sending, mailing, or delivery of any notice or the making
of any payment by Landlord or Tenant to the other shall be deemed to be complied with when and if
the following steps are taken:

27

 

     A. Rent. All Rent shall be payable to Landlord at such address as Landlord may
specify from time to time by written notice delivered in accordance herewith. Tenant’s
obligation to pay Rent shall not be deemed satisfied until Landlord has actually received such
Rent.

     B. Other. All notices, demands, consents and approvals that may or are required to
be given by either party to the other under or in connection with this Lease shall be in
writing
and either personally delivered, sent by commercial overnight courier, mailed, certified or
registered, postage prepaid or sent by facsimile with confirmed receipt (and with an original
sent
by commercial overnight courier), and in each case addressed to the party to be notified at
the
Notice Address for such party as specified in the Basic Lease Information or to such other
place
as the party to be notified may from time to time designate by at least 15 days notice to the
notifying party. Notices shall be deemed served upon receipt or refusal to accept delivery.

32. ATTORNEY FEES

     If Landlord places the enforcement of this Lease, the collection of any Rent, or the recovery
of possession of the Premises in the hands of an attorney, Tenant shall pay to Landlord, upon
demand, Landlord’s reasonable attorney fees and court costs, whether incurred at trial, appeal or
review. In any action which Landlord or Tenant brings to enforce its rights under this Lease, the
unsuccessful party shall pay all costs incurred by the prevailing party, including reasonable
attorneys’ fees, to be fixed by the court, and said costs and attorney fees shall be a part of the
judgment in said action.

33. SUCCESSORS AND ASSIGNS

     This Lease shall be binding upon and inure to the benefit of Landlord, its successors and
assigns, and shall be binding upon and inure to the benefit of Tenant, its successors, and to the
extent assignment is approved by Landlord as provided in this Lease, Tenant’s assigns.

34. FORCE MAJEURE

     If performance by a party of any portion of this Lease is made impossible by any prevention,
delay, or stoppage caused by strikes, lockouts, labor disputes, acts of God, inability to obtain
services, labor, or materials or reasonable substitutes for those items, government actions, civil
commotions, fire or other casualty, or other causes beyond the reasonable control of the party
obligated to perform, performance by that party for a period equal to the period of that
prevention, delay, or stoppage is excused. This Section 34, however, does not excuse Tenant from
the obligation to pay Rent.

35. SURRENDER OF PREMISES

     Tenant shall, upon the expiration of the Term or the earlier termination or cancellation of
this Lease, surrender the Premises to Landlord in the same condition as existed on the
Commencement Date, together with any alterations or other interior improvements that Landlord
expressly agrees that Tenant is permitted to leave in the Premises, ordinary wear and tear and
damage by fire or other casualty excepted, including, but not limited to, all interior walls

28

 

cleaned, all holes in walls repaired, all carpets shampooed and cleaned, all HVAC equipment in
operating order and good repair and all floors cleaned, all to the reasonable satisfaction of
Landlord. In addition, except to the extent Landlord expressly agrees in writing to the contrary,
Tenant shall, before the expiration of the Term or earlier termination or cancellation of the
Lease, (i) remove all of Tenant’s and any other occupant’s personal property, (ii) remove all
garbage and debris, and (iii) remove from all parts of the Building, in accordance with all
applicable laws and codes, all cabling and wiring that Tenant has installed in the Building, and
repair all damage that results from any such removals. Tenant must properly tag and identify in
accordance with all applicable Laws any wiring or cabling that Landlord expressly permits Tenant to
leave in the Building. At or before the time of surrender, Tenant shall comply with the terms of
Section 12.A of this Lease with respect to Alterations to the Premises and all other matters
addressed in such Section. Tenant does not so surrender the Premises at the expiration or sooner
termination of this Lease, the provisions of Section 25 of this Lease shall apply. Tenant shall
surrender all keys to the Premises to Landlord upon the expiration of the Term or the earlier
termination or cancellation of this Lease. Any delay caused by Tenant’s failure to carry out its
obligations under this Section 35 beyond the Term, shall constitute unlawful and illegal possession
of Premises under Section 25 of this Lease.

36. HAZARDOUS MATERIALS

     A. General Restrictions. Tenant shall conduct its business and shall cause each
Tenant Party to act in such a manner as to (a) not release or permit any Tenant Party to
release of
any Hazardous Material in, under, on or about the Premises or Property, or (b) not use,
store,
generate, treat, discharge, disperse, handle, manufacture, transport or dispose of
(collectively,
“Handle”) any Hazardous Materials (other than incidental amounts of customary cleaning and
office supplies) in or about the Premises or Property. “Hazardous Material” means any
hazardous, explosive, radioactive or toxic substance, material or waste which is or becomes
regulated by any local, state or federal governmental authority or agency, including, without
limitation, any material or substance which is (i) defined or listed as a “hazardous waste,”
“extremely hazardous waste,” “restricted hazardous waste,” “hazardous substance,” “hazardous
material,” “pollutant” or “contaminant” under any Law, (ii) petroleum or petroleum
derivative,
(iii) a flammable explosive, (iv) a radioactive material or waste, (v) a polychlorinated
biphenyl,
(vi) asbestos or asbestos containing material, (vii) infectious waste, or (viii) a
carcinogen.

     B. Additional Obligations. If any Hazardous Materials are released into the
environment comprising or surrounding the Property by Tenant or any Tenant Party, Tenant
shall
at its sole expense promptly prepare a remediation plan consistent with applicable Laws and
recommended industry practices (and approved by Landlord and all governmental agencies
having jurisdiction) to fully remediate such release, and thereafter shall prosecute the
remediation plan so approved to completion with all reasonable diligence and to the
satisfaction
of Landlord and applicable governmental agencies. If any Hazardous Materials are released by
Tenant or any Tenant Party in, under, on or about the Premises during the Term in violation
of
Hazardous Materials Laws, or if Landlord determines in good faith that any release of any
Hazardous Material by Tenant or any Tenant Party or violation of Hazardous Materials Laws by
Tenant or any Tenant Party may have occurred in, on, under or about the Premises during the
Term, Landlord may require Tenant to at Tenant’s sole expense, (i) retain a qualified
environmental consultant reasonably satisfactory to Landlord to conduct a
reasonable

29

 

investigation (an “Environmental Assessment”) of a nature and scope reasonably approved in writing
in advance by Landlord with respect to such release of any Hazardous Materials in, on, under or
about the Premises and providing a review of all Hazardous Materials activities of Tenant and the
Tenant Parties, and (ii) provide to Landlord a reasonably detailed, written report, prepared in
accordance with the institutional real estate standards, of the Environmental Assessment.

     C. Tenant’s Indemnity. Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord), protect and hold Landlord harmless from and against any and all claims, liabilities,
losses, costs, loss of rents, liens, damages, injuries or expenses (including attorney and
consultant fees and court costs), demands, causes of action, or judgments to the extent arising out
of the use, generation, storage, release, or disposal of Hazardous Materials by Tenant or any
Tenant Party in, on, under or about the Property or surrounding land or environment in violation of
Hazardous Materials Laws, which indemnity shall include, without limitation, damages for personal
or bodily injury, property damage, damage to the environment or natural resources occurring on or
off the Premises, losses attributable to diminution in value or adverse effects on marketability,
the cost of any investigation, monitoring, government oversight, repair, removal, remediation,
restoration, abatement, and disposal, and the preparation of any closure or other required plans,
whether such action is required or necessary prior to or following the expiration or earlier
termination of this Lease. Landlord’s consent to the use, generation, storage, release, or
disposal of Hazardous Materials shall excuse Tenant from Tenant’s obligation of
indemnification pursuant to this Section 36.C. Tenant’s obligations pursuant to the foregoing
indemnity shall survive the expiration or earlier termination of this Lease.

     D. Landlord’s Indemnity. Landlord shall indemnify, defend, protect and hold harmless
Tenant, its agents, contractors, stockholders, directors, successors, representatives, and assigns
from and against, all claims by any third party against all losses, costs, claims, liabilities and
damages (including attorneys’ and consultants’ fees) of every type and nature, directly or
indirectly arising out of or in connection with any Hazardous Material present at any time on or
about the Property, or the soil, air, improvements, groundwater or surface water, or the violation
of any Hazardous Material Laws, except to the extent that any of the foregoing actually results
from the release of Hazardous Material by Tenant or any Tenant Party in violation of applicable
Hazardous Material Laws.

37. MISCELLANEOUS

     A. Time. Time is of the essence regarding this Lease.

     B. Choice
of Law. This Lease shall in all respects be governed by the internal laws of the
State of California without giving effect to any conflict of laws principles.

     C. Entire Agreement. This Lease and the following exhibits and attachments constitute the
entire agreement between the parties and supersede all prior agreements and understandings related
to the Premises, including all lease proposals, letters of intent
and other documents: Exhibit A (Legal Description of the Land), Exhibit B (Outline and Location
of Premises), Exhibit C (Rules and Regulations), Exhibit D (Furniture and Fixtures) and Exhibit E
(Landlord’s Work).

30

 

     D. Modification. This Lease may not be modified except by a written instrument signed by
the parties.

     E. Severability. If, for any reason whatsoever, any of the provisions of this Lease is
unenforceable or ineffective, all of the other provisions shall be and remain in full force and
effect.

     F. Recordation. Tenant shall not record this Lease or a short form memorandum of this
Lease.

     G. Examination of Lease. Submission of this Lease to Tenant does not constitute an option
or offer to lease and this Lease is not effective otherwise until execution and delivery by both
Landlord and Tenant.

     H. Accord and Satisfaction. No payment by Tenant of a lesser amount than the total Rent due nor any
endorsement on any check or letter accompanying any check or payment of Rent shall be deemed an
accord and satisfaction of full payment of Rent, and Landlord may accept such payment without
prejudice to Landlord’s right to recover the balance of such Rent or to pursue other remedies. All
offers by or on behalf of Tenant of accord and satisfaction are hereby rejected in advance.

     I. Easements. Landlord may grant easements on the Property and dedicate for public use portions of
the Property without Tenant’s consent; provided that no such grant or dedication shall materially
interfere with Tenant’s Permitted Use of the Premises. Upon Landlord’s request, Tenant shall
execute, acknowledge and deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant’s covenants under this Lease.

     J. Changes to Property. Landlord reserves the right, in Landlord’s reasonable discretion, from time
to time, provided that parking for and access to the Premises are not materially diminished other
than on a temporary basis to: (i) make changes to the common areas and any other part of the
Property other than the Premises, including without limitation, changes in the location, size,
shape, and number of driveways, entrances, parking spaces, parking areas, loading and unloading
areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways; (ii)
close temporarily any areas for maintenance, rebuilding or other alterations so long as reasonable
access to the Premises remains available; (iii) use the common areas while engaged in making
additional improvements, repairs or alterations to the Property; and (iv) perform such other acts
and make such other changes in, to or with respect to the Property as Landlord deems appropriate
and reasonable.

     K. Drafting and Determination Presumption. The parties acknowledge that this Lease has been agreed
to by both the parties, that both Landlord and Tenant have consulted with attorneys with respect to
the terms of this Lease and that no presumption shall be created against Landlord because Landlord
drafted this Lease. Except as otherwise specifically set forth in this Lease, with respect to any
consent, determination or estimation of Landlord required or allowed in this Lease or requested of
Landlord, Landlord’s consent,
determination or estimation shall be given or made solely by Landlord in Landlord’s good faith
opinion, whether or not objectively

31

 

reasonable. If Landlord fails to respond to any request for its consent within the time period, if
any, specified in this Lease, Landlord shall be deemed to have disapproved such request.

     L. Exhibits. The Basic Lease Information, and the Exhibits, addenda and attachments attached to
this Lease are hereby incorporated in this Lease by this reference and made a part of this Lease as
though fully set forth in this Lease.

     M. No Light, Air, or View Easement. Any diminution or shutting off of light, air or view by any
structure which may be erected on lands adjacent to or in the vicinity of the Property shall in no
way affect this Lease or impose any liability on Landlord.

     N. No Third Party Benefit. This Lease is a contract between Landlord and Tenant and nothing in this
Lease is intended to create any third party benefit.

     O. Quiet Enjoyment. Upon payment by Tenant of the Rent, and upon the observance and performance of
all of the other covenants, terms and conditions on Tenant’s part to be observed and performed,
Tenant shall peaceably and quietly hold and enjoy the Premises for the Term without hindrance or
interruption by Landlord or any other person or persons lawfully or equitably claiming by, through
or under Landlord, subject, nevertheless, to all of the other terms and conditions of this Lease.
Landlord shall not be liable for any hindrance, interruption, interference or disturbance by other
tenants or third persons, nor shall Tenant be released from any obligations under this Lease
because of such hindrance, interruption, interference or disturbance.

     P. Consent Standard. Wherever this Lease requires Tenant to obtain Landlord’s consent or approval,
Landlord may withhold its consent or approval in its sole and absolute discretion, except to the
extent this Lease expressly provides otherwise.

     Q. Counterparts. This Lease may be executed in any number of counterparts, each of which shall be
deemed an original.

     R. Multiple Parties. If more than one person or entity is named in this Lease as Tenant, such
multiple parties shall have joint and several responsibility to comply with the terms of this
Lease.

     S. Prorations. Any Rent or other for any fractional month shall be prorated based on a month of 30
days.

     T. Broker. Tenant represents that it has dealt directly with and only with Tenant’s Broker as a
broker in connection with this Lease. Tenant shall indemnify and hold Landlord and the Landlord
Indemnitees harmless from all claims of any other brokers claiming to have represented Tenant in
connection with this Lease. Landlord agrees to indemnify and hold Tenant harmless from all claims
of any broker claiming to have represented Landlord in connection with this Lease. Landlord shall
pay any real estate commissions owed to Landlord’s broker and Tenant’s Broker.

