BUILD-TO-SUIT LEASE AGREEMENT

Exhibit 10.36

Execution Copy

BUILD-TO-SUIT LEASE AGREEMENT

BY AND BETWEEN

PEARLAND ECONOMIC DEVELOPMENT CORPORATION
(“LANDLORD”)

AND

CARDIOVASCULAR SYSTEMS, INC.
(“TENANT”)

TABLE OF CONTENTS

EXHIBITS :

EXHIBIT A — DEPICTION OF THE LAND
EXHIBIT B — ACCEPTANCE OF PREMISES MEMORANDUM
EXHIBIT C — TENANT’S ESTOPPEL CERTIFICATE
EXHIBIT D — IMPROVEMENTS
EXHIBIT E — INSURANCE REQUIREMENTS
EXHIBIT F — AMENDMENT TO LEASE AGREEMENT
EXHIBIT G — ARBITRATION PROCEDURES
EXHIBIT H — INTENTIONALLY DELETED
EXHIBIT I — DEPICTION OF FIRST EXPANSION OPTION LAND AND SECOND EXPANSION OPTION LAND
EXHIBIT J — BUILDING PLANS AND CONSTRUCTION DRAWINGS
EXHIBIT K—PERMITTED ENCUMBRANCES

BUILD-TO-SUIT LEASE AGREEMENT

     This Build-To-Suit Lease Agreement (this “Lease Agreement” ) is made and entered into as of the Effective Date (as defined on the signature page attached hereto) by and between the Pearland Economic Development Corporation, a corporation operating under Chapter 505 of the Texas Local Government Code, hereinafter referred to as “Landlord” , and Cardiovascular Systems, Inc., a Delaware corporation, hereinafter referred to as “Tenant” :

WITNESSETH:

SEC. 1 LEASED PREMISES In consideration of the mutual covenants as set forth herein, Landlord and Tenant hereby agree as follows:

     A. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, for the rental and on the terms and conditions hereinafter set forth, the following described property (collectively, the “Leased Premises” ): (i) the tract of land in Pearland, Texas (the “Land” ), more particularly depicted on Exhibit A attached hereto, together with any and all easements, rights and appurtenances appertaining to same, and (ii) that certain building (the “Building” ) to contain approximately forty-six thousand (46,000) square feet and to be constructed by Landlord on the Land in accordance with the terms of this Lease Agreement. For greater certainty, Landlord and Tenant hereby agree that the term “Leased Premises” shall include, but not be limited to, the Improvements (as defined in Exhibit D ).

     B. Landlord, at Landlord’s expense, will construct the Improvements in accordance with the terms and provisions of this Lease Agreement and Exhibit D attached hereto.

SEC. 2 TERM

     A. The term of this Lease Agreement (the “Term” ) shall commence on the date, subject to the terms of Exhibit D , Section 3 of this Lease Agreement, that is the later of (i) the date of Substantial Completion (as defined in Exhibit D ), or (ii) April 1, 2010 or such earlier date as Tenant may designate upon no less than one hundred five (105) days’ written notice to Landlord (such date being herein referred to as the “Commencement Date” ), and, unless sooner terminated or renewed and extended in accordance with the terms and conditions set forth herein, shall expire at 11:59 p.m. on the day preceding the tenth (10th) anniversary of the Rent Commencement Date (as defined in Schedule 1 ) (the “Expiration Date” ).

     B. Notwithstanding the terms of this Section 2 or anything to the contrary contained in this Lease Agreement, Landlord shall not be obligated to commence construction of the interior build-out portion of the Improvements (the “Build-out” ) until Landlord receives written notice (the “Build-out Notice” ) from Tenant to commence construction of the Build-out and that Tenant requests Substantial Completion to occur on a date on or prior to April 1, 2010, which notice shall be delivered during the period between the Effective Date and December 5, 2009. In the event Tenant does not deliver to Landlord the Build-out Notice on or before December 5, 2009, Landlord shall deliver written notice (the “Warning Notice” ) to Tenant of such failure. If Tenant does not deliver to Landlord the Build-out Notice within five (5) days after receipt of the Warning Notice, Landlord shall have the right to terminate this Lease Agreement, and as pursuant to terms that expressly survive the expiration or earlier termination of this Lease Agreement, the parties shall have not further rights or obligations hereunder. In the event Landlord terminates this Lease Agreement pursuant to the preceding sentence, Tenant shall, within five (5) business days after the date of such termination pay to Landlord as liquidated damages an amount equal to the sum of $69,000 and all amounts paid to Tenant by Landlord prior to such date pursuant to the terms of that certain Corporate Job Creation Agreement of even date herewith by and between Landlord and Tenant (the “Termination Fee”). Landlord and Tenant agree that because of the difficulty or impossibility of determining Landlord’s actual damages by way of loss of the costs of construction and financing, the costs of anticipated rent from the Leased Premises and the cost of re-bidding the Leased Premises to secure a new tenant, the difficulties of proof of loss and the inconvenience or nonfeasibility of Landlord otherwise having a remedy for such termination, the Termination Fee is a reasonable amount to be paid by Tenant for the failure to satisfy the conditions set forth in this Section 2. Further and without limiting the foregoing, Tenant hereby waives any right that it may have to challenge the amount of the Termination Fee or its appropriateness as an estimate of Landlord’s damages as a result of a termination of

this Lease Agreement. Landlord’s right to receive the Termination Fee shall be Landlord’s sole and exclusive remedy as a result of the termination of this Lease pursuant to this Section 2.B. but shall not limit Landlord’s remedies with respect to the other provisions which expressly survive termination of this Lease Agreement. The terms and provisions of this Section 2.B. shall survive the expiration or earlier termination of this Lease Agreement.

     C. This Lease Agreement shall be effective as of the Effective Date and in the event Tenant or its agents, employees or contractors enters the Leased Premises prior to the Commencement Date in accordance with the terms of Exhibit D , Section 4 of this Lease Agreement, such entry shall be subject to the terms and conditions of this Lease Agreement, except that the Rent (as hereinafter defined) shall not commence to accrue as a result of such entry until the Rent Commencement Date.

SEC. 3 USE: The Leased Premises shall be used and occupied by Tenant (and any of its permitted subtenants and assignees) solely for the engineering, design, storage, warehouse, manufacturing, assembly, distribution and sale of medical devices produced by Tenant or its affiliates and for all related and associated purposes. Tenant shall not use the Leased Premises for any other uses without Landlord’s prior written consent, which consent may be withheld in Landlord’s sole and absolute discretion. Notwithstanding anything contained in this Lease Agreement to the contrary, but subject to Landlord’s representations and warranties set forth in Section 9.C., Tenant will not use, occupy, or permit the use or occupancy of the Leased Premises for any purpose which is, directly or indirectly, forbidden by federal, state or local laws, rules, statutes, regulations, court order or decision, governmental directives, restrictive covenants, ordinances, or governmental or municipal regulations or orders ( “Laws” ) or which may be dangerous to life, limb or property, or permit the maintenance of any public or private nuisance.

SEC. 4 SECURITY DEPOSIT: $38,333.33 payable on the Effective Date. Upon the occurrence of any Event of Default (as hereinafter defined) by Tenant, Landlord may, from time to time, without prejudice to any other remedy, use the security deposit paid to Landlord by Tenant as herein provided to the extent necessary to make good any arrears of Rent (as hereinafter defined) and any other damage, injury, expense or liability caused to Landlord by such Event of Default. Following any such application of the security deposit, Tenant shall pay to Landlord on demand the amount so applied in order to restore the security deposit to the amount thereof existing prior to such application. Any remaining balance of the security deposit shall be returned by Landlord to Tenant within sixty (60) days after the termination of this Lease Agreement and after Tenant provides written notice to Landlord of Tenant’s forwarding address; provided, however, Landlord shall have the right to retain and expend such remaining balance (a) to reimburse Landlord for any and all rentals or other sums due hereunder that have not been paid in full by Tenant and/or (b) for cleaning and repairing the Leased Premises if Tenant shall fail to deliver same at the termination of this Lease Agreement in the condition required under this Lease Agreement. Tenant shall not be entitled to any interest on the security deposit. Such security deposit shall not be considered an advance payment of rental or a measure of Landlord’s damages in case of an Event of Default by Tenant. If Landlord assigns its interest in the Leased Premises during the Term hereof, Landlord may assign the security deposit to the assignee, and so long as such assignee assumes all of Landlord’s obligations under this Lease Agreement with respect to the security deposit thereafter Landlord shall have no further liability for the return of such security deposit, and Tenant agrees to look solely to the new Landlord for the return of such security deposit. The provisions of the preceding sentence shall apply to every transfer or assignment made of the security deposit to a new Landlord. Tenant agrees that it will not assign or encumber, or attempt to assign or encumber, the monies deposited hereunder as security, and that Landlord and its successors and assigns shall not be bound by any such actual or attempted assignment or encumbrance. Regardless of any assignment of this Lease Agreement by Tenant, Landlord may return the security deposit to the original Tenant, in the absence of evidence satisfactory to Landlord of an assignment of the right to receive such security deposit or any part of the balance thereof.

