Document:

exv4w10

 

Exhibit
4.10

LEASE

BETWEEN 

HDP ASSOCIATES, LLC, LESSOR

AND

LUMENIS INC., LESSEE

5302 Betsy Ross Drive

Santa Clara, California 95054

July 19, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Paragraph	 	 	 	Page
	1.

	 	Lease
	 	 	1	 
	2.

	 	Initial Term
	 	 	2	 
	3.

	 	Option to Extend
	 	 	3	 
	4.

	 	Monthly Base Rent
	 	 	5	 
	5.

	 	Additional Rent; Operating Expenses and Taxes
	 	 	6	 
	6.

	 	Payment of Rent
	 	 	10	 
	7.

	 	Security Deposit
	 	 	10	 
	8.

	 	Use
	 	 	12	 
	9.

	 	Environmental Matters
	 	 	12	 
	10.

	 	Taxes on Lessee’s Property
	 	 	14	 
	11.

	 	Insurance
	 	 	15	 
	12.

	 	Indemnification
	 	 	16	 
	13.

	 	Tenant Improvement Work; Condition of the Building
	 	 	17	 
	14.

	 	Maintenance and Repairs; Alterations; Surrender and Restoration
	 	 	18	 
	15.

	 	Utilities and Services
	 	 	21	 
	16.

	 	Liens
	 	 	22	 
	17.

	 	Assignment and Subletting
	 	 	22	 
	18.

	 	Non-Waiver
	 	 	25	 
	19.

	 	Holding Over
	 	 	26	 
	20.

	 	Damage or Destruction
	 	 	26	 
	21.

	 	Eminent Domain
	 	 	29	 
	22.

	 	Remedies
	 	 	29	 
	23.

	 	Lessee’s Personal Property
	 	 	30	 
	24.

	 	Notices
	 	 	30	 
	25.

	 	Estoppel Certificates
	 	 	31	 
	26.

	 	Parking
	 	 	32	 
	27.

	 	Signage
	 	 	32	 
	28.

	 	Real Estate Brokers
	 	 	32	 
	29.

	 	Subordination; Attornment
	 	 	32	 
	30.

	 	Breach by Lessor
	 	 	33	 
	31.

	 	Lessor’s Entry
	 	 	33	 
	32.

	 	Attorneys’ Fees
	 	 	34	 
	33.

	 	Compliance with CC&Rs
	 	 	34	 
	34.

	 	Quiet Possession
	 	 	34	 
	35.

	 	Force Majeure
	 	 	34	 
	36.

	 	Right of First Offer to Purchase the Property
	 	 	34	 
	37.

	 	General Provisions	 	 	37	 

SCHEDULE OF EXHIBITS

	 	 	 	 	 
	 

	 	EXHIBIT “A”
	 	Legal Description
	 

	 	EXHIBIT “B”
	 	Floor Plan
	 

	 	EXHIBIT “C”
	 	Commencement Memorandum
	 

	 	EXHIBIT “D”
	 	Letter of Credit Reduction Schedule

 

 

LEASE

5302 Betsy Ross Drive

Santa Clara, California 95054

     THIS LEASE, referred to herein as “this Lease,” dated for reference purposes as of July 19,
2006, is made and entered into by and between HDP ASSOCIATES, LLC, a California limited liability
company (“Lessor”), and LUMENIS INC., a Massachusetts corporation (“Lessee”).

     RECITALS:

     A. Lessor is the owner of the real property commonly referred to as 5302 Betsy Ross Drive,
Santa Clara, California 95054, more particularly described on Exhibit “A” attached hereto and
incorporated by reference herein, consisting of a parcel of land containing approximately 3.50
acres, together with all easements and appurtenances thereto (the “Land”), and the existing
two-story building (plus mezzanine) thereon containing approximately 85,053 rentable square feet
(the “Building”), and all other improvements located thereon. The Building and the other
improvements are hereafter referred to collectively as the “Improvements.” The Land and the
Improvements are hereafter referred to collectively as the “Property.”

     B. Lessor and Lessee wish to enter into this Lease upon the terms and conditions set forth
herein.

     NOW, THEREFORE, the parties agree as follows:

     1. Lease.

          (a) Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, a portion of the
Building containing approximately 70,000 rentable square feet, together with the exclusive right to
use the entire common areas of the Building, the entire parking area, and the entirety of the other
common areas on the Land, all of which are hereafter referred to collectively as the “Premises,” at
the rental and upon all of the terms and conditions set forth herein. The approximately 70,000
rentable square feet of the Building to be occupied by Lessee are the entire first floor and the
entire second floor of the Building (excluding the mezzanine area) shown on the floor plan of the
first floor and second floor of the Building attached hereto as Exhibit “B” and incorporated by
reference herein, including the lunchroom area, and associated patios and staircases.

          (b) Lessor hereby grants to Lessee the continuing right, at Lessee’s option, to lease all or a
portion of the remaining approximately 15,053 rentable square feet in the Building consisting of
the mezzanine area at any time during the initial term of this Lease, or during the option
extension period if exercised. Lessee’s right to lease the expansion space shall be upon the
following terms and conditions:

               (1) There shall be no uncured material default by Lessee hereunder at the time Lessee
exercises the option to lease all or any portion of the expansion space.

 

 

LEASE

5302 Betsy Ross Drive

Santa Clara, California 95054

     THIS LEASE, referred to herein as “this lease,” dated for reference purposes as of
July 19, 2006, is made and entered into by and between HDP ASSOCIATES, LLC, a California
limited liability company (“Lessor”), and LUMENIS INC., a Massachusetts corporation
(“Lessee”).