(SIGNATURES ARE ON FOLLOWING PAGE)

32

 

Landlord and Tenant hereby execute and deliver this Lease as of the Lease Date.

	 	 	 	 	 	 	 
	 	 	LANDLORD	 	 
	 
	 	 	 	 	 	 
	 	 	Ravendale ERP LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John C. Scholz
 

John C. Scholz, its Manager
	 	 
	 
	 	 	 	 	 	 
	 	 	TENANT	 	 
	 
	 	 	 	 	 	 
	 	 	Zonare Medical Systems, Inc., a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:

Name:

Title:
	 	/s/ Kevin Davidge
 

KEVIN DAVIDGE
 

V.P. & CFO
 

	 	   

 

 

EXHIBIT A

Legal Description of the Land

Lot 5, as shown on that certain Map of Tract No. 5717, which map was filed for record in the Office
of the Recorder of the County of Santa Clara, State of California on September 4, 1975 in Book 361,
Page(s) 6 and 7, of Maps, and as amended by Certificate of Correction recorded May 27, 1976 in Book
C46, Page 615, Official Records

 

 

EXHIBIT B

Outline and Location of Premises

 

 

Exhibit B

Outline

BERNARDO AVENUE

420 North Bernardo

31,000 square feet

 

 

EXHIBIT C

Rules and Regulations

     1. Driveways, sidewalks and halls shall not be obstructed by tenants or used by tenants for
any purpose other than for ingress to and egress from their respective premises. The driveways are
not for the use of the general public and Landlord shall in all cases retain the right to control
and prevent access thereto by all persons whose presence, in the judgment of Landlord, shall be
prejudicial to the safety, character; reputation and interests of the Property, and its tenants,
provided that nothing in this Lease contained shall be construed to prevent such access to persons
with whom any tenant normally deals in the ordinary course of such tenant’s business unless such
persons are engaged in illegal activities. No tenant, and no employees or invitees of any tenant,
shall go upon the roof of any building, except as authorized by Landlord.

     2. No sign, placard, banner, picture, name, advertisement or notice, visible from the
exterior of the Premises or the Property shall be inscribed, painted, affixed, installed by Tenant
either on its Premises or any part of the Property without the prior consent of Landlord in
Landlord’s reasonable discretion. Landlord shall have the right to remove any such sign,
placard, banner, picture, name, advertisement, or notice without notice to and at the expense of
Tenant, which were installed or displayed in violation of this rule. If Landlord shall have given
such consent to Tenant at any time, whether before or after the execution of Tenant’s Lease, such
consent shall in no way operate as a waiver or release of any of the provisions hereof or of the
Lease, and shall be deemed to relate only to the particular sign, placard, banner, picture, name,
advertisement or notice so consented to by Landlord and shall not be construed as dispensing with
the necessity of obtaining the specific written consent of Landlord with respect to any other such
sign, placard, banner, picture, name, advertisement or notice.

     All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed
at the expense of Tenant by a person or vendor approved by Landlord and shall be removed by Tenant
at the time of vacancy at Tenant’s expense.

     3. Intentionally Deleted.

     4. No awnings or hangings shall be attached to, hung or placed in, or used in connection
with, any window or door on the Premises without the prior written consent of Landlord.

     5. Each tenant shall be responsible for all persons for whom it allows to enter the
Building and shall be liable to Landlord for all acts of such persons.

     Landlord and its agents shall not be liable for damages for any error concerning the admission to,
or exclusion from, the Building of any person unless due to Landlord’s willful misconduct.

     During the continuance of any invasion, mob, riot, public excitement or other circumstance
rendering such action advisable in Landlord’s opinion, Landlord reserves the right

 

 

(but shall not be obligated) to prevent access to the Building during the continuance of that event
by any means it considers appropriate for the safety of tenants and protection of the Building,
property in the Building.

     6. Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys for all
doors which have been furnished to Tenant, and in the event of loss of any keys so furnished, shall
pay Landlord therefor.

     7. The restrooms, toilets, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign substance of any
kind whatsoever shall be thrown into them. The expense of any breakage, stoppage, or damage
resulting from violation of this rule shall be borne by the tenant who, or whose employees or
invitees, shall have caused the breakage, stoppage, or damage.

     8. Tenant shall not use or keep in or on the Premises or the Property any kerosene,
gasoline, or inflammable or combustible fluid or material except in strict accordance with the
terms of the Lease.

     9. Tenant shall not use, keep or permit to be used or kept in its Premises any foul or
noxious gas or substance. Tenant shall not allow the Premises to be occupied or used in a manner
offensive to Landlord or other occupants of the Property by reason of noise, odors and/or
vibrations or interfere in any way with other tenants or those having business therein.

     10. Except with the prior written consent of Landlord, Tenant shall not sell, or permit the
sale, at retail, of newspapers, magazines, periodicals, theater tickets or any other goods or
merchandise in or on the Premises, nor shall the Premises be used for any illegal, improper,
immoral purpose, or any business or activity other than that specifically provided for in such
Tenant’s Lease.

     11. Intentionally Deleted.

     12. Tenant shall not install any radio or television antenna, satellite dish, loudspeaker or
any other device on the exterior walls or the roof of the Building, without Landlord’s consent.
Tenant shall not interfere with radio or television broadcasting or reception from or in the
Property, or elsewhere.

     13. Tenant
shall not lay linoleum, tile, carpet or any other floor covering so that the same
shall be affixed to the floor of its Premises in any manner except as approved in writing by
Landlord. The expense of repairing any damage resulting from a violation of this rule or the
removal of any floor covering shall be borne by the tenant by whom, or by whose contractors,
employees or invitees, the damage shall have been caused.

     14. Tenant shall not place a load upon any floor of its Premises which exceeds the load per
square foot which such floor was designed to carry or which is allowed by law.

 

 

     15. Business machines and mechanical equipment belonging to Tenant that cause noise or
vibration that may be transmitted to the structure of the Building or to any space therein to such
a degree as to be objectionable to Landlord shall be placed and maintained by Tenant, at Tenant’s
expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration.
The persons employed to move such equipment in or out of the Building must be acceptable to
Landlord.

     16. Tenant shall not place in the trash boxes or receptacles any personal trash or any
material that may not or cannot be disposed of in the ordinary and customary manner of removing and
disposing of trash and garbage in the city, without violation of any law or ordinance governing
such disposal.

     17. Canvassing, soliciting, distribution of handbills or any other written material and
peddling in the Property are prohibited and each tenant shall cooperate to prevent the same.

     18. Landlord shall have the right, exercisable without notice and without liability to any
tenant, to change the name of the Property. However, in the event Landlord changes the address of
the Building, Landlord shall be responsible for any out-of-pocket costs Tenant may incur in
connection with business card, literature, brochures and other marketing materials which require
reprinting, provided, however, Landlord shall not be responsible for such out-of-pocket costs if
Landlord is required to change the address of the Building.

     19. Landlord reserves the right to exclude or expel from the Property any person who, in
Landlord’s judgment, is under the influence of alcohol or drugs or who commits any act in violation
of any of these Rules and Regulations.

     20. Intentionally Deleted.

     21. Tenant shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.

     22. Tenant assumes any and all responsibility for protecting its Premises from theft, robbery
and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.

     23. No trucks, truck tractors, trailers or fifth wheel are allowed to be parked anywhere at
any time within the Property other than in Tenant’s own truck dock well. Vehicles in violation of
the above shall be subject to tow-away, at vehicle owner’s expense. Vehicles parked in the
Property parking facility for more than three (3) days without prior written consent of the
Landlord shall be deemed abandoned and shall be subject to tow-away at vehicle owner’s expense.
No tenant of the Property shall park in visitor or reserved parking areas or loading areas. The
parking areas shall not be used to provide car wash, oil changes, detailing, automotive repair or
other services unless otherwise approved or furnished by Landlord.

     24. Tenant agrees to keep the exterior of the Premises clean and free of nails, wood,
pallets, packing materials, barrels and any other debris produced from their operation. All

 

 

products, materials and goods are to enter and exit the Premises by being loaded or unloaded
through dock high doors into trucks and or trailers, over dock high loading platforms into trucks
and or trailers or loaded or unloaded into trucks and or trailers within the Premises through grade
level door access.

     25. 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.

     26. These Rules and Regulations are in addition to, and shall not be construed to in any way
modify, alter or amend, in whole or in part, the terms, covenants, agreements and conditions of any
lease of any premises in the Property.

     27. Landlord may waive anyone or more of these Rules and Regulations for the benefit of any
particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such
Rules and Regulations In favor of any other tenant or tenants, not prevent Landlord from thereafter
enforcing any such Rules and Regulations against any or all tenants of the Property.

     Landlord reserves the right to make such other and reasonable rules and regulations as in its
judgment may from time to time be needed for safety and security, for care and cleanliness of the
Property and for the preservation of good order therein. Tenant agrees to abide by all such Rules
and Regulations and any additional rules and regulations that are adopted.

 

 

EXHIBIT D

Furniture and Fixtures

 

 

EXHIBIT E

Landlord’s Workexv10w11

Exhibit 10.11

FIRST AMENDMENT AND WAIVER

TO

LOAN AND SECURITY AGREEMENT

     This First Amendment and Waiver to Loan and Security Agreement (this “Amendment”) is entered into
as of May 15, 2008 by and between COMERICA BANK (“Bank”)
and ZONARE MEDICAL SYSTEMS, INC (“Borrower”).

RECITALS

     Borrower and Bank are parties to that certain Loan and Security Agreement dated as of May 15, 2007,
as it may be amended from time to time (the “Agreement”).
The parties desire to amend the Agreement
in accordance with the terms of this Amendment.

     NOW,
THEREFORE, the parties agree as follows:

     1. Bank hereby waives Borrower’s failure to comply with (a) Section 6.2(ii) (Audited
Financial Statements) for the fiscal years ended December 31, 2005 and December 31, 2006; and (b)
Section 7.11 (Maximum Cash at Subsidiaries) of the Agreement for periods ending January 31, 2008,
February 29, 2008 and March 31, 2008 (the “Existing Defaults”). Subject to the conditions
contained herein and performance by Borrower of all of the terms of this Amendment and the
Agreement after the date hereof, Bank waives Borrower’s failure to comply with the Existing
Defaults. Bank does not waive Borrower’s obligations under such section for any period other than
as stated above, and Bank does not waive any other failure by Borrower to perform its Obligations
under the Loan Documents. This waiver is not a continuing waiver with respect to any failure to
perform any Obligation after March 31, 2008.

     2. Section 7.11
of the Agreement is hereby amended in its entirety to read as follows:

     7.11
Maximum Cash at Subsidiaries. Borrower shall not permit any individual Subsidiary to own or
maintain an aggregate amount of Cash greater than $200,000 at any time; provided, however, that
Borrower’s Subsidiary, ZONARE GmbH, shall not own or maintain an aggregate amount of Cash greater
than $500,000 at any time.

     3. Unless otherwise defined, all initially capitalized terms in this Amendment shall be
as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force
and effect in accordance with its respective terms and hereby is ratified and confirmed in all
respects. Except as expressly set forth herein, the execution,
delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of
Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms
the continuing effectiveness of all promissory notes, guaranties, security agreements, mortgages,
deeds of trust, environmental agreements, and all other instruments, documents and agreements
entered into in connection with the Agreement.

     4. Borrower
is a party to certain documents, instruments and/or agreements
(collectively, the “Documents”) with or between the
undersigned and Comerica Bank, a Michigan
banking corporation (the “Merged Bank”). The Merged Bank has been merged with and into Comerica
Bank, a Texas banking association (the “Surviving Bank”). Borrower hereby acknowledges and agrees
that any reference in the Documents to Comerica Bank, a Michigan banking corporation, shall mean
Comerica Bank, a Texas banking association, as successor by merger to the Merged Bank.

     5. Borrower represents and warrants that the representations and warranties contained
in the Agreement are true and correct as of the date of this Amendment, and that no Event of
Default has occurred and is continuing.

1

 

     6. This Amendment may be executed in two or more counterparts, each of which shall be
deemed an
original, but all of which together shall constitute one instrument.

     7. As a condition to the effectiveness of this Amendment, Bank shall have received, in
form and
substance satisfactory to Bank, the following:

          (a) this Amendment, duly executed by Borrower;

          (b) an amount equal to all Bank Expenses incurred through the date of this Amendment; and

          (c) such
other documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2

 

     IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above
written.

	 	 	 	 	 	 	 
	 	 	ZONARE MEDICAL SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Timothy Marcotte	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	VP & CFO	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	COMERICA BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Nathaniel R. Highlander	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	VP	 	 
	 

	 	 	 	 

	 	 

3

 

ZONARE MEDICAL SYSTEMS, INC.

LOAN AND SECURITY AGREEMENT

 

 

This LOAN AND SECURITY AGREEMENT is entered into as of May 15, 2007, by and between Comerica Bank
(“Bank”) and ZONARE MEDICAL SYSTEMS, INC. (“Borrower”).

RECITALS

Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to
Borrower. This Agreement sets forth the terms on which Bank will advance credit to Borrower, and
Borrower will repay the amounts owing to Bank.

AGREEMENT

The parties agree as follows:

     1. DEFINITIONS AND CONSTRUCTION.

          1.1 Definitions. As used in this Agreement, all capitalized terms shall have the definitions
set forth on Exhibit A. Any term used in the Code and not defined herein shall have the meaning
given to the term in the Code.

          1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A shall be
construed in accordance with GAAP and all calculations shall be made in accordance with GAAP. The
term “financial statements” shall include the accompanying notes and schedules.

     2. LOAN AND TERMS OF PAYMENT.

          2.1 Credit Extensions.

               (a) Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower,
together with interest on the unpaid principal amount of such Credit Extensions at rates in
accordance with the terms hereof.

               (b) Advances Under Revolving Line.