SEC. 5 BASE RENT:

     A. Tenant shall pay to Landlord in advance, without demand, deduction or set off, except as provided in Section 55 and Section 14 of this Lease Agreement, a sum (the “Base Rent” ) equal to the amounts for the corresponding intervals as indicated on Schedule 1 attached hereto.

     B. Installments of Base Rent shall be due monthly, in advance, on the first day of each calendar month following the Rent Commencement Date. Base Rent for the month in which the Rent Commencement Date

occurs shall be due and payable on the Rent Commencement Date and Base Rent for any partial month shall be prorated.

     C. In addition to the foregoing Base Rent and the Additional Rent (as hereinafter defined) to be paid by Tenant pursuant to Section 6 below, Tenant agrees to pay to Landlord as Additional Rent all other sums payable by Tenant to Landlord hereunder, within ten (10) days after Landlord renders a statement therefor to Tenant. All Rent (as hereinafter defined) shall bear interest from five (5) days after the date due until paid at the greater of (i) two percent (2%) above the “prime rate” per annum of the JPMorgan Chase Bank, a New York banking corporation or its successor or such other “money center” as Landlord and Tenant may agree from time to time (“Chase”) in effect on said due date (or if the “prime rate” be discontinued, the base reference rate then being used by Chase to define the rate of interest charged to commercial borrowers) or (ii) twelve percent (12%) per annum; provided, however, in no event shall the rate of interest hereunder exceed the maximum non-usurious rate of interest (hereinafter called the “Maximum Rate”) permitted by applicable Laws. In addition thereto, if Tenant has failed to pay Rent within five (5) days after the date when due, then, Tenant shall pay Landlord a “Late Charge” of one percent (1%) of the overdue amount. Notwithstanding the foregoing, with respect to Tenant’s first late payment of Rent in a consecutive twelve (12) month period, Tenant shall not be required to pay the Late Charge with respect to such late payment. Tenant agrees that the Late Charge is not a penalty, and will compensate Landlord for costs not contemplated under this Lease Agreement that are impracticable or extremely difficult to fix. Landlord’s acceptance of a Late Charge does not waive Tenant’s default.

SEC. 6 ADDITIONAL RENT:

     A. In addition to Base Rent, Tenant shall pay, as Additional Rent, the cost of the Commercial General Liability Insurance that Landlord is required to maintain under Exhibit E of this Lease Agreement relating to the Leased Premises and all charges for any services, goods or materials furnished by Landlord at Tenant’s written request which are not required to be furnished by Landlord under this Lease Agreement (“Additional Rent” and, together with Base Rent, “Rent”) . In the event Landlord maintains a blanket policy of Commercial General Liability Insurance, Landlord and Tenant agree that the costs therefor attributable to this Lease Agreement and to be characterized as Additional Rent hereunder shall be determined on a pro rata basis among the matters insured by such blanket policy. Notwithstanding the foregoing, during the periods in which the Pearland Economic Development Corporation is the Landlord hereunder, the term “Additional Rent” shall not include the cost of Landlord’s Commercial General Liability Insurance.

     B. Additional Rent under this Section 6 shall be payable by Tenant to Landlord in monthly installments equal to 1/12th of Landlord’s estimate of the annual Additional Rent. The initial monthly payments are based upon Landlord’s estimate of the Additional Rent for the year in question, and shall be increased or decreased annually to reflect the projected actual Additional Rent for that year. Within one hundred twenty (120) days after each calendar year or as soon thereafter as is reasonably practicable, Landlord shall deliver to Tenant a statement setting forth the actual Additional Rent for such year. If Tenant’s total payments in respect of Additional Rent for any year are less than the actual Additional Rent for that year, Tenant shall pay the difference to Landlord within ten (10) days after Landlord’s request therefor. If such payments made by Tenant are more than such actual Additional Rent for that year, Landlord shall, at Landlord’s option, either (i) credit such excess against Tenant’s next accruing Rent hereunder, or (ii) repay such excess to Tenant within thirty (30) days. There shall be no duplication of costs for reimbursements in calculating Additional Rent, and any excess retained by Landlord at the end of the Term shall be refunded to Tenant within thirty (30) days after the end of the Term. Upon request from Tenant, Landlord shall deliver to Tenant the invoice from Landlord’s insurance carrier documenting the cost of the Commercial General Liability Insurance.

     C. The first monthly installment (subject to proration, if any) of Additional Rent shall be due on the Rent Commencement Date; thereafter, monthly installments of such Additional Rent shall be due monthly, in advance, on the first day of each calendar month following the Rent Commencement Date. In connection with the first monthly installment of Additional Rent, Landlord shall provide to Tenant a written estimate of the Additional Rent that will be owed by Tenant, at least ten (10) days prior to the Rent Commencement Date.

     D. All payments and reimbursements required to be made by Tenant under this Lease Agreement shall constitute “Rent” (herein so called) and shall be payable without demand, deduction or set off, except as set forth in Section 55 and Section 14 of this Lease Agreement.

     E. Landlord and Tenant hereby each acknowledge and agree that they are knowledgeable and experienced in commercial transactions and further hereby acknowledge and agree that the provisions of this Lease Agreement for determining Additional Rent and other charges are commercially reasonable and valid even though such methods may not state precise mathematical formulae for determining such Additional Rent. ACCORDINGLY, TENANT HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ALL RIGHTS AND BENEFITS TO WHICH TENANT MAY BE ENTITLED UNDER SECTION 93.012 OF THE TEXAS PROPERTY CODE, AS SUCH SECTION NOW EXISTS OR AS SAME MAY BE HEREAFTER AMENDED OR SUCCEEDED. Notwithstanding the foregoing, nothing set forth in this Section 6.E. shall be deemed to waive Tenant’s right to confirm that the Additional Rent charged to Tenant pursuant to the terms of Section 6.A. was calculated in accordance with the terms of Section 6.A.

SEC. 7 TAXES:

     A. Prior to the Rent Commencement Date, Landlord shall pay and discharge of record any delinquent Taxes (as hereinafter defined) owing with respect to periods prior to the Rent Commencement Date. Tenant shall pay, at least thirty (30) days prior to delinquency, all taxes and assessments and other governmental charges (whether federal, state, county or municipal and whether they be by taxing districts or authorities presently taxing the Leased Premises or by others subsequently created or otherwise) and any other taxes and improvement assessments due and payable for the Leased Premises (excluding, however, the costs of any assessments (i) levied of pending as of the Effective Date and (ii) levied after the Effective Date that were factored into the determination of the amount of Base Rent payable under this Lease Agreement, so as to prevent Tenant from paying the costs of such assessments as Base Rent and also paying such costs as Additional Rent), or its operation or the revenues or rents received therefrom (whether directly or indirectly through the use of a franchise, margin or other similar tax and whether or not such taxes allow for the deduction of expenses in calculating the base amount on which the tax is levied) but excluding, however, federal and state taxes on income sales, transfer, estate or other similar tax in lieu of income, transfer or estate taxes (collectively, “ Taxes ”); provided, however, that if at any time during the Term, new taxes, assessments, levies, impositions or charges are imposed in lieu of amounts previously charged, or the present method of taxation or assessment shall be so changed that the whole or any part of the taxes, assessments, levies, impositions or charges now levied, assessed or imposed on real estate and the improvements thereof shall be discontinued and as a substitute therefor, or in lieu of an increase to the tax rate thereof, taxes, assessments, levies, impositions or charges shall be levied, assessed and/or imposed wholly or partially as a capital levy or otherwise on the rents received from the Leased Premises or the rents reserved herein or any part thereof (whether directly or indirectly through the use of a franchise, margin or similar tax and whether or not such taxes allow for the deduction of expenses in calculating the base amount on which the tax is levied), then such substitute or additional taxes, assessments, levies, impositions or charges, to the extent so levied, assessed or imposed, shall be deemed to be included within the term “Taxes” to the extent that such substitute or additional tax would be payable if the Leased Premises were the only property of the Landlord subject to such tax. For greater certainty, Landlord and Tenant agree that the term “Taxes” will include all management district fees assessed against the Leased Premises. Notwithstanding the foregoing or anything to the contrary contained herein, in the event that after the Effective Date (i) new taxes, assessments, levies, impositions or charges are imposed on rents received from the Leased Premises or the rents reserved herein or any part thereof (whether directly or indirectly through the use of a franchise, margin or similar tax) and (ii) the Law levying such new tax, assessment, levy, imposition or charges requires Landlord, as a landlord under a lease agreement, to pay such new tax, assessment, levy, imposition or charge, then the term “Taxes” shall not include such new tax, assessment, levy, imposition or charge, and Landlord shall be responsible therefor.

     B. From and after the Rent Commencement Date through the remainder of the Term, Tenant shall pay, or cause to be paid, all such Taxes directly to the taxing authority or other payee therefor. Such payment shall be completed at least thirty (30) days prior to the date on which Taxes would become delinquent, subject to Section 7D. below. If any Taxes legally may be paid in installments prior to delinquency, whether or not interest shall accrue on the unpaid balance thereof, Tenant shall have the option to pay such Taxes in installments, and Tenant shall be obligated to pay only such installments or portions thereof as shall be properly allocated to periods within

the Term. Tenant shall furnish to Landlord, promptly upon receipt thereof, copies of all notices of Taxes. At least thirty (30) days prior to the applicable due date for Taxes, Tenant shall deliver to Landlord reasonable evidence of the payment thereof.

     C. Notwithstanding anything to the contrary herein, (a) all Taxes with respect to the fiscal year or tax year in which the Rent Commencement Date occurs shall be apportioned so that Tenant shall pay only the portion of the Taxes that is applicable to the period after the Rent Commencement Date and (b) all Taxes for the fiscal year or tax year in which the Expiration Date occurs shall be apportioned so that Tenant shall pay only the portion of such Taxes that are attributable to the period prior to the Expiration Date.

     D. Tenant’s Right to Contest Taxes.

     (i) Tenant shall have the right in its own name, and at its sole cost and expense, to contest the validity or amount, in whole or in part, of any Taxes, by appropriate proceedings timely instituted in accordance with any protest procedures permitted by applicable Governmental Authority (a “ Tax Proceeding ”); provided Tenant gives Landlord at least thirty (30) days prior notice of its intention to contest and diligently prosecute such contest by a Tax Proceeding and at all times effectively stays or prevents any non-judicial or judicial sale of any part of the Leased Premises or the leasehold state created by this Lease Agreement or any interest of Landlord in any of the foregoing, by reason of non-payment of any Taxes. Tenant shall diligently pursue all such Tax Proceedings in good faith. Further, Tenant shall, incident to any such Tax Proceeding, provide such bond or other security as may be required by the applicable Governmental Authority. Tenant shall indemnify, defend, and hold Landlord harmless from any and all such Taxes and all claims, costs, fees, and expense related to any such Taxes or Tax Proceeding, including any and all penalties and interest, and Tenant shall promptly pay any valid final adjudication enforcing any Taxes and shall cause any such final adjudication to be timely satisfied prior to any time period within which any non-judicial or judicial sale could occur to collect any such Taxes. As used herein, the term “Governmental Authority” means any federal, state, local or foreign governmental entity, authority or agency, court, tribunal, regulatory commission or other body, whether legislative, judicial or executive (or a combination or permutation thereof), including a local government corporation.

     (ii) Upon the entry of any determination, ruling or judgment in any Tax Proceedings, it shall be the obligation of Tenant to pay the amount of such Tax or part thereof, as is finally determined in such Tax Proceedings, the payment of which may have been deferred during the prosecution thereof, together with any claims, costs, fees, interest, penalties, charges or other liabilities in connection therewith. Nothing herein contained, however, shall be construed so as to allow such Tax to remain unpaid for such length of time as shall permit the Leased Premises or the leasehold estate created by this Lease Agreement, or any part thereof, to be sold or taken by any Governmental Authority for the non-payment of any Tax. Tenant shall promptly furnish Landlord with copies of all notices, filings and pleadings in all such Tax Proceedings. If Landlord chooses to participate in any such Tax Proceedings, then Landlord shall have the right, at its expense, to participate therein.

     (iii) Tenant at its expense may, if it shall so desire, endeavor at any time or times to obtain a reduction in assessed valuation of the Leased Premises for the purpose of reducing Taxes thereon. Tenant shall be authorized to collect any tax refund payable as a result of any proceeding Tenant may institute for any such reduction in assessed value and any such tax refund shall be the property of Tenant (unless the same was paid by Landlord and not reimbursed by Tenant).

     (iv) Tenant is obligated to notify each Governmental Authority imposing Taxes that all certificates, advices, bills or statements regarding Taxes should be sent directly to Tenant. Landlord hereby grants and gives permission to Tenant to render the Leased Premises from time to time during the Term.

     (v) Landlord shall not be required to join in any Tax Proceeding or other action or proceeding referred to in this Section 7D. unless required by Laws in order to make such action or proceeding effective, in which event any such action or proceeding may be taken by Tenant in the name of but without expense to Landlord, and TENANT HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD LANDLORD HARMLESS FROM ALL COSTS, FEES, EXPENSES, CLAIMS, LOSSES OR

DAMAGES BY REASON OF, RELATED TO OR IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING. To the extent such cooperation is required by applicable Governmental Authority for such Tax Proceeding, Landlord shall cooperate in any such Tax Proceeding as reasonably requested by Tenant, at Tenant’s sole cost and expense, whether or not Landlord is joined pursuant thereto, and Landlord agrees to take no action that would be materially adverse to Tenant in any such Tax Proceeding where Tenant seeks to reduce its obligation to pay Taxes.

     (vi) The certificate, advice, bill or statement issued or given by any Governmental Authority authorized by applicable Laws to issue the same or to receive payment of a Tax shall be prima facie evidence of the existence, non-payment or amount of such Tax.

     E. Notwithstanding anything to the contrary contained in this Lease and except as provided in Section 7D. above, in the event Tenant fails to pay any Tax payable by Tenant pursuant to the provisions of this Lease at least thirty (30) days before the date the same becomes delinquent and fails to deliver to Landlord reasonable evidence of such payment at least thirty (30) days before the date the same becomes delinquent, Landlord may, after giving Tenant ten (10) days’ notice of its intention to do so, pay or cause to be paid any such Tax which is delinquent and Tenant shall, within thirty (30) days following Landlord’s demand and notice, pay and reimburse Landlord therefor with interest thereon at the rate described in Section 5C from the date of payment by Landlord until repayment in full by Tenant.

SEC. 8 MAINTENANCE AND REPAIRS; UTILITIES:

     A. LANDLORD’S MAINTENANCE AND REPAIRS.

     (i) Landlord, at its sole cost and expense, without any reimbursement from Tenant except as set forth in Section 8.B. or elsewhere in this Lease Agreement, shall maintain the foundation, load bearing walls, roof, exterior surface of the outside walls (except window glass and signage) and other structural members of the Building (the “Structural Components” ) in good condition and repair and in compliance with all Laws, unless the damage is due to the negligence of Tenant or its agent.