                    (i) Amount. Subject to and upon the terms and conditions of this Agreement (1) Borrower may
request Advances in an aggregate outstanding amount not to exceed the lesser of (A) the Revolving
Line or (B) the Borrowing Base, and (2) amounts borrowed pursuant to this Section 2.1(b) may be
repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time all Advances
under this Section 2.1(b) shall be immediately due and payable.

                    (ii) Form of Request. Whenever Borrower desires an Advance, Borrower will notify Bank by
facsimile transmission or telephone no later than 1:00 p.m. Pacific time, on the Business Day that
the Advance is to be made. Each such notification shall be promptly confirmed by a Payment/Advance
Form in substantially the form of Exhibit C. Bank is authorized to make Advances under this
Agreement, based upon instructions received from a Responsible Officer or a designee of a
Responsible Officer, or without instructions if in Bank’s discretion such Advances are necessary to
meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any
telephonic notice given by a person who Bank reasonably believes to be a Responsible Officer or a
designee thereof, and Borrower shall indemnify and hold Bank harmless for any damages or loss
suffered by Bank as a result of such reliance. Bank will credit the amount of Advances made under
this Section 2.1(b) to Borrower’s deposit account.

               (c) Term
Advances.

1.

 

                    (i) Subject to and upon the terms and conditions of this Agreement, at any time from the
Closing Date through May 15, 2008, Bank agrees to make term advances to Borrower (each a “Term
Advance” and collectively, the “Term Advances”) in an aggregate amount not to exceed the Term Line.

                    (ii) Interest shall accrue from the date of each Term Advance at the rate specified in Section
2.3(a) and shall be payable in accordance with Section 2.3(c). Any Term Advances that are
outstanding on November 15, 2007 shall be payable in 36 equal monthly installments of principal,
plus all accrued interest, beginning on December 1, 2007, and continuing on the same day of each
month thereafter through the Term Maturity Date, at which time all amounts owing in connection with
the Term Advances and any other amounts owing under this Agreement shall be immediately due and
payable. Any Term Advances that are outstanding on May 15, 2008 (which were not outstanding on
November 15, 2007) shall be payable in 36 equal monthly installments of principal, plus all accrued
interest, beginning on June 1, 2008, and continuing on the same day of each month thereafter
through the Term Maturity Date, at which time all amounts owing in connection with the Term
Advances and any other amounts owing under this Agreement shall be immediately due and payable.
The Term Advances or any portion thereof, once repaid, may not be reborrowed.

                    (iii) When Borrower desires to obtain a Term Advance, Borrower shall notify Bank (which notice
shall be irrevocable) by facsimile transmission to be received no later than 3:00 p.m. Pacific time
three Business Days before the day on which the Term Advance is to be made. Such notice shall be
substantially in the form of Exhibit C. The notice shall be signed by a Responsible Officer or its
designee.

          2.2 Overadvances. If the aggregate amount of the outstanding Advances exceeds the lesser of
the Revolving Line or the Borrowing Base at any time, Borrower shall immediately pay to Bank, in
cash, the amount of such excess.

          2.3 Interest Rates, Payments, and Calculations.

               (a) Interest Rates.

                    (i) Advances. Except as set forth in Section 2.3(b), the Advances shall bear interest, on the
outstanding daily balance thereof, as set forth in the LIBOR Addendum to Loan & Security Agreement
executed in connection herewith.

                    (ii) Term Advances. Except as set forth in Section 2.3(b), the Term Advances shall bear
interest, on the outstanding daily balance thereof, as set forth in the LIBOR Addendum to Loan &
Security Agreement executed in connection herewith.

               (b) Late Fee; Default Rate. If any payment is not made within 10 days after the date such
payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i) 5% of the amount of
such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All
Obligations shall bear interest, from and after the occurrence and during the continuance of an
Event of Default, at a rate equal to 5 percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.

               (c) Payments. Interest on the outstanding Advances and Term Advances hereunder shall be due
and payable on the first calendar day of each month during the term hereof. Bank shall, at its
option, charge such interest, all Bank Expenses, and all Periodic Payments against any of
Borrower’s deposit accounts or against the Revolving Line, in which case those amounts shall
thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due
shall be compounded by becoming a part of the Obligations, and such interest shall thereafter
accrue interest at the rate then applicable hereunder.

               (d) Prepayment. Borrower may prepay the Term Advances only upon written notice to Bank, which
shall be irrevocable, at least three Business Days before the proposed prepayment date (the
“Prepayment Date”), such notice shall specify the Prepayment Date and the amount to be prepaid. On
the Prepayment Date, Borrower shall pay Bank, in addition to the principal amount to be prepaid and
the interest accrued thereon through the Prepayment Date, a premium equal to (i) four percent (4%)
of the prepaid principal

2.

 

amount of the Term Advance if the prepayment takes place during the period beginning on the
Closing Date through the first anniversary of the Closing Date, (ii) one and one half of one
percent (1.5%) of the prepaid principal amount of the Term Advance if the prepayment takes place
during the period beginning on the day after the first anniversary of the Closing Date through the
second anniversary of the Closing Date, and (iii) one percent (1%) of the prepaid principal amount
of the Term Advance if the prepayment takes place during the period beginning on the day after the
second anniversary of the Closing Date through the Revolving Maturity Date. Borrower may prepay
any Advances without penalty or premium.

               (e) Interest Computation. All interest chargeable under the Loan Documents at the LIBOR Rate
as defined and set forth in the LIBOR Addendum to Loan & Security Agreement executed in connection
herewith shall be computed on the basis of a 360 day year for the actual number of days elapsed.
All interest chargeable under the Loan Documents at the Prime Rate or the base rate set forth in
the LIBOR Addendum to Loan & Security Agreement executed in connection herewith shall be computed
on the basis of a 365 day year for the actual number of days elapsed.

               (f) Prime Rate. In the event the Prime Rate is changed from time to time hereafter, the
applicable rate of interest hereunder shall be increased or decreased, effective as of the day the
Prime Rate is changed, by an amount equal to such change in the Prime Rate.

          2.4 Crediting Payments. Prior to the occurrence of an Event of Default, Bank shall credit a
wire transfer of funds, check or other item of payment to such deposit account or Obligation as
Borrower specifies. After the occurrence of an Event of Default, Bank shall have the right, in its
sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment
Bank may receive to conditionally reduce Obligations, but such applications of funds shall not be
considered a payment on account unless such payment is of immediately available federal funds or
unless and until such check or other item of payment is honored when presented for payment.
Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by
Bank after 12:00 noon Pacific time shall be deemed to have been received by Bank as of the opening
of business on the immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such extension.

          2.5 Fees. Borrower shall pay to Bank the following:

               (a) Facility Fee. On the Closing Date, a Facility Fee equal to $50,000, which shall be
nonrefundable and, on the first anniversary of the Closing Date, a Facility Fee equal to $50,000,
which shall be nonrefundable;

               (b) Non-Usage Fee. A per annum fee equal to 0.5% of the difference between (1) the amount of
the Revolving Line available on each date of determination, and (2) the average daily balance owing
on account of the Revolving Line during the term hereof, paid monthly in arrears, which shall be
nonrefundable; and

               (c) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date,
and, after the Closing Date, all Bank Expenses, as and when they become due.

          2.6 Term. This Agreement shall become effective on the Closing Date and, subject to Section
13.7, shall continue in full force and effect for so long as any Obligations remain outstanding or
Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the
foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under
this Agreement immediately and without notice upon the occurrence and during the continuance of an
Event of Default.

     3. CONDITIONS OF LOANS.

3.

 

          3.1 Conditions Precedent to Initial Credit Extension. The obligation of Bank to make the
initial Credit Extension is subject to the condition precedent that Bank shall have received, in
form and substance satisfactory to Bank, the following:

               (a) this Agreement;

               (b) an officer’s certificate of Borrower with respect to incumbency and resolutions
authorizing the execution and delivery of this Agreement;

               (c) stock powers for the shares of stock which are part of the Collateral, executed in blank
by Borrower for each of Borrower’s Subsidiaries;

               (d) LIBOR Addendum to Loan & Security Agreement;

               (e) a UCC financing statement;

               (f) agreement to provide insurance;

               (g) payment of the fees and Bank Expenses then due specified in Section 2.5;

               (h) current SOS Reports indicating that except for Permitted Liens, there are no other
security interests or Liens of record in the Collateral;

               (i) an audit of the Collateral, the results of which shall be satisfactory to Bank;

               (j) current financial statements and such other updated financial information as Bank may
reasonably request;

               (k) current Compliance Certificate in accordance with Section 6.2; and

               (l) such other documents or certificates, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.

          3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit
Extension, including the initial Credit Extension, is further subject to the following conditions:

               (a) timely receipt by Bank of the Payment/Advance Form as provided in Section 2.1; and

               (b) after giving effect to any updates to the Schedules referred to therein (provided such
updates are approved by Bank), the representations and warranties contained in Section 5 shall be
true and correct in all material respects on and as of the date of such Payment/Advance Form and on
the effective date of each Credit Extension as though made at and as of each such date, and no
Event of Default shall have occurred and be continuing, or would exist after giving effect to such
Credit Extension (provided, however, that those representations and warranties expressly referring
to another date shall be true, correct and complete in all material respects as of such date). The
making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on
the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.

     4. CREATION OF SECURITY INTEREST.

          4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing security
interest in the Collateral to secure prompt repayment of any and all Obligations and to secure
prompt performance by Borrower of each of its covenants and duties under the Loan Documents.
Except as set forth in the Schedule, such security interest constitutes a valid, first priority
security interest in the presently existing Collateral, and will

4.

 

constitute a valid, first priority security interest in later-acquired Collateral.
Notwithstanding any termination, Bank’s Lien on the Collateral shall remain in effect for so long
as any Obligations are outstanding.

          4.2 Perfection of Security Interest. Borrower authorizes Bank to file at any time financing
statements, continuation statements, and amendments thereto that (i) either specifically describe
the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder,
and (ii) contain any other information required by the Code for the sufficiency of filing office
acceptance of any financing statement, continuation statement, or amendment, including whether
Borrower is an organization, the type of organization and any organizational identification number
issued to Borrower, if applicable. Any such financing statements may be signed by Bank on behalf
of Borrower, as provided in the Code, and may be filed at any time in any jurisdiction whether or
not Revised Article 9 of the Code is then in effect in that jurisdiction. Borrower shall from time
to time endorse and deliver to Bank, at the request of Bank, all Negotiable Collateral and other
documents that Bank may reasonably request, in form satisfactory to Bank, to perfect and continue
to perfect Bank’s security interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents. Borrower shall have possession of the
Collateral, except where expressly otherwise provided in this Agreement or where Bank chooses to
perfect its security interest by possession in addition to the filing of a financing statement.
Where Collateral is in possession of a third party bailee, Borrower shall take such steps as Bank
reasonably requests for Bank to (i) obtain an acknowledgment, in form and substance satisfactory to
Bank, of the bailee that the bailee holds such Collateral for the benefit of Bank, (ii) obtain
“control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit
rights or electronic chattel paper (as such items and the term “control” are defined in Revised
Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing
bank to execute a control agreement in form and substance satisfactory to Bank. Borrower will not
create any chattel paper without placing a legend on the chattel paper acceptable to Bank
indicating that Bank has a security interest in the chattel paper. Borrower from time to time may
deposit with Bank specific cash collateral to secure specific Obligations; Borrower authorizes Bank
to hold such specific balances in pledge and to decline to honor any drafts thereon or any request
by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long
as the specific Obligations are outstanding.

          4.3 Pledge of Shares. Borrower hereby pledges, assigns and grants to Bank a security interest
in all shares of stock of any entity formed under the laws of the United States which are part of
the Collateral and 65% of the stock of any entity formed under the laws of a jurisdiction other
than the United States and directly or indirectly owned by Borrower or by one of Borrower’s US
Subsidiaries which are part of the Collateral including without limitation, in each case,
Borrower’s equity interests in each of its Subsidiaries (collectively, 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 noncash proceeds of the foregoing, as security for the performance of the Obligations.
The certificate or certificates for the Shares will be delivered to Bank, accompanied by an
instrument of assignment duly executed in blank by Borrower, and Borrower shall cause the books of
each entity whose shares are part of the Shares and any transfer agent to reflect the pledge of the
Shares. Upon the occurrence of an Event of Default, Bank may effect the transfer of the Shares
into the name of Bank and cause new certificates representing such securities to be issued in the
name of Bank or its transferee. Borrower will execute and deliver such documents, and take or
cause to be taken such actions, as Bank may reasonably request to perfect or continue the
perfection of Bank’s security interest in the Shares. Unless an Event of Default shall have
occurred and be continuing, Borrower shall be entitled to exercise any 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. The Shares are not held in a brokerage
or similar securities account.

          4.4 Right to Inspect. Bank (through any of its officers, employees, or agents) shall have the
right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but
no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect
Borrower’s Books and to make copies thereof and to check, test, and appraise the Collateral in
order to verify Borrower’s financial condition or the amount, condition of, or any other matter
relating to, the Collateral.

     5. REPRESENTATIONS AND WARRANTIES.

5.

 

     Borrower represents and warrants as follows:

          5.1 Due Organization and Qualification. Borrower and each Subsidiary is a corporation duly
existing under the laws of the state in which it is incorporated and qualified and licensed to do
business in any state in which the conduct of its business or its ownership of property requires
that it be so qualified, except where the failure to do so would not reasonably be expected to
cause a Material Adverse Effect.

          5.2 Due Authorization; No Conflict. The execution, delivery, and performance of the Loan
Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor
constitute a breach of any provision contained in Borrower’s Articles of Incorporation or Bylaws,
nor will they constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement by which it is bound, except to the extent
such default would not reasonably be expected to cause a Material Adverse Effect.