     (ii) Except as specifically provided in this Section 8A. or elsewhere in this Lease Agreement, Landlord shall not be responsible for maintaining all or any other portion of the Leased Premises.

     B. TENANT’S REPAIR AND MAINTENANCE.

     (i) Tenant, at its own cost and expense, shall (i) maintain all parts of the Leased Premises (other than those for which Landlord is responsible pursuant to the terms and conditions of Section 8A. above) in good condition and repair, and (ii) promptly make all necessary repairs and replacements to the Leased Premises (other than those for which Landlord is responsible pursuant to the terms and conditions of Section 8A. above), including, but not limited to, windows, glass and plate glass, wiring, applicable, corridors, lobbies, elevator foyers, restrooms, parking areas and similar areas of the Leased Premises, Building sprinkler systems, exterior doors, any special office entry, interior walls and finish work, interior doors and floor covering, utility connections, heating and air conditioning systems, light bulbs, fire protection systems serving the Building, plumbing work and fixtures, termite and pest extermination, and any damage due to vandalism or malicious mischief, unless the damage is due to the negligence of the Landlord or its agent.

     (ii) Any and all security of any kind for Tenant, Tenant’s agents, employees or invitees, the Leased Premises, or any personal property thereon (including, without limitation, any personal property of any sublessee) shall be the sole responsibility and obligation of Tenant, and shall be provided by Tenant at Tenant’s sole cost and expense. Tenant acknowledges and agrees that Landlord shall have no obligation or liability whatsoever with respect to same. Landlord shall not be liable for any loss, cost, damage or other liability arising directly or indirectly from security measures or the absence thereof with respect to the Leased Premises unless caused by the negligence or willful misconduct of Landlord. Tenant may, at Tenant’s sole cost and expense, install alarm systems in the Leased Premises provided such installation

complies with the applicable terms of this Lease Agreement. Removal of such alarm systems shall be Tenant’s sole responsibility and, at Tenant’s sole cost and expense, shall be completed prior to lease termination and all affected areas of the Leased Premises shall be repaired and/or restored in a good and workmanlike manner to the condition that existed prior to such installation unless Landlord agrees that such system may remain.

     (iii) Tenant agrees, at its own cost and expense, to repair or replace any damage or injury done to the Leased Premises, or any part thereof, by Tenant or Tenant’s agents, employees, invitees, or visitors. Tenant further agrees not to commit or allow any waste or damage to be committed on any portion of the Leased Premises, and at the termination of this Lease, by lapse of time or otherwise, Tenant shall deliver up said Premises to Landlord in as good condition as at the Commencement Date, ordinary wear and tear excepted.

     C. It is hereby agreed by Landlord and Tenant that any repairs or replacements that are necessary as a result of any casualty or condemnation, then the sections of this Lease Agreement governing casualty and condemnation shall control the responsibility and obligations of Landlord and Tenant.

     D. Tenant shall maintain the hot water equipment, the heating, air condition, and ventilation equipment and system (the “HVAC System” ), the electrical system, the mechanical system and the plumbing system of the Leased Premises in good repair and condition and in accordance with applicable Laws and with such equipment manufacturers’ suggested operation/maintenance service program; such obligation shall include replacement of all equipment necessary to maintain such equipment and systems in good working order. Tenant shall enter into regularly scheduled preventive maintenance/service contracts for such equipment and systems, each in compliance with Landlord’s reasonable specifications and otherwise in form and substance and with a contractor reasonably acceptable to Landlord, and deliver copies thereof to Landlord. Notwithstanding the foregoing, if, throughout the Term, Tenant has maintained the HVAC System in a manner consistent with the manufacturer’s maintenance and repair standards therefor and the HVAC System needs to be replaced during the Term as determined by the contractor performing the preventive maintenance on such system as required herein and as verified by an independent HVAC contractor reasonably acceptable to Landlord and Tenant, then Landlord, at its sole cost and expense, shall purchase and install a replacement HVAC System consistent in capacity and quality to the HVAC System installed by Landlord as of the Commencement Date (the “Replacement HVAC System” ). Landlord shall amortize the cost of the Replacement HVAC System over a period directed by Generally Accepted Accounting Principles and Tenant shall reimburse Landlord as Additional Rent for the annual amortization of such cost until the earlier of the (i) expiration of the Term or (ii) expiration of such amortization period for the Replacement HVAC System.

     E. Tenant shall be responsible for all sanitation and pest control relating to the Leased Premises.

     F. Landlord shall be responsible for any sewer availability charges or water availability charges payable for Tenant’s use of the Leased Premises. Tenant shall obtain and pay for all water, gas, electricity, heat, telephone, sewer, and other utilities and services used at the Leased Premises, together with any sales or use taxes, penalties, surcharges, and the like pertaining to the Tenant’s use of the Leased Premises and shall indemnify, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties (as defined on Exhibit E ) from and against all costs (including attorneys’ fees and costs of suit), losses, liabilities, or causes of action arising out of or relating to the provision of such utilities to the Leased Premises. If Tenant fails to pay any such amounts when due (and such failure continues for ten (10) days after receipt of written notice from Landlord of such failure), Landlord may do so, in which case, Tenant shall reimburse Landlord for all amounts paid by Landlord plus ten percent (10%) of such costs within ten (10) days after Landlord’s request therefor. Landlord will have no responsibility or liability for the interruption or cessation of any utility, service or amenity to the Leased Premises, nor shall any such interruption or cessation entitle Tenant to any abatement of Rent or be deemed to constitute a constructive eviction of Tenant. For greater certainty, Landlord and Tenant agree that nothing in this Section 8.F. shall relieve Landlord of its obligations set forth in Section 8.A. of this Lease Agreement.

SEC. 9 QUIET ENJOYMENT; RIGHTS RESERVED:

     A. Landlord covenants, warrants and represents to Tenant that Tenant, on paying the said Rent and performing the covenants herein agreed to be by it performed, shall and may peaceably and quietly have, hold and enjoy the Leased Premises for the said Term.

     B. Any diminution or shutting off of light, air or view by any structure which is now or may hereafter be effected on lands adjacent to the Building shall in no way affect this Lease Agreement or impose any liability on Landlord. Noise, dust or vibration or other incidents caused by or arising out of any new construction of improvements on lands adjacent to the Leased Premises, whether or not owned by Landlord, or on the Land shall in no way affect this Lease Agreement or impose any liability on Landlord.

     C. Landlord represents and warrants to Tenant that, as of the Effective Date, (i) the Leased Premises are zoned appropriately for the Permitted Use, (ii) Landlord holds fee simple title to the Land and (iii) Landlord will deliver the Leased Premises to Tenant free and clear of all other tenancies and claims of rights to occupy the Leased Premises.

SEC. 10 ALTERATIONS:

     A. Tenant shall not make or allow to be made (except as otherwise provided in this Lease Agreement) any alterations or physical additions (including fixtures) in or to the Leased Premises, or place safes, vaults or other heavy furniture or equipment within the Leased Premises, without first obtaining the written consent of Landlord. In addition, Tenant shall not be permitted to take x-rays or core drill or penetrate the floor of the Leased Premises without first obtaining the Landlord’s consent. The reasonable cost of any third party consultant or engineer hired by Landlord and approved by Tenant, such approval not to be unreasonably withheld, delayed or conditioned in connection with such work undertaken by Tenant shall be paid for by Tenant as Additional Rent hereunder. Tenant shall submit requests for consent to make alterations or physical additions together with copies of the plans and specifications for such alterations. Subsequent to obtaining Landlord’s consent and prior to commencement of construction of the alterations or physical additions, Tenant shall deliver to Landlord the building permit (if a building permit is required to complete such alterations or additions), a copy of the executed construction contract covering the alterations and physical additions and evidence of contractor’s and subcontractor’s insurance, such insurance being with such companies, for such periods and in such amounts as Landlord may reasonably require, naming the Landlord Parties as additional insureds. Tenant shall pay to Landlord upon demand a review fee in the amount of Landlord’s actual and reasonable costs (provided that prior to incurring such costs, Landlord shall deliver to Tenant a good faith estimate thereof, the parties acknowledging and agreeing, however, that Tenant’s reimbursement obligation with respect thereto shall not be limited to such estimate) incurred to compensate Landlord for the third party (such third party to be approved by Tenant in advance, such approval not to be unreasonably withheld, conditioned or delayed) cost of review and approval of the plans and specifications and for additional third party (such third party to be approved by Tenant in advance, such approval not to be unreasonably withheld, conditioned or delayed) administrative costs (provided that prior to incurring such costs, Landlord shall deliver to Tenant a good faith estimate thereof, the parties acknowledging and agreeing, however, that Tenant’s reimbursement obligation with respect thereto shall not be limited to such estimate) incurred in monitoring the construction of the alterations. If available, Tenant shall deliver to Landlord a copy of the “as-built” plans and specifications for all alterations or physical additions so made in or to the Leased Premises, and shall reimburse Landlord for the reasonable third party (such third party to be approved by Tenant in advance, such approval not to be unreasonably withheld, conditioned or delayed) cost (provided that prior to incurring such costs, Landlord shall deliver to Tenant a good faith estimate thereof, the parties acknowledging and agreeing, however, that Tenant’s reimbursement obligation with respect thereto shall not be limited to such estimate) incurred by Landlord to update its current architectural plans for the Building.

     B. Notwithstanding the foregoing but subject to the other terms and conditions of this Section 9, Tenant may from time to time at its sole cost and expense make such alterations, additions, restorations, changes, replacements or installations ( “Alterations” ) in, of or to the interior of the Building as Tenant deems necessary or desirable; provided, however, Tenant shall not make or allow to be made any structural alterations to the Building or any other portion of the Leased Premises, without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. For purposes of this Lease Agreement, the term “structural alterations” means alterations that affect the structure or the structural integrity of Building or any portion

thereof, or alter the exterior appearance of the Building or any other portion of the Leased Premises, or affect the mechanical, electrical or plumbing systems of the Building.

     C. Tenant shall indemnify, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties from and against all costs (including reasonable attorneys’ fees and costs of suit), losses, liabilities, or causes of action arising out of or relating to any alterations, additions or improvements made by Tenant to the Leased Premises, including but not limited to any mechanics’ or materialmen’s liens asserted in connection therewith.

     D. Tenant shall not be deemed to be the agent or representative of Landlord in making any such alterations, physical additions or improvements to the Leased Premises, and shall have no right, power or authority to encumber any interest in the Leased Premises in connection therewith other than Tenant’s leasehold estate under this Lease Agreement. However, should any mechanics’ or other liens be filed against any portion of the Leased Premises or any interest therein (other than Tenant’s leasehold estate hereunder) by reason of Tenant’s acts or omissions or because of a claim against Tenant or its contractors, Tenant shall cause the same to be canceled or discharged of record by bond or otherwise within thirty (30) days after notice by Landlord. If Tenant shall fail to cancel or discharge said lien or liens, within said thirty (30) day period, which failure shall be deemed to be an Event of Default hereunder without the necessity of any further notice or cure period, Landlord may, at its sole option and in addition to any other remedy of Landlord hereunder, cancel or discharge the same and upon Landlord’s demand, Tenant shall promptly reimburse Landlord for all costs incurred in canceling or discharging such lien or liens.

     E.  Tenant shall cause all alterations, physical additions, and improvements (including fixtures), constructed or installed in the Leased Premises by or on behalf of Tenant to comply with all applicable Laws, excluding the Structural Components. Tenant acknowledges and agrees that neither Landlord’s review and approval of Tenant’s plans and specifications nor its observation or supervision of the construction or installation thereof shall constitute any warranty or agreement by Landlord that same comply with Laws or release Tenant from its obligations under this Section 10D. The terms of this Section 10.E. shall not apply to Landlord’s initial construction of the Improvements as set forth in Exhibit D and Sections 52, 53, 54 and 56 of this Lease Agreement.

     F. Tenant shall be wholly responsible for any accommodations or alterations that are required by Laws to be made to the Leased Premises to accommodate disabled employees and customers of Tenant, including, without limitation, compliance with the Americans with Disabilities Act (42 U.S.C. §§ 12101 et seq.) (collectively, the “Accommodation Laws” ); provided, however, that Landlord shall be wholly responsible for any accommodations or alterations that are required by Laws to be made to Structural Components.

     G. If (a) because of any act or omission of Landlord or anyone claiming by, through or under Landlord, or (b) by reason of any construction, alteration, repair or restoration of any part of the Leased Premises by Landlord, any mechanics’ or other lien, encumbrance, judgment lien or order for the payment of money or the performance of any act or thing, shall be filed against the Leased Premises or against Tenant (whether or not such lien or order is valid or enforceable as such), Landlord shall, at Landlord’s own cost and expense, cause the same to be canceled and discharged of record within thirty (30) days after Landlord’s receipt of notice thereof. In connection with Landlord’s obligations set forth in Exhibit D and Sections 52, 53, 54 and 56 of this Lease Agreement with respect to initial construction of the Improvements, Landlord to the extent not specifically prohibited by Laws, shall also indemnify and save harmless Tenant from and against any and all costs, expenses, claims, losses or damages, including, but not limited to, reasonable counsel fees charged by counsel of Landlord’s choice, resulting therefrom or by reason thereof.

SEC. 11 FURNITURE, FIXTURES AND PERSONAL PROPERTY: Tenant may remove its trade fixtures, office supplies and movable office furniture and equipment not attached to the Building provided: (a) such removal is made prior to the termination of this Lease Agreement (b) Tenant is not in default of any obligation or covenant under this Lease Agreement at the time of such removal; and (c) Tenant promptly repairs all damage caused by such removal. All other property at the Leased Premises and any alterations or additions to the Leased Premises (including wall-to-wall carpeting, paneling or other wall covering) and any other article attached or affixed to the floor, wall or ceiling of the Leased Premises shall become the property of Landlord and shall remain upon and be surrendered with the Leased Premises as a part thereof at the termination of the Lease Agreement by lapse of time or otherwise, Tenant hereby waiving all rights to any payment or compensation therefor. If, however, Landlord so

requests in writing within ten (10) business days after receipt of written notice from Tenant of alterations to the Leased Premises that do not require Landlord’s consent (or if written consent is required, then at the time Landlord grants its consent to such alteration), Tenant will, prior to termination of this Lease Agreement, remove any and all alterations, additions, fixtures, equipment and property placed or installed by Tenant in the Leased Premises and will repair any damage caused by such removal. If Tenant does not complete all removals prior to the termination of this Lease Agreement, Landlord may remove such items (or contract for the removal of such items), Tenant shall reimburse Landlord upon demand for the costs incurred by Landlord in connection therewith and Tenant shall be deemed to be holding over pursuant to Section 26 below until such time as such items have been removed from the Leased Premises. This Section 11 shall survive the expiration or termination of this Lease Agreement. For greater certainty, Landlord and Tenant agree that no portion of the Building or the Improvements shall constitute Tenant’s trade fixtures, office supplies or movable office furniture or equipment for purposes of this Section 11.