          5.3 Collateral. Borrower has rights in or the power to transfer the Collateral, and its title
to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or
pledge except for Permitted Liens. All Collateral is located solely in the Collateral States. The
Eligible Accounts are bona fide existing obligations. The property or services giving rise to such
Eligible Accounts has been delivered or rendered to the account debtor or its agent for immediate
shipment to and unconditional acceptance by the account debtor. Borrower has not received notice
of an actual or imminent Insolvency Proceeding of any account debtor whose accounts are included in
any Borrowing Base Certificate as an Eligible Account. All Inventory is in all material respects
of good and merchantable quality, free from all material defects, except for Inventory for which
adequate reserves have been made. Except as set forth in the Schedule, none of the Collateral is
maintained or invested with a Person other than Bank or Bank’s Affiliates.

          5.4 Intellectual Property. Borrower is the sole owner of the Intellectual Property, except
for licenses granted by Borrower to its customers in the ordinary course of business. To the best
of Borrower’s knowledge, each of the Copyrights, Trademarks and Patents is valid and enforceable,
and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in
part, and no claim has been made to Borrower that any part of the Intellectual Property violates
the rights of any third party except to the extent such claim would not reasonably be expected to
cause a Material Adverse Effect.

          5.5 Name; Location of Chief Executive Office. Except as disclosed in the Schedule, Borrower
has not done business under any name other than that specified on the signature page hereof, and
its exact legal name is as set forth in the first paragraph of this Agreement. The chief executive
office of Borrower is located in the Chief Executive Office State at the address indicated in
Section 10 hereof.

          5.6 Litigation. Except as set forth in the Schedule, there are no actions or proceedings
pending by or against Borrower or any Subsidiary before any court or administrative agency in which
a likely adverse decision would reasonably be expected to have a Material Adverse Effect.

          5.7 No Material Adverse Change in Financial Statements. All consolidated and consolidating
financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Bank
fairly present in all material respects Borrower’s consolidated and consolidating financial
condition as of the date thereof and Borrower’s consolidated and consolidating results of
operations for the period then ended. There has not been a material adverse change in the
consolidated or in the consolidating financial condition of Borrower since the date of the most
recent of such financial statements submitted to Bank.

          5.8 Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as
they mature; the fair saleable value of Borrower’s assets (including goodwill minus disposition
costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small
capital after the transactions contemplated by this Agreement.

          5.9 Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum
funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No
event

6.

 

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 reasonably be expected to 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 the 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 in all material
respects with all the provisions of the Federal Fair Labor Standards Act. Borrower is in
compliance with all environmental laws, regulations and ordinances except where the failure to
comply is not reasonably likely to have a Material Adverse Effect. Borrower has not violated any
statutes, laws, ordinances or rules applicable to it, the violation of which would reasonably be
expected to have a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to
be filed all tax returns required to be filed, and have paid, or have made adequate provision for
the payment of, all taxes reflected therein except those being contested in good faith with
adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not
reasonably be expected to have a Material Adverse Effect.

          5.10 Subsidiaries. Except as set forth on the Schedule and for Permitted Investments,
Borrower does not own any stock, partnership interest or other equity securities of any Person.

          5.11 Government Consents. Borrower and each Subsidiary have obtained all consents, approvals
and authorizations of, made all declarations or filings with, and given all notices to, all
governmental authorities that are necessary for the continued operation of Borrower’s business as
currently conducted, except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.

          5.12 Inbound Licenses. Except as disclosed on the Schedule, Borrower is not a party to, nor
is bound by, any license or other agreement that prohibits or otherwise restricts Borrower from
granting a security interest in Borrower’s interest in such license or agreement or any other
property.

          5.13 Shares. Borrower has full power and authority to create a first lien on the Shares and
no disability or contractual obligation exists that would prohibit Borrower from pledging the
Shares pursuant to this Agreement. There are no subscriptions, warrants, rights of first refusal
or other restrictions on, or options exercisable with respect to the Shares. The Shares have been
and will be duly authorized and validly issued, and are fully paid and non-assessable. The Shares
are not the subject of any present or threatened suit, action, arbitration, administrative or other
proceeding, and Borrower knows of no reasonable grounds for the institution of any such
proceedings.

          5.14 Full Disclosure. No representation, warranty or other statement made by Borrower in any
certificate or written statement furnished to Bank taken together with all such certificates and
written statements furnished to Bank contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained in such certificates or
statements not misleading, it being recognized by Bank that the projections and forecasts provided
by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and
that actual results during the period or periods covered by any such projections and forecasts may
differ from the projected or forecasted results.

     6. AFFIRMATIVE COVENANTS.

     Borrower covenants that, until payment in full of all outstanding Obligations, and for so long
as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the
following :

          6.1 Good Standing and Government Compliance. Borrower shall maintain its and each of its
Subsidiaries’ corporate existence and good standing in the Borrower State, shall maintain
qualification and good standing in each other jurisdiction in which the failure to so qualify would
reasonably be expected to have a Material Adverse Effect, and shall furnish to Bank the
organizational identification number issued to Borrower by the authorities of the state in which
Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to
meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject
to ERISA. Borrower shall comply in all material respects with all applicable Environmental Laws,
and maintain all material permits, licenses and approvals required thereunder where the failure to
do so would

7.

 

reasonably be expected to have a Material Adverse Effect. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and
regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to
maintain, in force all licenses, approvals and agreements, the loss of which or failure to comply
with which would reasonably be expected to have a Material Adverse Effect.

          6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Bank: (i) as soon
as available, but in any event within 30 days after the end of each calendar month, a company
prepared consolidated and consolidating balance sheet and income statement covering Borrower’s
operations during such period, in a form reasonably acceptable to Bank and certified by a
Responsible Officer; (ii) as soon as available, but in any event within 120 days after the end of
Borrower’s fiscal year, audited consolidated and consolidating financial statements of Borrower
prepared in accordance with GAAP, consistently applied, together with an opinion which is
unqualified or otherwise consented to in writing by Bank on such financial statements of an
independent certified public accounting firm reasonably acceptable to Bank (provided that Borrower
shall deliver drafts of such financial statements for the fiscal years ending December 31, 2005 and
December 31, 2006 on or before April 30, 2007 and such final audited financial statements for the
fiscal years ending December 31, 2005 and December 31, 2006 on or before June 30, 2007); (iii) if
applicable, copies of all statements, reports and notices sent or made available generally by
Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms
10-K and 10-Q filed with the Securities and Exchange Commission; (iv) promptly upon receipt of
notice thereof, a report of any legal actions pending or threatened against Borrower or any
Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any
Subsidiary of $250,000 or more; (v) promptly upon receipt, each management letter prepared by
Borrower’s independent certified public accounting firm regarding Borrower’s management control
systems; (vi) as soon as available, but in any event within 30 days prior to Borrower’s fiscal year
end, operating budgets, annual budgets and financial forecasts for the subsequent fiscal year, and
(vii) such budgets, sales projections, operating plans or other financial information generally
prepared by Borrower in the ordinary course of business as Bank may reasonably request from time to
time.

               (a) Within 30 days after the last day of each month, Borrower shall deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer in substantially the form of Exhibit D
hereto, together with aged listings by invoice date of accounts receivable and accounts payable.

               (b) Within 30 days after the last day of each month, Borrower shall deliver to Bank with the
monthly financial statements a Compliance Certificate certified as of the last day of the
applicable month and signed by a Responsible Officer in substantially the form of Exhibit E hereto.

               (c) As soon as possible and in any event within 3 Business Days after becoming aware of the
occurrence or existence of an Event of Default hereunder, a written statement of a Responsible
Officer setting forth details of the Event of Default, and the action which Borrower has taken or
proposes to take with respect thereto.

               (d) Bank shall have a right from time to time hereafter to audit or request that its
designated agent audit Borrower’s Accounts and appraise Collateral at Borrower’s expense (each a
“Collateral Audit”), with results satisfactory to Bank, provided that such audits will be conducted
no more often than every 6 months unless an Event of Default has occurred and is continuing.

     Borrower may deliver to Bank on an electronic basis any certificates, reports or information
required pursuant to this Section 6.2, and Bank shall be entitled to rely on the information
contained in the electronic files, provided that Bank in good faith believes that the files were
delivered by a Responsible Officer. If Borrower delivers this information electronically, it shall
also deliver to Bank by U.S. Mail, reputable overnight courier service, hand delivery, facsimile or
..pdf file within 5 Business Days of submission of the unsigned electronic copy the certification of
monthly financial statements, the Borrowing Base Certificate and the Compliance Certificate, each
bearing the physical signature of the Responsible Officer.

          6.3 Inventory; Returns. Borrower shall keep all Inventory in good and merchantable condition,
free from all material defects except for Inventory for which adequate reserves have been made.
Returns and allowances, if any, as between Borrower and its account debtors shall be on the same
basis and in accordance

8.

 

with the usual customary practices of Borrower, as they exist on the Closing Date. Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving
more than $100,000.

          6.4 Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or
deposit of all material federal, state, and local taxes, assessments, or contributions required of
it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A.
and state disability, and will execute and deliver to Bank, on demand, proof satisfactory to Bank
indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate
certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary
need not make any payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower.

          6.5 Insurance.

               (a) Borrower, at its expense, shall keep the Collateral insured against loss or damage by
fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as
ordinarily insured against by other owners in similar businesses conducted in the locations where
Borrower’s business is conducted on the date hereof. Borrower shall also maintain liability and
other insurance in amounts and of a type that are customary to businesses similar to Borrower’s.

               (b) All such policies of insurance shall be in such form, with such companies, and in such
amounts as reasonably satisfactory to Bank. All policies of property insurance shall contain a
lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional
loss payee, and all liability insurance policies shall show Bank as an additional insured and
specify that the insurer must give at least 20 days notice to Bank before canceling its policy for
any reason. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies
of insurance and evidence of all premium payments. If no Event of Default has occurred and is
continuing, proceeds payable under any casualty policy will, at Borrower’s option, be payable to
Borrower to replace the property subject to the claim, provided that any such replacement property
shall be deemed Collateral in which Bank has been granted a first priority security interest. If
an Event of Default has occurred and is continuing, all proceeds payable under any such policy
shall, at Bank’s option, be payable to Bank to be applied on account of the Obligations.

          6.6 Depository and Investment Accounts. Borrower shall, within 60 days after the Closing
Date, maintain all its depository, operating, and investment accounts with Bank or Bank’s
Affiliates.

          6.7 Financial Covenants. Borrower shall maintain the following financial covenants:

               (a) Minimum Quarterly Billed Sales. Borrower shall maintain, measured on a trailing twelve
month basis, minimum billed sales in an amount equal to the following amounts for each
corresponding period: (i) $16,400,000 for the period beginning January 1, 2007 and ending March 31,
2007, (ii) $18,400,000 for the period beginning April 1, 2007 and ending June 30, 2007, (iii)
$20,800,000 for the period beginning July 1, 2007 and ending September 30, 2007, (iv) $24,000,000
for the period beginning October 1, 2007 and ending December 31, 2007, (v) $27,427,000 for the
period beginning January 1, 2008 and ending March 31, 2008, (vi) $30,855,000 for the period
beginning April 1, 2008 and ending June 30, 2008, (vii) $34,282,000 for the period beginning July
1, 2008 and ending September 30, 2008, (viii) $37,709,000 for the period beginning October 1, 2008
and ending December 31, 2008, (ix)$38,652,000 for the period beginning January 1, 2009 and ending
March 31, 2009, (x) $39,594,000 for the period beginning April 1, 2009 and ending June 30, 2009,
(xi) $40,537,000 for the period beginning July 1, 2009 and ending September 30, 2009, (xii)
$41,480,000 for the period beginning October 1, 2009 and ending December 31, 2009, (xiii)
$41,480,000 for the period beginning January 1, 2010 and ending March 31, 2010, (xiv) $41,480,000
for the period beginning April 1, 2010 and ending June 30, 2010. At all times thereafter,
Borrower shall maintain, measured on a trailing twelve month basis, minimum gross invoiced revenue
equal to no less than $41,480,000.

               (b) Liquidity Ratio. Borrower shall maintain at all times a Liquidity Ratio of 1.25 to 1.00.
As used herein, “Liquidity Ratio” means the ratio of (i) the sum of unrestricted cash and cash
equivalents

9.

 

plus all foreign and domestic accounts receivable invoiced in North America to (ii) all
Indebtedness owing by Borrower to Bank.

          6.8 Intellectual Property Rights. Borrower shall (i) protect, defend and maintain the
validity and enforceability of the trade secrets, Trademarks, Patents and Copyrights, (ii) detect
infringements of the Trademarks, Patents and Copyrights and promptly advise Bank in writing of
material infringements detected and (iii) not allow any material Trademarks, Patents or Copyrights
to be abandoned, forfeited or dedicated to the public.

          6.9 Future Stock Pledges and Guaranties. Borrower and each Subsidiary shall execute and
deliver promptly and in any event within three (3) Business Days after the formation or acquisition
of a Subsidiary such documents and share certificates as may be requested by Bank in order for Bank
to take and perfect a security interest in 100% of the Capital Stock of a Subsidiary incorporated
or formed under the laws of a United States jurisdiction and 65% of the Capital Stock of a
Subsidiary formed under the laws of a jurisdiction other than the United States and directly or
indirectly owned by Borrower or by one of Borrower’s US Subsidiaries. As used herein “Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and whether or not voting) of corporate
stock, and (ii) with respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.

          6.10 Further Assurances. At any time and from time to time Borrower shall execute and deliver
such further instruments and take such further action as may reasonably be requested by Bank
consistent with the purposes of this Agreement.

     7. NEGATIVE COVENANTS.

     Borrower covenants and agrees that, so long as any credit hereunder shall be available and
until the outstanding Obligations are paid in full or for so long as Bank may have any commitment
to make any Credit Extensions, Borrower will not do any of the following without Bank’s prior
written consent, which shall not be unreasonably withheld:

          7.1 Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of
(collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, or move cash balances on deposit with Bank to accounts opened at another
financial institution, other than Permitted Transfers.