SEC. 12 SUBLETTING AND ASSIGNMENT:

     A. In the event Tenant should desire to assign this Lease Agreement or sublet the Leased Premises or any part thereof or allow same to be used or occupied by others, Tenant shall give Landlord written notice (which shall specify the duration of said desired sublease or assignment, the date same is to occur, the exact location of the space affected thereby, the proposed rentals on a square foot basis chargeable thereunder and reasonably sufficient information of the proposed sublessee or assignee regarding its intended use, financial condition and business operations) of such desire at least forty-five (45) days in advance of the date on which Tenant desires to make such assignment or sublease or allow such a use or occupancy. Landlord shall then have a period of fifteen (15) days following receipt of such notice within which to notify Tenant in writing that Landlord elects:

     B. No assignment or subletting by Tenant shall be effective unless Tenant shall execute, have acknowledged and deliver to Landlord, and cause each sublessee or assignee to execute, have acknowledged and deliver to Landlord, an instrument in form and substance reasonably acceptable to Landlord in which (i) such sublessee or assignee adopts this Lease Agreement and assumes and agrees to perform jointly and severally with Tenant (provided that if the entity succeeding as Tenant hereunder shall have a tangible net worth equal to or greater than the tangible net worth of Cardiovascular Systems, Inc. as of the Effective Date, Cardiovascular Systems, Inc. shall not be required to be jointly and severally liable with respect to the performance of such obligation) all of the obligations of Tenant under this Lease Agreement to the extent accruing after the effective date of the assignment or subletting, as to the space transferred to it, (ii) such sublessee or assignee agrees to use and occupy the transferred space solely for the purpose specified in Section 3 and otherwise in accordance with this Lease Agreement, and (iii) Tenant acknowledges and agrees that, notwithstanding such subletting or assignment, Tenant remains directly and primarily liable for the performance of all the obligations of Tenant hereunder (including, without limitation, the obligation to pay Rent), and Landlord shall be permitted to enforce this Lease Agreement against Tenant or such sublessee or assignee, or both, without prior demand upon or proceeding in any way against any other persons. Tenant shall, upon demand, reimburse Landlord for all reasonable third party (such third party to be approved by Tenant in advance, such approval not to be unreasonably withheld, conditioned or delayed) costs and expenses (provided that prior to incurring such costs and expenses, Landlord shall deliver to Tenant a good faith estimate thereof, the parties acknowledging and agreeing, however, that Tenant’s reimbursement obligation with respect thereto shall not be limited to such estimate) incurred by Landlord in connection with a request made by Tenant pursuant to this Section 12, including, without limitation, any investigations as to the acceptability of the proposed assignee or sublessee, all legal costs reasonably incurred in connection with the granting of any requested consent and a charge reasonably determined by Landlord to cover in-house time spent in respect of such request.

     C. Any consent by Landlord to a particular assignment or sublease shall not constitute Landlord’s consent to any other or subsequent assignment or sublease, and any proposed sublease or assignment by any assignee or sublessee shall be subject to the provisions of this Section 12 as if it were a proposed sublease or assignment by Tenant. The prohibition against an assignment or sublease described in this Section 12 shall be deemed to include a prohibition against (i) Tenant’s mortgaging or otherwise encumbering its leasehold estate, (ii) an assignment or sublease which may occur by merger or operation of law and (iii) permitting the use or occupancy of the Leased Premises, or any part thereof, by anyone other than Tenant, each of which shall be ineffective and void and shall constitute an Event of Default under this Lease Agreement unless consented to by Landlord in writing in advance. For purposes hereof, the transfer of the ownership or voting rights in a controlling interest of the voting stock of Tenant (if Tenant is a corporation) or the membership interests of Tenant (if Tenant is a limited liability company) or the transfer of a general partnership interest or a majority of the limited partnership interest in Tenant (if Tenant is a partnership), at any time throughout the Term, shall be deemed to be an assignment of this Lease Agreement; provided that the terms of the foregoing clause shall be limited to periods in which the shares of Tenant are not traded on an exchange.

     D. Notwithstanding anything to the contrary set forth herein, Tenant shall have the right to enter into an assignment of this Lease or a sublease of the Leased Premises, without Landlord’s consent, to any subsidiary corporation of Tenant that is owned and controlled by Tenant, any entity succeeding to substantially all of the assets of Tenant as a result of a consolidation or merger, or to an entity to which all or substantially all of the assets of Tenant have been sold; provided, however, that, as conditions to such permitted assignments and subleases, (i) the entity succeeding as Tenant hereunder shall have a tangible net worth equal to or greater than the tangible net worth of Cardiovascular Systems, Inc. as of the date of the transfer and (ii) Cardiovascular Systems, Inc. (to the extent Cardiovascular Systems, Inc. exists as an entity following such a consolidation or merger) shall be jointly and severally liable with such assignee or sublessee for all obligations of Tenant under this Lease Agreement.

SEC. 13 FIRE AND CASUALTY:

     A. In the event of a fire or other casualty in the Leased Premises, Tenant shall immediately give notice thereof to Landlord. In the event such a fire or other casualty occurs during the last five (5) years of the initial ten (10) year Term or during either of the Extended Terms and (i) results in total or substantial damages to or destruction of the Improvements, or (ii) results in the Leased Premises being untenantable in whole or in substantial part and the reasonable estimation of a contractor reasonably approved by Landlord and Tenant as to the amount of time necessary to rebuild or restore such destruction to the Leased Premises exceeds six (6) months from the time

such work is commenced, then in either event, Tenant shall have a right to terminate this Lease Agreement effective as of the date of casualty or destruction, and upon such termination, all Rent owed up to the time of such destruction or termination shall be paid by Tenant. Subject to reasonable delays for insurance adjustments, Tenant shall give Landlord written notice of its decisions, estimates or elections under this Section 13 within sixty (60) days after any such damage or destruction.

     B. Any net insurance proceeds payable with respect to the casualty shall be paid directly to Tenant and may be used by Tenant only for the repair or reconstruction of the Improvements to a like or better condition than existed prior to such damage or destruction; provided, however, that if an Event of Default has occurred and is continuing at the time of such casualty or at any time thereafter, all such insurance proceeds shall be paid directly to Landlord and disbursed, subject to terms and conditions that Landlord in its sole discretion deems appropriate given the circumstances, to Tenant for the repair or reconstruction of the Improvements. Notwithstanding anything contained in this Section 13, Tenant shall not be required to expend more to reconstruct, restore and repair the Improvements than the amount actually received (plus deductibles) from the proceeds of the property insurance carried by Tenant, so long as (i) Tenant has maintained policies of insurance consistent with the terms and conditions of this Lease and (ii) Tenant delivers to Landlord written notice thereof at least thirty (30) days prior to commencing the reconstruction, restoration and repair of the Improvements. In the event Tenant will not reconstruct, restore and repair the Improvements to its condition prior to the casualty, Landlord shall have the right to terminate this Lease Agreement upon delivery of written notice to Tenant, delivered within thirty (30) days following the date Tenant delivers to Landlord written notice of the amount of available insurance proceeds and the condition to which Tenant desires to reconstruct, restore and repair the Improvements. If such proceeds are more than sufficient to reconstruct, restore and repair the Improvements to its condition prior to the casualty, the surplus shall belong to and be returned to Tenant; provided, however, that if a monetary Event of Default or Event of Default that could be cured with the payment of money exists at such time, Landlord shall direct such surplus to cure such Event(s) of Default and any surplus remaining after the cure thereof shall be delivered to Tenant. Should Landlord or Tenant terminate this Lease Agreement in accordance with the terms of this Section 13.B., the insurance proceeds shall belong to Landlord and Tenant shall have no claim to such proceeds, except proceeds attributable to the trade fixtures, equipment and personal property of Tenant, provided that in no event shall any portion of the Improvements be considered the trade fixtures, equipment and personal property of Tenant for purposes of such an allocation of proceeds. If Tenant desires any other additional repairs or restoration, and if Landlord consents thereto which consent shall not be unreasonably withheld, it shall be done at Tenant’s sole cost and expense subject to all of the applicable provisions of this Lease Agreement.

     C. Tenant shall not have any right under this Lease Agreement, and hereby waives all rights under applicable law, if any, to abate, reduce or offset Rent by reason of any damage or destruction of the Leased Premises by reason of an insured or uninsured casualty.

SEC. 14 CONDEMNATION:

     A. If all of the Leased Premises is taken or condemned, or acquired under threat of condemnation, by or at the direction of any Governmental Authority (a “Taking” or “Taken” , as the context requires) during the last five (5) years of the initial ten (10) year Term or during either of the Extended Terms, or if so much of the Leased Premises is Taken that, in Tenant’s reasonable opinion, the remainder cannot be used for the Permitted Use, or if the awards payable to Landlord as a result of any Taking are, in Tenant’s reasonable opinion, inadequate to restore the remainder to an economically viable building, Tenant may, at its election, exercisable by the giving of written notice to Landlord within sixty (60) days after the date of the Taking, terminate this Lease Agreement as of the date of the Taking or the date Tenant is deprived of possession of the Leased Premises (whichever is later). If this Lease Agreement is not terminated as a result of a Taking, (i) Landlord shall restore the Leased Premises remaining after the Taking to a tenantable condition; provided however that Landlord shall not be required to expend more to reconstruct, restore and repair the Building than the amount of condemnation awards, proceeds, compensation or other payments actually received by Landlord, and (ii) and the Base Rent shall be reduced proportionately to the portion of the Improvements so taken. Unless covered by business interruption policy of insurance required to be carried by Tenant pursuant to the terms of Exhibit E to this Lease Agreement, during the period of restoration, Base Rent shall be abated to the extent the Leased Premises are rendered untenantable. All awards, proceeds, compensation or other payments from or with respect to any Taking of the Leased Premises or any portion thereof shall belong to Landlord, Tenant hereby assigning to Landlord all of its right, title, interest and claim to same.

Tenant shall have the right to assert a separate claim for and recover from the condemning authority, but not from Landlord, such compensation as may be awarded on account of Tenant’s moving and relocation expenses, and depreciation to and loss of Tenant’s movable personal property, trade fixtures and equipment.

SEC. 15 DEFAULT BY TENANT: The occurrence of any one or more of the following shall constitute an “Event of Default” under this Lease Agreement:

     A. The failure of Tenant to pay any Rent within ten (10) days after receipt of written notice from Landlord of Tenant’s failure to pay such Rent on the due date therefor under this Lease Agreement;

     B. The failure of Tenant to perform, comply with or observe any of the other covenants or conditions contained in this Lease Agreement and the continuance of such failure for the period of time as may be specified elsewhere in this Lease Agreement for such specific covenant or condition, or should no period of time be specified elsewhere in this Lease Agreement with respect to such specific covenant or condition, a period of ten (10) days after written notice to Tenant; or, if such failure cannot reasonably be cured within said ten (10) day period despite Tenant’s diligent good faith efforts, the failure of Tenant to promptly commence its diligent good faith efforts to cure such failure within said ten (10) day period and/or the continuance of such failure for a period of one hundred twenty (120) days notwithstanding Tenant’s efforts to cure;

     C.  Tenant shall fail to execute and acknowledge or otherwise respond in good faith and in writing within ten (10) days after submission to Tenant of a request for confirmation of the subordination of this Lease Agreement pursuant to Section 24 or an estoppel certificate pursuant to Section 35;

     D. The failure of Tenant to occupy the Leased Premises during the entire Term for a period of twelve (12) consecutive months (other than reasonable cessations of operations in connection with fires or other casualties as described in Section 13 or a Taking as described in Section 14), provided that intermittent operations not exceeding six (6) consecutive months in duration shall not serve to interrupt the running of such twelve (12) month period;

     E. The filing of a petition by or against Tenant of Tenant’s obligations under this Lease Agreement (i) naming Tenant or as debtor in any bankruptcy or other insolvency proceeding, (ii) for the appointment of a liquidator or receiver for all or substantially all of Tenant’s property or for Tenant’s interest in this Lease Agreement, or (iii) to reorganize or modify Tenant’s capital structure, to the extent such petition is not removed or rescinded within ninety (90) days after the filing date;

     F. The admission by Tenant in writing of its inability to meet its obligations as they become due or the making by Tenant of an assignment for the benefit of its creditors;

     G. The attempt by Tenant to assign this Lease Agreement or to sublet all or any part of the Leased Premises without the prior written consent of Landlord in accordance with Section 12, to the extent Landlord’s consent was required; or

     H. The failure by Tenant to comply with the insurance requirements set forth in Exhibit E .

SEC. 16 REMEDIES OF LANDLORD: Upon any Event of Default, Landlord may exercise any one or more of the following described remedies, in addition to all other rights and remedies provided under applicable Laws or in equity:

     A. Terminate this Lease Agreement by written notice to Tenant and forthwith repossess the Leased Premises and be entitled to recover forthwith as damages a sum of money equal to the total of (i) the cost of recovering the Leased Premises (including attorneys’ fees and costs of suit), (ii) the cost of removing and storing any personal property, (iii) the unpaid Rent earned at the time of termination, plus interest thereon at the rate described in Section 5C., (iv) the present value (discounted at the rate of eight percent (8%) per annum) of the balance of the Rent for the remainder of the Term less the present value (discounted at the same rate) of the fair market rental value of the Leased Premises for said period, taking into account the period of time the Leased

Premises will remain vacant until a new tenant is obtained, and the cost to prepare the Leased Premises for occupancy and the other costs (such as leasing commissions, tenant improvement allowances and attorneys’ fees) to be incurred by Landlord in connection therewith, and (v) any other sum of money and damages owed by Tenant to Landlord under this Lease Agreement.

     B. Terminate Tenant’s right of possession (but not this Lease Agreement) and may repossess the Leased Premises by forcible detainer suit or otherwise, without thereby releasing Tenant from any liability hereunder and without demand or notice of any kind to Tenant and without terminating this Lease Agreement. Subject to Section 16E. below, Landlord shall use reasonable efforts under the circumstances to relet the Leased Premises on such terms and conditions as Landlord in its sole discretion may determine (including a term different than the Term, rental concessions, alterations and repair of the Leased Premises). Landlord shall not be liable for, nor shall Tenant’s obligations hereunder be diminished because of, Landlord’s failure or refusal to relet the Leased Premises or collect rent due in respect of such reletting. For the purpose of such reletting Landlord shall have the right to decorate or to make any repairs, changes, alterations or additions in or to the Leased Premises as may be reasonably necessary or desirable. In the event that (i) Landlord shall fail to relet the Leased Premises, or (ii) the Leased Premises are relet and a sufficient sum shall not be realized from such reletting (after first deducting therefrom, for retention by Landlord, the unpaid Rent due hereunder earned but unpaid at the time of reletting plus interest thereon at the rate specified in Section 5C., the cost of recovering possession (including attorneys’ fees and costs of suit), all of the costs and expenses of such decorations, repairs, changes, alterations and additions, the expense of such reletting and the cost of collection of the rent accruing therefrom) to satisfy the Rent, then Tenant shall pay to Landlord as damages a sum equal to the amount of such deficiency. Any such payments due Landlord shall be made upon demand therefor from time to time and Tenant agrees that Landlord may file suit to recover any sums falling due under the terms of this Section 16 from time to time. No delivery to or recovery by Landlord of any portion due Landlord hereunder shall be any defense in any action to recover any amount not theretofore reduced to judgment in favor of Landlord, nor shall such reletting be construed as an election on the part of Landlord to terminate this Lease Agreement unless a written notice of such intention be given to Tenant by Landlord. Notwithstanding any such termination of Tenant’s right of possession of the Leased Premises, Landlord may at any time thereafter elect to terminate this Lease Agreement. In any proceedings to enforce this Lease Agreement under this Section 16, Landlord shall be presumed to have used its reasonable efforts to relet the Leased Premises, and Tenant shall bear the burden of proof to establish that such reasonable efforts were not used.

     C. Alter any and all locks and other security devices at the Leased Premises, and if it does so Landlord shall not be required to provide a new key or other access right to Tenant unless Tenant has cured all Events of Default; provided, however, that in any such instance, during Landlord’s normal business hours and at the convenience of Landlord, and upon the written request of Tenant accompanied by such written waivers and releases as Landlord may require, Landlord will escort Tenant or its authorized personnel to the Leased Premises to retrieve any personal belongings or other property of Tenant. The provisions of this Section 16.C are intended to override and control any conflicting provisions of the Texas Property Code.

     D. Make any payment or perform any act on Tenant’s part to cure such Event of Default without waiving or releasing Tenant from any obligations. All sums so paid by Landlord and all costs incurred by Landlord in taking such action plus interest thereon at the lesser of ten percent (10%) per annum or the highest rate then allowed under Laws shall be deemed Additional Rent hereunder and shall be paid to Landlord on demand, and Landlord shall have (in addition to all other rights and remedies of Landlord) the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in the payment of Rent.