          7.2 Change in Name, Location, Executive Office, or Executive Management; Change in Business;
Change in Fiscal Year; Change in Control. Change its name or the Borrower State or relocate its
chief executive office without 30 days prior written notification to Bank; replace its chief
executive officer or chief financial officer without 30 days prior written notification to Bank;
engage in any business, or permit any of its Subsidiaries to engage in any business, other than or
reasonably related or incidental to the businesses currently engaged in by Borrower; change its
fiscal year end; have a Change in Control.

          7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge
or consolidate, with or into any other business organization (other than mergers or consolidations
of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or property of another
Person except where (i) such transactions do not in the aggregate exceed $250,000 during any fiscal
year, (ii) no Event of Default has occurred, is continuing or would exist after giving effect to
such transactions, (iii) such transactions do not result in a Change in Control, and (iv) Borrower
is the surviving entity.

          7.4 Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any
Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any
Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness,
except Indebtedness to Bank.

10.

 

          7.5 Encumbrances. Create, incur, assume or allow any Lien with respect to any of its
property, including without limitation its Intellectual Property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so
to do, except for Permitted Liens, or covenant to any other Person that Borrower in the future will
refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s
property, including without limitation its Intellectual Property.

          7.6 Distributions. Pay any dividends or make any other distribution or payment on account of
or in redemption, retirement or purchase of any capital stock, except that Borrower may make
Permitted Investments.

          7.7 Investments. Directly or indirectly acquire or own, or make any Investment in or to any
Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or maintain
or invest any of its property with a Person other than Bank or Bank’s Affiliates or permit any
Subsidiary to do so unless such Person has entered into a control agreement with Bank, in form and
substance satisfactory to Bank, or suffer or permit any Subsidiary to be a party to, or be bound
by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing
property to Borrower.

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

          7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of
its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated
Debt, or amend any provision affecting Bank’s rights contained in any documentation relating to the
Subordinated Debt without Bank’s prior written consent.

          7.10 Inventory and Equipment. Store the Inventory or the Equipment with a bailee,
warehouseman, or similar third party unless the third party has been notified of Bank’s security
interest and Bank (a) has received an acknowledgment from the third party that it is holding or
will hold the Inventory or Equipment for Bank’s benefit or (b) is in possession of the warehouse
receipt, where negotiable, covering such Inventory or Equipment. Except for Inventory sold in the
ordinary course of business and except for such other locations as Bank may approve in writing,
Borrower shall keep the Inventory and Equipment only at the location set forth in Section 10 and
such other locations of which Borrower gives Bank prior written notice and as to which Bank files a
financing statement where needed to perfect its security interest.

          7.11 Maximum Cash at Subsidiaries. Borrower shall not permit any individual Subsidiary to own
or maintain an aggregate amount of Cash greater than $200,000 at any time.

          7.12 No Investment Company; Margin Regulation. Become or be 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 Credit Extension for
such purpose.

     8. EVENTS OF DEFAULT.

     Any one or more of the following events shall constitute an Event of Default by Borrower under
this Agreement:

          8.1 Payment Default. If Borrower fails to (a) make any payment of principal or interest on
the Obligations when due, or (b) pay any other Obligations within three (3) Business Days after the
date such Obligations are due;

          8.2 Covenant Default.

11.

 

               (a) If Borrower fails to perform any obligation under Sections 6.2, 6.5, 6.6, 6.7 or 6.9 or
violates any of the covenants contained in Article 7 of this Agreement; or

               (b) If Borrower fails or neglects to perform or observe any other material term, provision,
condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank and as to any default under such other term,
provision, condition or covenant that can be cured, has failed to cure such default within 10
Business Days after Borrower receives notice thereof or any officer of Borrower becomes aware
thereof; provided, however, that if the default cannot by its nature be cured within such 10
Business Day period or cannot after diligent attempts by Borrower be cured within such 10 Business
Day period, and such default is likely to be cured within a reasonable time, then Borrower shall
have an additional reasonable period (which shall not in any case exceed 30 calendar days) to
attempt to cure such default, and within such reasonable time period the failure to have cured such
default shall not be deemed an Event of Default but no Credit Extensions will be made;

          8.3 Material Adverse Change. If there occurs a material adverse change in Borrower’s
prospects, business or financial condition, or if there is a material impairment in the prospect of
repayment of any portion of the Obligations or a material impairment in the perfection, value or
priority of Bank’s security interests in the Collateral;

          8.4 Attachment. If any material portion of Borrower’s assets is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee,
receiver or person acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within 10 Business Days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other claim becomes a lien or
encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or
assessment is filed of record with respect to any of Borrower’s assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten days after Borrower receives
notice thereof, provided that none of the foregoing shall constitute an Event of Default where such
action or event is stayed or an adequate bond has been posted pending a good faith contest by
Borrower (provided that no Credit Extensions will be made during such cure period);

          8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by
Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or
stayed within 45 days (provided that no Credit Extensions will be made prior to the dismissal of
such Insolvency Proceeding);

          8.6 Other Agreements Governing Indebtedness. If there is a default or other failure to
perform in any agreement to which Borrower is a party with a third party or parties resulting in a
right by such third party or parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of $100,000 or that would reasonably be expected to have a
Material Adverse Effect;

          8.7 Judgments. If a judgment or judgments for the payment of money in an amount, individually
or in the aggregate, of at least $100,000 (excluding any amount thereof covered by insurance) shall
be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 Business
Days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the
judgment);

          8.8 Subordinated Debt. If Borrower makes any payment on account of Subordinated Debt, except
to the extent the payment is allowed under any subordination agreement entered into with Bank; or

          8.9 Misrepresentations. If any material misrepresentation or material misstatement exists now
or hereafter in any warranty or representation set forth herein or in any certificate delivered to
Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.

     9. BANK’S RIGHTS AND REMEDIES

12.

 

          9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of
Default, Bank may, at its election, without notice of its election and without demand, do any one
or more of the following, all of which are authorized by Borrower:

               (a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event
of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and
payable without any action by Bank);

               (b) Cease advancing money or extending credit to or for the benefit of Borrower under this
Agreement or under any other agreement between Borrower and Bank;

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

               (d) Make such payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so
requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes
Bank to enter the premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank’s determination appears to be prior or superior to its security
interest and to pay all expenses incurred in connection therewith. With respect to any of
Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of Bank’s rights or
remedies provided herein, at law, in equity, or otherwise;

               (e) Set off and apply to the Obligations any and all (i) balances and deposits of Borrower
held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;

               (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a
license or other right, solely pursuant to the provisions of this Section 9.1, to use, without
charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Collateral, in completing production of, advertising for sale, and selling any
Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s
rights under all licenses and all franchise agreements shall inure to Bank’s benefit;

               (g) Sell the Collateral at either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such places (including
Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the
Obligations in whatever manner or order Bank deems appropriate. Bank may sell the Collateral
without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties
of title or the like. This procedure will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral. If Bank sells any of the Collateral upon credit,
Borrower will be credited only with payments actually made by the purchaser, received by Bank, and
applied to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral,
Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale;

               (h) Bank may credit bid and purchase at any public sale;

               (i) Apply for the appointment of a receiver, trustee, liquidator or conservator of the
Collateral, without notice and without regard to the adequacy of the security for the Obligations
and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of
the Obligations; and

               (j) Any deficiency that exists after disposition of the Collateral as provided above will be
paid immediately by Borrower.

13.

 

Bank may comply with any applicable state or federal law requirements in connection with a
disposition of the Collateral and compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral.

          9.2 Power of Attorney. Effective only upon the occurrence and during the continuance of an
Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers,
or employees) as Borrower’s true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse
Borrower’s name on any checks or other forms of payment or security that may come into Bank’s
possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account,
drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts,
and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all
claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust
disputes and claims respecting the Accounts directly with account debtors, for amounts and upon
terms which Bank determines to be reasonable; and (g) file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of the Collateral
without the signature of Borrower where permitted by law; provided Bank may exercise such power of
attorney to sign the name of Borrower on any of the documents described in clause (g) above,
regardless of whether an Event of Default has occurred. The appointment of Bank as Borrower’s
attorney in fact, and each and every one of Bank’s rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid and performed and
Bank’s obligation to provide advances hereunder is terminated.

          9.3 Accounts Collection. At any time after the occurrence and during the continuation of an
Event of Default Bank may notify any Person owing funds to Borrower of Bank’s security interest in
such funds and verify the amount of such Account, and Borrower shall collect all amounts owing to
Borrower for Bank, receive in trust all payments as Bank’s trustee, and immediately deliver such
payments to Bank in their original form as received from the account debtor, with proper
endorsements for deposit.

          9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of
payment due to third persons or entities, as required under the terms of this Agreement, then Bank
may do any or all of the following after reasonable notice to Borrower: (a) make payment of the
same or any part thereof; (b) set up such reserves under the Revolving Line as Bank deems necessary
to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect
to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute
Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable
rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall
not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of
any Event of Default under this Agreement.

          9.5 Bank’s Liability for Collateral. Bank has no obligation to clean up or otherwise prepare
the Collateral for sale. All risk of loss, damage or destruction of the Collateral shall be borne
by Borrower.

          9.6 No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy the
Obligations by collecting them from any other person liable for them and Bank may release, modify
or waive any collateral provided by any other Person to secure any of the Obligations, all without
affecting Bank’s rights against Borrower. Borrower waives any right it may have to require Bank to
pursue any other Person for any of the Obligations.

          9.7 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents,
and all other agreements shall be cumulative. Bank shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one
right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on
Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver,
election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written
document signed on behalf of Bank and then shall be effective only in the specific instance and for
the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may
not be waived or modified by Bank by course of performance, conduct, estoppel or otherwise.

14.

 

          9.8 Shares. Borrower recognizes that Bank may be unable to effect a public sale of any or all
the Shares, by reason of certain prohibitions contained in federal securities laws and applicable
state securities laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not with a view to the
distribution or resale thereof. Borrower acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. Bank shall be under no obligation to delay a sale of any
of the Shares for the period of time necessary to permit the issuer thereof to register such
securities for public sale under federal securities laws or under applicable state securities laws,
even if such issuer would agree to do so.

          9.9 Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any
other notices relating to the Obligations.

     10. NOTICES.

     Unless otherwise provided in this Agreement, all notices or demands by any party relating to
this Agreement or any other agreement entered into in connection herewith shall be in writing and
(except for financial statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower
or to Bank, as the case may be, at its addresses set forth below:

	 	 	 	 	 
	 

	 	If to Borrower:
	 	Zonare Medical Systems, Inc.
	 

	 	 	 	1061 Terra Bella Avenue
	 

	 	 	 	Mountain View, CA 94043
	 

	 	 	 	Attn: Chief Financial Officer
	 

	 	 	 	FAX: (650) 230-2828
	 
	 	 	 	 
	 

	 	If to Bank:
	 	Comerica Bank
	 

	 	 	 	75 E Trimble Road
	 

	 	 	 	Mail Code 4770
	 

	 	 	 	San Jose, CA 95131
	 

	 	 	 	Attn: Manager
	 

	 	 	 	FAX: (408) 556-5091
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Comerica Bank
	 

	 	 	 	10500 NE 8th Street
	 

	 	 	 	Suite 1905
	 

	 	 	 	Bellevue, WA 98004
	 

	 	 	 	Attn: Jeff Roberts and Nate Highlander

	 

	 	 	 	FAX: (425) 452-2510

     The parties hereto may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other.

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

This Agreement shall be governed by, and construed in accordance with, the internal laws of the
State of California, without regard to principles of conflicts of law. Jurisdiction shall lie in
the State of California. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED
BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,
WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF

15.

 

LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR
AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.

     12. REFERENCE PROVISION.

          12.1 In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect
to proceed under this Judicial Reference Provision.

          12.2 With the exception of the items specified in clause 12.3, below, any controversy, dispute
or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement or any
other document, instrument or agreement between the undersigned parties (collectively in this
Section, the “Comerica Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure
(“CCP”), or their successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except
as otherwise provided in the Comerica Documents, venue for the reference proceeding will be in the
state or federal court in the county or district where the real property involved in the action, if
any, is located or in the state or federal court in the county or district where venue is otherwise
appropriate under applicable law (the “Court”).

          12.3 The matters that shall not be subject to a reference are the following: (i) nonjudicial
foreclosure of any security interests in real or personal property, (ii) exercise of self-help
remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv)
temporary, provisional or ancillary remedies (including, without limitation, writs of attachment,
writs of possession, temporary restraining orders or preliminary injunctions). This reference
provision does not limit the right of any party to exercise or oppose any of the rights and
remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent
jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition
to, any of those items does not waive the right of any party to a reference pursuant to this
reference provision as provided herein.

          12.4 The referee shall be a retired judge or justice selected by mutual written agreement of
the parties. If the parties do not agree within ten (10) days of a written request to do so by any
party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the
Court (or his or her representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would result if ex parte
relief is not granted. Pursuant to CCP § 170.6, each party shall have one peremptory challenge to
the referee selected by the Presiding Judge of the Court (or his or her representative).

          12.5 The parties agree that time is of the essence in conducting the reference proceedings.
Accordingly, the referee shall be requested, subject to change in the time periods specified herein
for good cause shown, to (i) set the matter for a status and trial-setting conference within
fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues
of law or fact within one hundred twenty (120) days after the date of the conference and (iii)
report a statement of decision within twenty (20) days after the matter has been submitted for
decision.

          12.6 The referee will have power to expand or limit the amount and duration of discovery. The
referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s
failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based
upon good cause shown, no party shall be entitled to “priority” in conducting discovery,
depositions may be taken by either party upon seven (7) days written notice, and all other
discovery shall be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.

          12.7 Except as expressly set forth herein, the referee shall determine the manner in which the
reference proceeding is conducted including the time and place of hearings, the order of
presentation of evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee, except for trial,
shall be conducted without a court reporter, except that when any party so requests, a court
reporter will be used at any hearing conducted before the referee, and the referee will be provided
a courtesy copy of the transcript. The party making such a request shall have the obligation to
arrange for and pay the court reporter. Subject to the referee’s power to award costs to the
prevailing party, the parties will

16.

 

equally share the cost of the referee and the court reporter at trial.

          12.8 The referee shall be required to determine all issues in accordance with existing case
law and the statutory laws of the State of California. The rules of evidence applicable to
proceedings at law in the State of California will be applicable to the reference proceeding. The
referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that
will be binding on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary adjudication. The
referee shall issue a decision at the close of the reference proceeding which disposes of all
claims of the parties that are the subject of the reference. Pursuant to CCP § 644, such decision
shall be entered by the Court as a judgment or an order in the same manner as if the action had
been tried by the Court and any such decision will be final, binding and conclusive. The parties
reserve the right to appeal from the final judgment or order or from any appealable decision or
order entered by the referee. The parties reserve the right to findings of fact, conclusions of
laws, a written statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding under this provision.

          12.9 If the enabling legislation which provides for appointment of a referee is repealed (and
no successor statute is enacted), any dispute between the parties that would otherwise be
determined by reference procedure will be resolved and determined by arbitration. The arbitration
will be conducted by a retired judge or justice, in accordance with the California Arbitration Act
§1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.

          12.10 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED
UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY
KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE
PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR
IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER COMERICA DOCUMENTS.

     13. GENERAL PROVISIONS.

          13.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the
respective successors and permitted assigns of each of the parties and shall bind all persons who
become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any
rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent
may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the
consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank’s obligations, rights and benefits hereunder.

          13.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities
claimed or asserted by any other party in connection with the transactions contemplated by this
Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank, its
officers, employees and agents as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise
(including without limitation reasonable attorneys fees and expenses), except for losses caused by
Bank’s gross negligence or willful misconduct.

          13.3 Time of Essence. Time is of the essence for the performance of all obligations set forth
in this Agreement.

          13.4 Severability of Provisions. Each provision of this Agreement shall be severable from
every other provision of this Agreement for the purpose of determining the legal enforceability of
any specific provision.

17.

 

          13.5 Amendments in Writing, Integration. All amendments to or terminations of this Agreement
or the other Loan Documents must be in writing. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with respect to the
subject matter of this Agreement and the other Loan Documents, if any, are merged into this
Agreement and the Loan Documents.

          13.6 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall constitute but one and the
same Agreement.

          13.7 Survival. All covenants, representations and warranties made in this Agreement shall
continue in full force and effect so long as any Obligations remain outstanding or Bank has any
obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described in Section 13.2
shall survive until all applicable statute of limitations periods with respect to actions that may
be brought against Bank have run.

          13.8 Confidentiality. In handling any confidential information, Bank and all employees and
agents of Bank shall exercise the same degree of care that Bank exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any non-public
information thereby received or received pursuant to this Agreement except that disclosure of such
information may be made (i) to the subsidiaries or Affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective transferees or
purchasers of any interest in the Loans, provided that they have entered into a comparable
confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may
be required in connection with the examination, audit or similar investigation of Bank and (v) as
Bank may determine in connection with the enforcement of any remedies hereunder. Confidential
information hereunder shall not include information that either: (a) is in the public domain or in
the knowledge or possession of Bank when disclosed to Bank, or becomes part of the public domain
after disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a third party,
provided Bank does not have actual knowledge that such third party is prohibited from disclosing
such information.

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

	 	 	 	 	 	 	 
	 	 	ZONARE MEDICAL SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Kevin Davidge	 	 
	 

	 	 	 	 	 	 
	 
	 

	 	Title:	 	V.P. Finance 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	COMERICA BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ [Illegible]	 	 
	 

	 	 	 	 	 	 
	 
	 

	 	Title:	 	VP 	 	 
	 

	 	 	 	 	 	 

18.

 

EXHIBIT A

DEFINITIONS

“Accounts” means all presently existing and hereafter arising accounts, contract rights, payment
intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease
of goods (including, without limitation, the licensing of software and other technology) or the
rendering of services by Borrower and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books
relating to any of the foregoing.

“Advance” or “Advances” means a cash advance or cash advances under the Revolving Line.

“Affiliate” means, with respect to any Person, any Person that owns or controls directly or
indirectly such Person, any Person that controls or is controlled by or is under common control
with such Person, and each of such Person’s senior executive officers, directors, and partners.

“Bank Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and
expenses, whether generated in-house or by outside counsel) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable
Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses (whether generated
in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an Insolvency
Proceeding, whether or not suit is brought.

“Borrower State” means Delaware, the state under whose laws Borrower is organized.

“Borrower’s Books” means all of Borrower’s books and records including: ledgers; records
concerning Borrower’s assets or liabilities, the Collateral, business operations or financial
condition; and all computer programs, or tape files, and the equipment, containing such
information.

“Borrowing Base” means an amount equal to 85% of Eligible Accounts, as determined by Bank with
reference to the most recent Borrowing Base Certificate delivered by Borrower plus an amount equal
to 95% of the amount of any letters of credit issued on behalf of Borrower by a domestic bank or
other financial institution reasonably acceptable to Bank and provided that Bank maintains a
perfected first priority security interest in such letters of credit.

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the
State of California or the State of Washington are authorized or required to close.

“Cash” means unrestricted cash and cash equivalents.

“Change in Control” shall mean a transaction in which any “person” or “group” (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of a sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the Board of Directors of Borrower, who did not have such power
before such transaction.

“Chief Executive Office State” means California, where Borrower’s chief executive office is
located.

“Closing Date” means the date of this Agreement.

“Code” means the California Uniform Commercial Code as amended or supplemented from time to time.

“Collateral” means the property described on Exhibit B attached hereto.

1.

 

“Collateral State” means the state or states where the Collateral is located, which is California.

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend,
letter of credit or other obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any
obligations with respect to undrawn letters of credit, corporate credit cards or merchant services
issued for the account of that Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement,
or other agreement or arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the guarantee or other
support arrangement.

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations
and like protections in each work or authorship and derivative work thereof, whether published or
unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing,
created, acquired or held.

“Credit Extension” means each Advance, Term Advance, or any other extension of credit by Bank
to or for the benefit of Borrower hereunder.

“Eligible Accounts” means those Accounts that arise in the ordinary course of Borrower’s business
that comply with all of Borrower’s representations and warranties to Bank set forth in Section 5.3;
provided, that Bank may change the standards of eligibility based on the results of a Collateral
audit or otherwise in its good faith business discretion by giving Borrower 30 days prior written
notice. Unless otherwise agreed to by Bank, Eligible Accounts shall not include the following:

(a) Accounts that the account debtor has failed to pay in full within 90 days of invoice date;

(b) Credit balances over 90 days;

(c) Accounts with respect to an account debtor, 25% of whose Accounts the account debtor has failed
to pay within 90 days of invoice date;

(d) Accounts with respect to an account debtor, including Subsidiaries and Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, to the extent such obligations exceed the
aforementioned percentage, except as approved in writing by Bank;

(e) Accounts with respect to which the account debtor does not have its principal place of business
in the United States, except for Eligible Foreign Accounts;

(f) Accounts with respect to which the account debtor is the United States or any department,
agency, or instrumentality of the United States;

(g) Accounts with respect to which Borrower is liable to the account debtor for goods sold or
services rendered by the account debtor to Borrower, but only to the extent of any amounts owing to
the account debtor against amounts owed to Borrower;

(h) Accounts with respect to which goods are placed on consignment, guaranteed sale, sale or
return, sale on approval, bill and hold, demo or promotional, or other terms by reason of which the
payment by the account debtor may be conditional;

2.

 

(i) Accounts with respect to which the account debtor is an officer, employee, agent or Affiliate
of Borrower;

(j) Accounts that have not yet been billed to the account debtor or that relate to deposits (such
as good faith deposits) or other property of the account debtor held by Borrower for the
performance of services or delivery of goods which Borrower has not yet performed or delivered;

(k) Accounts with respect to which the account debtor disputes liability or makes any claim with
respect thereto as to which Bank believes, in its sole discretion, that there may be a basis for
dispute (but only to the extent of the amount subject to such dispute or claim), or is subject to
any Insolvency Proceeding, or becomes insolvent, or goes out of business;

(l) Accounts the collection of which Bank reasonably determines after inquiry and consultation with
Borrower to be doubtful; and

(m) Retentions and hold-backs.

“Eligible Foreign Accounts” means Accounts with respect to which the account debtor does not have
its principal place of business in the United States and that are (i) domestically billed accounts
invoiced in North America with respect to which the account debtor is Fuji Photo Film, a division
of FujiFilm Holdings Corp., (ii) supported by one or more letters of credit in an amount and of a
tenor, and issued by a financial institution, acceptable to Bank, (iii) insured by the Export
Import Bank of the United States, (iv) generated by an account debtor with its principal place of
business in Canada, provided that the Bank has perfected its security interest in the appropriate
Canadian province, or (v) approved by Bank on a case-by-case basis. All Eligible Foreign Accounts
must be calculated in U.S. Dollars.

“Environmental Laws” means all laws, rules, regulations, orders and the like issued by any
federal state, local foreign or other governmental or quasi-governmental authority or any agency
pertaining to the environment or to any hazardous materials or wastes, toxic substances, flammable,
explosive or radioactive materials, asbestos or other similar materials.

“Equipment” means all present and future machinery, equipment, tenant improvements, furniture,
fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereunder.

“Event of Default” has the meaning assigned in Article 8.

“GAAP” means generally accepted accounting principles, consistently applied, as in effect from
time to time.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of
property or services, including without limitation reimbursement and other obligations with respect
to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations.

“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any
provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency law, including assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Intellectual Property” means all of Borrower’s right, title, and interest in and to the following:

(n) Copyrights, Trademarks and Patents;

(o) Any and all trade secrets, and any and all intellectual property rights in computer software
and computer

3.

 

software products now or hereafter existing, created, acquired or held;

(p) Any and all design rights which may be available to Borrower now or hereafter existing,
created, acquired or held;

(q) Any and all claims for damages by way of past, present and future infringement of any of the
rights included above, with the right, but not the obligation, to sue for and collect such damages
for said use or infringement of the intellectual property rights identified above;

(r) All licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all
license fees and royalties arising from such use to the extent permitted by such license or rights;

(s) All amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents; and

(t) All proceeds and products of the foregoing, including without limitation all payments under
insurance or any indemnity or warranty payable in respect of any of the foregoing.

“Inventory” means all present and future inventory in which Borrower has any interest.

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

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

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

“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and
any other document, instrument or agreement entered into in connection with this Agreement, all as
amended or extended from time to time.

“Material Adverse Effect” means a material adverse effect on (i) the business operations or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a whole, (ii) the
ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan
Documents, or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security
interest in the Collateral.

“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is
a beneficiary, drafts, instruments (including promissory notes), securities, documents of title,
and chattel paper, and Borrower’s Books relating to any of the foregoing.

“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by
Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or
to become due, now existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.

“Patents” means all patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of
the same.

“Periodic Payments” means all installments or similar recurring payments that Borrower may now or
hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument,
or agreement now or hereafter in existence between Borrower and Bank.

“Permitted Indebtedness” means:

(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan
Document;

4.

 

(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;

(c) Indebtedness not to exceed $250,000 in the aggregate at any time outstanding of Borrower
secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such
Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed
with such Indebtedness;

(d) Subordinated Debt;

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

(f) Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the
principal amount is not increased or the terms modified to impose more burdensome terms upon
Borrower or its Subsidiary, as the case may be.

“Permitted Investment” means:

(a) Investments existing on the Closing Date disclosed in the Schedule;

(b) (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of
America or any agency or any State thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and
currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (iii) Bank’s certificates of deposit maturing no more than one year from the
date of investment therein, and (iv) Bank’s money market accounts;

(c) Repurchases of stock from former employees or directors of Borrower under the terms of
applicable repurchase agreements (i) in an aggregate amount not to exceed $100,000 in any fiscal
year, provided that no Event of Default has occurred, is continuing or would exist after giving
effect to the repurchases, or (ii) in any amount where the consideration for the repurchase is the
cancellation of indebtedness owed by such former employees to Borrower regardless of whether an
Event of Default exists;

(d) Investments accepted in connection with Permitted Transfers;

(e) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower
in Subsidiaries not to exceed $250,000 in the aggregate in any fiscal year;

(f) Investments not to exceed $250,000 in the aggregate in any fiscal year consisting of (i) travel
advances and employee relocation loans and other employee loans and advances in the ordinary course
of business, and (ii) loans to employees, officers or directors relating to the purchase of equity
securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements
approved by Borrower’s Board of Directors;

(g) Investments (including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;

(h) Investments consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business,
provided that this subparagraph (h) shall not apply to Investments of Borrower in any Subsidiary;
and

(i) Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting
of the non-exclusive licensing of technology, the development of technology or the providing of
technical support, provided that any cash Investments by Borrower do not exceed $100,000 in the
aggregate in any fiscal year.

“Permitted Liens” means the following:

(a) Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be
satisfied with

5.