     E. In connection with the exercise by Landlord of its rights and remedies in respect of any Event of Default on the part of Tenant, to the extent (but no further) that Landlord is required by applicable Laws to mitigate damages, or to use efforts to do so, Tenant agrees in favor of Landlord that Landlord shall not be deemed to have failed to mitigate damages, or to have used the efforts required by Laws to do so, because:

and it is further agreed that each and all of the grounds for refusal set forth in clauses (1) through (7) above, both inclusive, of this sentence are reasonable grounds for Landlord’s refusal to relet the Leased Premises, or (as to all other provisions of this Lease Agreement) for Landlord’s refusal to issue any approval, or take any other action, of any nature whatsoever under this Lease Agreement.

SEC. 17 WAIVER OF LANDLORD’S LIEN: Landlord hereby expressly, unconditionally and irrevocably waives any and all liens, express or implied, statutory, constitutional or contractual, that would or might otherwise secure the performance by Tenant of its obligations under this Lease Agreement.

SEC. 18 NON-WAIVER: Neither acceptance of Rent by Landlord nor failure by Landlord to exercise available rights and remedies, whether singular or repetitive, shall constitute a waiver of any of Landlord’s rights hereunder. Waiver by Landlord of any right for any Event of Default of Tenant shall not constitute a waiver of any right for either a subsequent Event of Default of the same obligation or any other Event of Default. No act or thing done by Landlord or its agent shall be deemed to be an acceptance or surrender of the Leased Premises and no agreement to accept a surrender of the Leased Premises shall be valid unless it is in writing and signed by a duly authorized officer or agent of Landlord.

SEC. 19 COMPLIANCE WITH LAWS: Tenant shall comply with, and Tenant shall cause its visitors, employees, contractors, agents, invitees and licensees to comply with, all Laws relating to the use, condition or occupancy of the Leased Premises.

SEC. 20 ASSIGNMENT BY LANDLORD; LIMITATION OF LANDLORD’S LIABILITY: Landlord shall have the right to transfer and assign, in whole or in part, all its rights and obligations hereunder and in the Leased Premises, and in such event and upon such transfer no further liability or obligation shall thereafter accrue against Landlord hereunder. Furthermore, Tenant specifically agrees to look solely to Landlord’s interest in the Leased Premises, including, without limitation, all rents and insurance proceeds, for the recovery of any judgment from Landlord, it being agreed that the Landlord Parties shall never be personally liable for any such judgment.

SEC. 21 SEVERABILITY: This Lease Agreement shall be construed in accordance with the laws of the State of Texas. If any clause or provision of this Lease Agreement is illegal, invalid or unenforceable, under present or future Laws effective during the Term hereof, then it is the intention of the parties hereto that the remainder of this

Lease Agreement shall not be affected thereby, and it is also the intention of both parties that in lieu of each clause or provision that is illegal, invalid or unenforceable, there be added as part of this Lease Agreement a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable.

SEC. 22 SIGNS: Other than the signage expressly referred to in the Construction Drawings (as defined in Exhibit D) , Tenant shall not place, install or attach any signage, window or door lettering, decals, window or storefront stickers, advertising media of any type, exterior lights, or exterior decorations, balloons, flags, pennants, banners, paintings, or bars on windows, or security installations on or to the Leased Premises or the Building without Landlord’s prior written approval, which shall not be unreasonably withheld. Other than the signage expressly referred to in the Construction Drawings, or otherwise consented to by Landlord, Tenant shall repair, paint, and/or replace any portion of the Leased Premises or the Building damaged or altered as a result of its signage when it is removed (including, without limitation, any discoloration of the Building). Landlord shall not be required to notify Tenant of whether it consents to any sign until it has received detailed, to-scale drawings thereof specifying design, material composition, color scheme, and method of installation, and has had a reasonable opportunity to review them.

SEC. 23 SUCCESSORS AND ASSIGNS: Landlord and Tenant agree that all provisions hereof are to be construed as covenants and agreements as though the words imparting such covenants were used in each separate paragraph hereof, and that, except as restricted by the provisions of Section 12, this Lease Agreement and all the covenants herein contained shall be binding upon the parties hereto, their respective heirs, legal representatives, successors and assigns.

SEC. 24 SUBORDINATION; NONDISTURBANCE:

     A. Tenant covenants and agrees with Landlord that this Lease Agreement is subject and subordinate to any mortgage, deed of trust, ground lease and/or security agreement which may now or hereafter encumber the Leased Premises or any interest of Landlord therein, and to any advances made on the security thereof and to any and all increases, renewals, modifications, consolidations, replacements and extensions thereof. This clause shall be self-operative and no further instrument of subordination need be required by any owner or holder of any such ground lease, mortgage, deed of trust or security agreement. In confirmation of such subordination, however, at Landlord’s request, Tenant shall execute promptly any appropriate certificate or instrument that Landlord may request. In the event of the enforcement by the ground lessor, the trustee, the beneficiary or the secured party under any such ground lease, mortgage, deed of trust or security agreement of the remedies provided for by Laws or by such ground lease, mortgage, deed of trust or security agreement, Tenant, upon request of the ground lessor or any person or party succeeding to the interest of Landlord as a result of such enforcement, will automatically become the Tenant of such ground lessor or successor in interest without any change in the terms or other provisions of this Lease Agreement; provided, however, that the obligations of such ground lessor or successor in interest shall be as set forth in a subordination, nondisturbance and attornment agreement delivered pursuant to Section 24.C or 24.D below and in no event shall such ground lessor or successor in interest be (a) bound by any payment of Rent for more than one month in advance except prepayments in the nature of security for the performance by Tenant of its obligations under this Lease Agreement, unless received by such ground lessor or successor, (b) bound by any amendment or modification of this Lease Agreement made without the written consent of such ground lessor or such successor in interest (c) liable for any previous act or omission of the Landlord unless such ground lessor or successor in interest, after acquiring succeeding to the interest of Landlord under this Lease Agreement, shall fail to cure any default by Landlord within the time periods set forth in this section, (d) subject to any credit, demand, claim, counterclaim, offset or defense which theretofore accrued to Tenant against the Landlord, unless such ground lessor or successor in interest, after acquiring succeeding to the interest of Landlord under this Lease Agreement, shall fail to cure any default by Landlord within the time periods set forth in this section, (e) required to account for any security deposit of Tenant other than any security deposit actually delivered to lender by Landlord and (f) responsible for any monies owing by Landlord to Tenant. Upon request by such ground lessor or successor in interest, whether before or after the enforcement of its remedies, Tenant shall execute and deliver an instrument or instruments confirming and evidencing the attornment herein set forth. Notwithstanding anything contained in this Lease Agreement to the contrary, in the event of any default by Landlord in performing its covenants or obligations hereunder which would give Tenant the right to terminate this Lease Agreement, Tenant shall not exercise such right unless and until (a) Tenant gives written notice of such default (which notice shall specify the exact nature of said

default and how the same may be cured) to the lessor under any such land or ground lease and the holder(s) of any such mortgage or deed of trust or security agreement who has theretofore notified Tenant in writing of its interest and the address to which notices are to be sent, and (b) said lessor and holder(s) fail to cure or cause to be cured said default within thirty (30) days from the receipt of such notice from Tenant.

     B. Notwithstanding anything to the contrary set forth above, any beneficiary under any deed of trust may at any time subordinate its deed of trust to this Lease Agreement in whole or in part, without any need to obtain Tenant’s consent, by execution of a written document subordinating such deed of trust to the Lease Agreement to the extent set forth in such document and thereupon the Lease Agreement shall be deemed prior to such deed of trust to the extent set forth in such document without regard to their respective dates of execution, delivery and/or recording. In that event, to the extent set forth in such document, such deed of trust shall have the same rights with respect to this Lease Agreement as would have existed if this Lease Agreement had been executed, and a memorandum thereof, recorded prior to the execution, delivery and recording of the deed of trust.

     C. It shall be a condition precedent to Tenant’s obligation to subordinate this Lease Agreement to any current or future lien, encumbrance, easement, deed of trust or ground lease of any ground lessor or mortgagee that such ground lessor or mortgagee enter into a subordination, non-disturbance and attornment agreement in a reasonable and customary form with Tenant which includes and recognizes the terms of this Lease Agreement and provides that: (a) so long as Tenant is not in default after the expiration of any applicable notice