 

the proceeds of the Advances) or arising under this Agreement or the other Loan Documents;

(b) Liens for taxes, fees, assessments or other governmental charges or levies, either not
delinquent or being contested in good faith by appropriate proceedings and for which Borrower
maintains adequate reserves, provided the same have no priority over any of Bank’s security
interests;

(c) Liens not to exceed $250,000 in the aggregate at any one time (i) upon or in any Equipment
acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such
Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of
such Equipment, or (ii) existing on such Equipment at the time of its acquisition, provided that
the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds
of such Equipment;

(d) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described in clauses (a) through (e)c) above, provided that any
extension, renewal or replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not
increase;

(e) Liens of materialmen, warehousemen, carrier, artisans or other similar Liens arising in the
ordinary course of Borrower’s business or by operation of law, which are not past due or which are
being contested in good faith by appropriate proceedings and for which reserves have been
established in accordance with GAAP;

(f) Leases and subleases and licenses and sublicenses granted to others which do not interfere in
any material respects with the business of Borrower and its Subsidiaries taken as a whole;

(g) Deposits in the ordinary course of business under worker’s compensation, unemployment
insurance, social security and other similar laws, or to secure performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or
other similar bonds for the performance of bids, tenders or contracts (other than for the repayment
of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or
environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other
similar bonds; and

(h) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event
of Default under Sections 8.4 (attachment) or 8.8 (judgments).

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or any
Subsidiary of:

(a) Inventory in the ordinary course of business;

(b) licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries
in the ordinary course of business;

(c) worn-out or obsolete Equipment; or

(d) other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $100,000
during any fiscal year.

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

“Prime Rate” means the variable rate of interest, per annum, most recently announced by Bank, as
its “prime rate,” whether or not such announced rate is the lowest rate available from Bank.

“Responsible Officer” means each of the Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer and the Controller of Borrower.

6.

 

“Revolving Line” means a Credit Extension of up to $5,000,000.

“Revolving Maturity Date” means 36 months from the Closing Date.

“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.

“SOS Reports” means the official reports from the Secretaries of State of each Collateral State,
Chief Executive Office State and the Borrower State and other applicable federal, state or local
government offices identifying all current security interests filed in the Collateral and Liens of
record as of the date of such report.

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt
owing by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by
Borrower and Bank).

“Subsidiary” means any corporation, partnership or limited liability company or joint venture in
which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability
company interest or joint venture of which by the terms thereof ordinary voting power to elect the
Board of Directors, managers or trustees of the entity, at the time as of which any determination
is being made, is owned by Borrower, either directly or through an Affiliate.

“Term Advance” means a cash advance or cash advances under the Term Line in accordance with Section
2.1(c).

“Term Line” means a Credit Extension of up to $5,000,000.

“Term Maturity Date” means 48 months from the Closing Date.

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to
register and registrations of the same and like protections, and the entire goodwill of the
business of Borrower connected with and symbolized by such trademarks.

7.

 

	 	 	 
	DEBTOR:

	 	ZONARE MEDICAL SYSTEMS, INC.
	 
	 	 
	SECURED PARTY:

	 	COMERICA BANK

EXHIBIT B

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

     All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) of every
kind, whether presently existing or hereafter created or acquired, and wherever located, including
but not limited to: (a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents (including
negotiable documents), equipment (including all accessions and additions thereto), general
intangibles (including payment intangibles and software), goods (including fixtures), instruments
(including promissory notes), inventory (including all goods held for sale or lease or to be
furnished under a contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit rights, money, and
all of Debtor’s books and records with respect to any of the foregoing, and the computers and
equipment containing said books and records; and (b) any and all cash proceeds and/or noncash
proceeds thereof, including, without limitation, insurance proceeds, and all supporting obligations
and the security therefor or for any right to payment. All terms above have the meanings given to
them in the California Uniform Commercial Code, as amended or supplemented from time to time.

     Notwithstanding the foregoing, the Collateral shall not include (i) the capital stock of a
controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all
classes of capital stock of such controlled foreign corporations entitled to vote and directly or
indirectly owned by Borrower or by one of Borrower’s US Subsidiaries, or (ii) any copyrights,
patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or
any claims for damages by way of any past, present and future infringement of any of the foregoing
(collectively, the “Intellectual Property”); provided, however, that the Collateral shall include
all accounts and general intangibles that consist of rights to payment from the sale, licensing or
disposition of all or any part of, or rights in, the Intellectual Property (the “Rights to
Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy
Court) holds that a security interest in the underlying Intellectual Property is necessary to have
a security interest in the Rights to Payment, then the Collateral shall automatically, and
effective as of May 15, 2007, include the Intellectual Property to the extent necessary to permit
perfection of Bank’s security interest in the Rights to Payment.

1.

 

EXHIBIT C

TECHNOLOGY & LIFE SCIENCES DIVISION

LOAN ANALYSIS

PAYMENT/ADVANCE FORM

DEADLINE FOR PROCESSING IS 1:00* P.M., Pacific Time

	 	 	 	 	 
	TO: Loan Analysis

	 	DATE:
	 	TIME:
	FAX #: (650) 846-6840
	 	 	 	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	FROM:

	 	ZONARE MEDICAL SYSTEMS, INC.
	 	 	TELEPHONE REQUEST (For Bank Use Only):	 
	 	 
	 	 	 	 	 	 
	 	 

	 	Borrower’s Name	 	 	 	 
	 	

FROM:

	 	 	 	 	The following person is authorized to request the loan payment transfer/loan advance on
the designated account and is known to me.	 
	 	 

	 	Authorized Signer’s Name	 	 	 	 
	 	FROM:
	 	 	 	 	 	 
	 	 

	 	Authorized Signature (Borrower)
	 	 	     Authorized Request & Phone #	 
	 	PHONE #:
	 	 	 	 	 	 
	 	 

	 	 	 	 	     Received by (Bank) & Phone #	 
	 	FROM ACCOUNT#:
	 	 	 	 	 	 
	 	(please include Note number, if applicable)	 	 	 	 
	 	TO ACCOUNT #:

	 	 	 	 	     Authorized Signature (Bank)	 
	 	(please include Note number, if applicable)	 	 	 	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	REQUESTED TRANSACTION TYPE	 	REQUESTED DOLLAR AMOUNT	 	 	For Bank Use Only
	 
	 	 
	 	 	 	 	 	 	 	 
	 	PRINCIPAL INCREASE* (ADVANCE)

	 	 $
	 	 	Date Rec’d:	 	 	 
	 	PRINCIPAL PAYMENT (ONLY)

	 	 $
	 	 	Time:	 	 	 
	 	 

	 	 	 	 	Comp. Status:
	 	YES       NO	 
	 	OTHER INSTRUCTIONS:

	 	 	 	 	Status Date:	 	 	 
	 	 

	 	 	 	 	Time:	 	 	 
	 	 

	 	 	 	 	Approval:	 	 	 
	 	 	 	 	 	 

All representations and warranties of Borrower stated in the Loan Agreement are true, correct and complete in all material respects as of the date of the telephone
request for and advance confirmed by this Payment/Advance Form; provided, however, that those representations and warranties the date expressly referring to another
date shall be true, correct and complete in all material respects as of such date.

*   IS THERE A WIRE REQUEST TIED TO THIS LOAN ADVANCE? (PLEASE CIRCLE ONE)
           YES
     
      NO

If YES, the Outgoing Wire Transfer Instructions must be completed below.

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	OUTGOING WIRE TRANSFER INSTRUCTIONS	Fed Reference Number	          Bank Transfer Number	 
	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	The items marked with an asterisk (*) are required to be completed.
	 
	 	 	 	 	 	 
	 	*Beneficiary Name
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	*Beneficiary Account Number
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	*Beneficiary Address
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	Currency Type

	 	 	 	 	US DOLLARS ONLY	 	 	 
	 	 	 	 	 	 
	 	*ABA Routing Number (9 Digits)
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	*Receiving Institution Name
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	*Receiving Institution Address
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	*Wire Account

	 	 	 $	 	 	 	 	 
	 	 	 	 	 	 

2.

 

EXHIBIT D

BORROWING BASE CERTIFICATE

      

			
	 	 	 
	Borrower: ZONARE MEDICAL SYSTEMS, INC.
	 	Lender: Comerica Bank
	 
	Commitment Amount: $5,000,000	 	 

      

	 	 	 	 	 	 	 	 	 
	ACCOUNTS RECEIVABLE
	 	 	 	 	 	 	 	 
	1.        Accounts Receivable Book Value as of ___
	 	 	 	 	 	$	                    	 
	2.        Additions (please explain on reverse)
	 	 	 	 	 	$	                    	 
	3.        TOTAL ACCOUNTS RECEIVABLE
	 	 	 	 	 	$	                    	 
	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
	 	 	 	 	 	 	 	 
	4.        Amounts over 90 days due
	 	$	                    	 	 	 	 	 
	5.        Balance of 25% over 90 day accounts
	 	$	                    	 	 	 	 	 
	6.        Concentration Limits
	 	$	                    	 	 	 	 	 
	7.        Foreign Accounts
	 	$	                    	 	 	 	 	 
	8.        Governmental Accounts
	 	$	                    	 	 	 	 	 
	9.        Contra Accounts
	 	$	                    	 	 	 	 	 
	10.      Demo Accounts
	 	$	                    	 	 	 	 	 
	11.      Intercompany/Employee Accounts
	 	$	                    	 	 	 	 	 
	12.      Other (please explain on reverse)
	 	$	                    	 	 	 	 	 
	13.      TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	 	 	 	 	 	$	                    	 
	14.      Eligible Accounts (#3 minus #13)
	 	 	 	 	 	$	                    	 
	15.      LOAN VALUE OF ACCOUNTS (85% of #14 plus 95% of Letters of Credit* )
	 	 	 	 	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	BALANCES
	 	 	 	 	 	 	 	 
	16.      Maximum Loan Amount
	 	 	 	 	 	$	5,000,000	 
	17.      Total Funds Available [Lesser of #16 or #15]
	 	 	 	 	 	$	                    	 
	18.      Present balance owing on Line of Credit
	 	 	 	 	 	$	                    	 
	19.      RESERVE POSITION (#17 minus #18)
	 	 	 	 	 	$	                    	 

*   “Letters of Credit” shall mean the amount of any letters of credit issued on behalf of Borrower by
a domestic bank or other financial institution acceptable to Bank and in which Bank maintains a
perfected first priority security interest,

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

ZONARE MEDICAL SYSTEMS, INC.

By:

Authorized Signer

1.

 

EXHIBIT E

COMPLIANCE CERTIFICATE

	 	 	 
	TO:

	 	COMERICA BANK
	 
	 	 
	FROM:

	 	ZONARE MEDICAL SYSTEMS, INC.

          The undersigned authorized officer of ZONARE MEDICAL SYSTEMS, INC. hereby certifies that in
accordance with the terms and conditions of the Loan and Security Agreement between Borrower and
Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending
                     with all required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct as of the date hereof.
Attached herewith are the required documents supporting the above certification. The undersigned
further certifies that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next except as explained in
an accompanying letter or footnotes.

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

	 	 	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies     
	Monthly financial statements

	 	Monthly within 30 days
	 	Yes      
	 	No
	Annual (CPA Audited)

	 	FYE within 120 days*
	 	Yes      
	 	No
	10K and 10Q

	 	(as applicable)
	 	Yes      
	 	No
	A/R & A/P Agings, Borrowing Base Cert.

	 	Monthly within 30 days
	 	Yes      
	 	No
	Operating & annual budgets, forecasts

	 	30 days prior to FYE
	 	Yes      
	 	No
	A/R Audit

	 	Initial and Semi-Annual
	 	Yes      
	 	No
	Total amount of Borrower’s cash and investments

	 	Amount: $___
	 	Yes      
	 	No
	Total amount of Borrower’s cash and investments
maintained with Bank

	 	Amount: $___
	 	Yes      
	 	No

*   drafts on or before 4/30/07 for FYE 12/31/05 and 12/31/06; final audited statements on or before 6/30/07 for FYE

12/31/05 and 12/31/06.

	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	Actual	 	Complies    
	Minimum Quarterly Billed Sales

	 	See Section 6.7 of
Agreement
	 	$___
	 	Yes      
	 	No
	Liquidity Ratio**

	 	1.25:1.00
	 	___: 1.00
	 	Yes      
	 	No

**  “Liquidity Ratio” means the ratio of (i) the sum of unrestricted cash and cash equivalents plus all foreign and
domestic accounts receivable invoiced in North America to (ii) all Indebtedness owing by Borrower to Bank.

Comments Regarding Exceptions: See Attached.

Sincerely,

      

SIGNATURE

      

TITLE

      

BANK USE ONLY

	 	 	 
	Received by:
	 	 
	 

	 	 
	 

	 	AUTHORIZED SIGNER
	 
	 	 
	Date:
	 	 
	 

	 	 
	 
	 	 
	Verified:
	 	 
	 

	 	 
	 
	 	 
	 

	 	AUTHORIZED SIGNER
	Date:
	 	 
	 

	 	 
	 
	 	 
	Compliance Status                 Yes       No

1.

 

DATE

2.

 

LIBOR

Addendum To Loan and Security Agreement

     This LIBOR Addendum to Loan and Security Agreement (this “Addendum”) is entered into as of
this 15th day of May, 2007 by and between Comerica Bank (“Bank”) and ZONARE
MEDICAL SYSTEMS, INC. (“Borrower”). This Addendum supplements the terms of the Loan Agreement (as
defined below).

	1. Definitions.

     a. Advance. As used herein, “Advance” means a borrowing requested by Borrower and made by Bank under the Loan Agreement, including a LIBOR Option Advance and/or a
Base Rate Option Advance.

     b. Business Day. As used herein, “Business Day” means any day except a Saturday,
Sunday or any other day designated as a holiday under Federal or California statute or regulation.

     c. LIBOR. As used herein, “LIBOR” means the rate per annum (rounded upward if necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the following formula;

	 	 	 	 
	LIBOR =

	 	Base LIBOR
	 

	 	 
	 

	 	100% — LIBOR Reserve Percentage

	 	(1)	 	“Base LIBOR” means the rate per annum determined by Bank at which
deposits for the relevant LIBOR Period would be offered to Bank in the
approximate amount of the relevant LIBOR Option Advance in the interbank LIBOR
market selected by Bank, upon request of Bank at 10:00 a.m. California time, on
the day that is the first day of such LIBOR Period.
	 
	 	(2)	 	“LIBOR Reserve Percentage” means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the applicable LIBOR Period.

     d. LIBOR Business Day. As used herein, “LIBOR Business Day” means a Business Day on which dealings in Dollar deposits may be carried out in the interbank LIBOR market.

     e. LIBOR Period. As used herein, “LIBOR Period” means, with respect to a LIBOR Option Advance:

	 	(1)	 	initially, the period commencing on, as the case may be, the
date the Advance is made or the date on which the Advance is converted to a
LIBOR Option Advance, and continuing for, in every case, a 1, 2, 3, 6, or 12
month period thereafter so long as the LIBOR Option is quoted for such period
in the applicable interbank LIBOR market, as such period is

1.

 

	 	 	 	-selected by Borrower in the notice of Advance as provided in the Loan
Agreement or in the notice of conversion as provided in this Addendum; and
	 
	 	(2)	 	thereafter, each period commencing on the last day of the
next preceding LIBOR Period applicable to such LIBOR Option Advance and
continuing for, in every case, a 1, 2, 3, 6, or 12 month period thereafter so
long as the LIBOR Option is quoted for such period in the applicable interbank
LIBOR market, as such period is selected by Borrower in the notice of
continuation as provided in this Addendum.

     f. Loan Agreement. As used herein, “Loan Agreement” means the Loan and Security Agreement, dated as of the date of this Addendum.

     g. Regulation D. As used herein, “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as amended or supplemented from time to time.

     h. Regulatory Development. As used herein, “Regulatory Development” means any or all of the
following: (i) any change in any law, regulation or interpretation thereof by any public authority
(whether or not having the force of law); (ii) the application of any existing law, regulation or
the interpretation thereof by any public authority (whether or not having the force of law); and
(iii) compliance by Bank with any request or directive (whether or not having the force of law) of
any public authority.

2. Interest Rate Options. Borrower shall have the following options regarding the interest rate to be paid by Borrower on Advances under the Loan Agreement:

     a. A rate equal to four and three quarters of one percent (4.75%) above Bank’s
LIBOR for each Term Advance (as defined in the Loan Agreement) and a rate equal to three and
three quarters of one percent (3.75%) above Bank’s LIBOR for each Advance (as defined in the
Loan Agreement) under the Revolving Line (as defined in the Loan Agreement) (collectively,
the “LIBOR Option”), which LIBOR Option shall be in effect during the relevant LIBOR
Period; or

     b. A rate equal to two percent (2.0%) above the “Prime Rate” as referenced in the
Loan Agreement for and quoted from time to time by Bank for each Term Advance (as defined
in the Loan Agreement) and a rate equal to one percent (1.00%) above the “Prime Rate” as
referenced in the Loan Agreement for and quoted from time to time by Bank for each Advance
(as defined in the Loan Agreement) under the Revolving Line (as defined in the Loan
Agreement), in each case as such rate may change from time to time
(collectively, the “Base Rate Option”).

3. LIBOR Option Advance. The minimum LIBOR Option Advance will not be less than
Five Hundred Thousand and 00/100 Dollars ($500,0000) for any LIBOR Option Advance.
Borrower shall not be permitted to have more than four (4) LIBOR Option Advances outstanding
at any time.

2.

 

4. Payment of Interest on LIBOR Option Advances. Interest on each LIBOR
Option Advance shall be payable pursuant to the terms of the Loan Agreement. Interest on such
LIBOR Option Advance shall be computed on the basis of a 360-day year and shall be assessed
for the actual number of days elapsed from the first day of the LIBOR Period applicable thereto
but not including the last day thereof.

5. Bank’s Records Re: LIBOR Option Advances. With respect to each LIBOR
Option Advance, Bank is hereby authorized to note the date, principal amount, interest rate and
LIBOR Period applicable thereto and any payments made thereon on Bank’s books and records
(either manually or by electronic entry) and/or on any schedule attached to the Loan Agreement,
which notations shall be prima facie evidence of the accuracy of the information noted.

6. Selection/Conversion of Interest Rate Options. At the time any Advance is
requested under the Loan Agreement and/or Borrower wishes to select the LIBOR Option for all
or a portion of the outstanding principal balance of the Loan Agreement, and at the end of each
LIBOR Period, Borrower shall give Bank notice specifying (a) the interest rate option selected
by Borrower; (b) the principal amount subject thereto; and (c) if the LIBOR Option is selected,
the length of the applicable LIBOR Period. Any such notice may be given by telephone so long
as, with respect to each LIBOR Option selected by Borrower, (i) Bank receives written
confirmation from Borrower not later than three (3) LIBOR Business Days after such telephone
notice is given; and (ii) such notice is given to Bank prior to 10:00 a.m., California time, on the
first day of the LIBOR Period. For each LIBOR Option requested hereunder, Bank will quote
the applicable fixed LIBOR Rate to Borrower at approximately 10:00 a.m., California time, on
the first day of the LIBOR Period. If Borrower does not immediately accept the rate quoted by
Bank, any subsequent acceptance by Borrower shall be subject to a redetermination of the rate by
Bank; provided, however, that if Borrower fails to accept any such quotation given, then the
quoted rate shall expire and Bank shall have no obligation to permit a LIBOR Option to be
selected on such day. If no specific designation of interest is made at the time any Advance is
requested under the Loan Agreement or at the end of any LIBOR Period, Borrower shall be
deemed to have selected the Base Rate Option for such Advance or the principal amount to
which such LIBOR Period applied. At any time the LIBOR Option is in effect, Borrower may,
at the end of the applicable LIBOR Period, convert to the Base Rate Option. At any time the
Base Rate Option is in effect, Borrower may convert to the LIBOR Option, and shall designate a
LIBOR Period.

7. Default Interest Rate. From and after the maturity date of the Loan Agreement, or
such earlier date as all principal owing hereunder becomes due and payable by acceleration or
otherwise, the outstanding principal balance of the Loan Agreement shall bear interest until paid
in full at an increased rate per annum as set forth in Section 2.3 of the Loan Agreement.

8. Prepayment. In the event that the LIBOR Option is the applicable interest rate for all
or any part of the outstanding principal balance of the Loan Agreement, and any payment or
prepayment of any such outstanding principal balance of the Loan Agreement shall occur on any
day other than the last day of the applicable LIBOR Period (whether voluntarily, by acceleration,
required payment, or otherwise), or if Borrower elects the LIBOR Option as the applicable
interest rate for all or any part of the outstanding principal balance of the Loan Agreement in
accordance with the terms and conditions hereof, and, subsequent to such election, but prior to

3.

 

the commencement of the applicable LIBOR Period, Borrower revokes such election for any reason
whatsoever, or if the applicable interest rate in respect of any outstanding principal balance of
the Loan Agreement hereunder shall be changed, for any reason whatsoever, from the LIBOR Option to
the Base Rate Option prior to the last day of the applicable LIBOR Period, or if Borrower shall
fail to make any payment of principal or interest hereunder at any time that the LIBOR Option is
the applicable interest rate hereunder in respect of such outstanding principal balance of the Loan
Agreement, Borrower shall reimburse Bank, on demand, for any resulting loss, cost or expense
incurred by Bank as a result thereof, including, without limitation, any such loss, cost or expense
incurred in obtaining, liquidating, employing or redeploying deposits from third parties. Such
amount payable by Borrower to Bank may include, without limitation, an amount equal to the excess,
if any, of (a) the amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, refunded or converted, for the period from the date of such prepayment or of such failure
to borrow, refund or convert, through the last day of the relevant LIBOR Period, at the applicable
rate of interest for such outstanding principal balance of the Loan Agreement, as provided under
this Loan Agreement, over (b) the amount of interest (as reasonably determined by Bank) which would
have accrued to Bank on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank LIBOR market. Calculation of any amounts payable to Bank under this
paragraph shall be made as though Bank shall have actually funded or committed to fund the relevant
outstanding principal balance of the Loan Agreement hereunder through the purchase of an underlying
deposit in an amount equal to the amount of such outstanding principal balance of the Loan
Agreement and having a maturity comparable to the relevant LIBOR Period; provided, however, that
Bank may fund the outstanding principal balance of the Loan Agreement hereunder in any manner it
deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation
of amounts payable under this paragraph. Upon the written request of Borrower, Bank shall deliver
to Borrower a certificate setting forth the basis for determining such losses, costs and expenses,
which certificate shall be conclusively presumed correct, absent manifest error. Any prepayment
hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount
so prepaid. Any outstanding principal balance of the Loan Agreement which is bearing interest at
such time at the Base Rate Option may be prepaid without penalty or premium. Partial prepayments
hereunder shall be applied to the installments hereunder in the inverse order of their maturities.

BY INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT: (A) THERE IS NO RIGHT TO PREPAY
ANY LIBOR OPTION ADVANCE, IN WHOLE OR IN PART, WITHOUT PAYING THE PREPAYMENT AMOUNT SET FORTH
HEREIN (“PREPAYMENT AMOUNT”), EXCEPT AS OTHERWISE REQUIRED UNDER APPLICABLE LAW; (B) BORROWER
SHALL BE LIABLE FOR PAYMENT OF THE PREPAYMENT AMOUNT IF BANK EXERCISES ITS RIGHT TO ACCELERATE
PAYMENT OF ANY LIBOR OPTION ADVANCE AS PART OR ALL OF THE OBLIGATIONS OWING UNDER THE LOAN
AGREEMENT, INCLUDING WITHOUT LIMITATION, ACCELERATION UNDER A DUE-ON-SALE PROVISION; (C) BORROWER
WAIVES ANY RIGHTS UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE OR ANY SUCCESSOR STATUTE; AND
(D) BANK HAS MADE EACH LIBOR OPTION ADVANCE PURSUANT TO THE LOAN AGREEMENT IN RELIANCE ON THESE
AGREEMENTS.

4.

 

	 
	/s/ KD

	 

	BORROWER’S INITIALS

9. Hold Harmless and Indemnification. Borrower agrees to indemnify Bank and to
hold Bank harmless from, and to reimburse Bank on demand for, all losses and expenses which
Bank sustains or incurs as a result of (i) any payment of a LIBOR Option Advance prior to the
last day of the applicable LIBOR Period for any reason, including, without limitation,
termination of the Loan Agreement, whether pursuant to this Addendum or the occurrence of an
Event of Default; (ii) any termination of a LIBOR Period prior to the date it would otherwise end
in accordance with this Addendum; or (iii) any failure by Borrower, for any reason, to borrow
any portion of a LIBOR Option Advance.

10. Funding Losses. The indemnification and hold harmless provisions set forth in this
Addendum shall include, without limitation, all losses and expenses arising from interest and
fees that Bank pays to lenders of funds it obtains in order to fund the loans to Borrower on the
basis of the LIBOR Option(s) and all losses incurred in liquidating or re-deploying deposits from
which such funds were obtained and loss of profit for the period after termination. A written
statement by Bank to Borrower of such losses and expenses shall be conclusive and binding,
absent manifest error, for all purposes. This obligation shall survive the termination of this
Addendum and the payment of the Loan Agreement.

11. Regulatory Developments Or Other Circumstances Relating To Illegality or Impracticality of LIBOR. If any Regulatory Development (as defined in
Section 1 (h) above) or other circumstances relating to the interbank Euro-dollar markets shall, at
any time, in Bank’s reasonable determination, make it unlawful or impractical for Bank to fund
or maintain, during any LIBOR Period, to determine or charge interest rates based upon LIBOR,
Bank shall give notice of such circumstances to Borrower and:

	 	(i)	 	In the case of a LIBOR Period in progress,
Borrower shall, if requested by Bank, promptly pay any interest which
had accrued prior to such request and the date of such request shall
be deemed to be the last day of the term of the LIBOR Period; and
	 
	 	(ii)	 	No LIBOR Period may be designated thereafter
until Bank determines that such would be practical.

12. Additional Costs. Borrower shall pay to Bank from time to time, upon Bank’s
request, such amounts as Bank determines are needed to compensate Bank for any costs it
incurred which are attributable to Bank having made or maintained a LIBOR Option Advance or
to Bank’s obligation to make a LIBOR Option Advance, or any reduction in any amount
receivable by Bank hereunder with respect to any LIBOR Option or such obligation (such
increases in costs and reductions in amounts receivable being herein called “Additional Costs”),
resulting from any Regulatory Developments, which (i) change the basis of taxation of any
amounts payable to Bank hereunder with respect to taxation of any amounts payable to Bank
hereunder with respect to any LIBOR Option Advance (other than taxes imposed on the overall
net income of Bank for any LIBOR Option Advance by the jurisdiction where Bank is
headquartered or the jurisdiction where Bank extends the LIBOR Option Advance; (ii) impose

5.

 

or modify any reserve, special deposit, or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, Bank (including any LIBOR
Option Advance or any deposits referred to in the definition of LIBOR); or (iii) impose any other
condition affecting this Addendum (or any of such extension of credit or liabilities). Bank shall
notify Borrower of any event occurring after the date hereof which entitles Bank to compensation
pursuant to this paragraph as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Determinations by Bank for purposes of this paragraph
shall be conclusive, provided that such determinations are made on a reasonable basis.

13. Legal Effect. Except as specifically modified hereby, all of the terms and conditions
of the Loan Agreement remain in full force and effect.

     In Witness Whereof, the parties have agreed to the foregoing as of the date first set forth above.

	 	 	 	 	 	 	 
	ZONARE MEDICAL SYSTEMS, INC.	 	COMERICA BANK
	 

	 	 	 	 	 	 
	By:

	 	/s/ Kevin Davidge
	 	By:
	 	/s/ [Illegible]
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	 
	Title:

	 	V.P. Finance
	 	Title:
	 	VP
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

6.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]