     RECITALS:

     A. Lessor is the owner of the real property commonly referred to as 5302 Betsy Ross
Drive, Santa Clara, California 95054, more particularly described on Exhibit “A” attached
hereto and incorporated by reference herein, consisting of a parcel of land containing
approximately 3.50 acres, together with all casements and appurtenances thereto (the “Land”),
and the existing two-story building (plus mezzanine) thereon containing approximately 85,053
rentable square feet (the “Building”), and all other improvements located thereon. The
Building and the other improvements are hereafter referred to collectively as the
“Improvements.” The Land and the Improvements are hereafter referred to collectively as the
“Property.”

     B. Lessor and Lessee wish to enter into this Lease upon the terms and conditions set
forth herein.

     NOW, THEREFORE, the parties agree as follows:

     1. Lease.

          (a) Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, a portion of
the Building containing approximately 70,000 rentable square feet, together with the exclusive
right to use the entire common areas of the Building, the entire parking area, and the
entirety of the other common areas on the Land, all of which are hereafter referred to
collectively as the “Premises,” at the rental and upon all of the terms and conditions set
forth herein. The approximately 70,000 rentable square feet of the Building to be occupied by
Lessee are the entire first floor and the entire second floor of the Building (excluding the
mezzanine area) shown on the floor plan of the first floor and second floor of the Building
attached hereto as Exhibit “B”
and incorporated by reference herein, including the lunchroom area, and associated patios and staircases.

          (b) Lessor hereby grants to Lessee the continuing right, at Lessee’s option, to
lease all or a portion of the remaining approximately 15,053 rentable square feet in the
Building consisting of the mezzanine area at any time during the initial term of this Lease,
or during the option extension period if exercised. Lessee’s right to lease the expansion
space shall be upon the following terms and conditions:

               (1) There shall be no uncured material default by Lessee hereunder at the time
Lessee exercises the option to lease all or any portion of the expansion space.

 

 

          (2) Lessee may exercise the option to lease all or a portion of the expansion space by giving
written notice to Lessor of the exercise of such option, and specifying the number of rentable
square feet of the expansion space that Lessee elects to lease and the effective date of the lease
of the expansion space. The expansion space shall be leased by Lessor to Lessee “as is” in its
existing configuration and in good operating condition and repair. The expansion space shall be
subject to the same warranties of condition as the original Premises, as set forth in Paragraph
2(c) below.

          (3) Lessor and Lessee shall execute and deliver an amendment to this Lease to include the
expansion space. The expansion space shall be leased by Lessee at the then applicable Monthly Base
Rent, with the same annual adjustments to the Monthly Base Rent that are provided for in Paragraph
4(a), for a term which is co-terminus with the then remaining initial term of this Lease and the
option extension period, if the option to extend set forth in Paragraph 3 is exercised, and subject
to all of the other terms and provisions of this Lease, excluding Paragraphs 13(a) through 13(d)
hereof.

     2. Initial Term.

          (a) The initial term of this Lease (the “initial term”) shall commence upon the execution and
delivery of this Lease by the parties (the “Commencement Date”), subject to the satisfaction
thereafter of the other conditions set forth in Paragraph 2(e). The Commencement Date shall be
confirmed in writing by Lessor and Lessee by the execution and delivery of the Commencement
Memorandum in the form attached hereto as Exhibit “C.”

          (b) The initial term of this Lease shall expire on December 31, 2012 (the “Expiration Date”),
unless sooner terminated in accordance with the provisions hereof.

          (c) Notwithstanding the commencement of this Lease on the Commencement Date pursuant to
Paragraph 2(a), Lessor shall not deliver possession of the Premises to Lessee until the date which
is the earlier of (1) the date of substantial completion of the Tenant Improvement Work referred to
in Paragraph 13(a), or (2) October 1, 2006 (the “Warranty Date”). Lessor warrants that on the
Warranty Date the Premises and the Building will be in compliance with the Americans With
Disabilities Act (ADA), applicable building codes, and all other applicable orders, regulations,
rules, laws, statutes, ordinances and requirements of all governmental agencies or authorities
(collectively, “Laws”), and with the roof membrane and roof structure and all of the systems of the
Building in good operating condition and repair, including, but not limited to, the HVAC,
mechanical, lighting, electrical, life safety, and plumbing systems, with the ceiling tiles in good
condition, and with the roof in water tight condition.

          (d) If for any reason the Premises and the Building are not in the condition referred to in
Paragraph 2(c) on the Warranty Date, Lessor shall not be subject to any liability therefore, nor
shall such failure affect the validity of this Lease, or the obligations of Lessee hereunder, but
in such case, Lessee shall not, except as otherwise provided herein, be obligated to pay Operating
Expenses, Taxes, or Monthly Base Rent until the Premises are delivered to Lessee in the condition
referred to in Paragraph 2(c) above. Lessor shall use its good faith diligent efforts to see to
it that the Premises and the Building are in the condition referred to in Paragraph 2(c) by the
Warranty Date. If the Premises are not delivered to Lessee in the condition referred to in
Paragraph 2(c) by January 31, 2007, Lessee may, at its option, by notice

2

 

in writing received by Lessor after January 31, 2007 and before the date possession is so
delivered, cancel this Lease, in which event Lessor shall promptly refund the first month’s
Monthly Base Rent and the cash Security Deposit to Lessee and return the Letter of Credit to
Lessee, and the parties shall be discharged from all further obligations hereunder. If such
written notice is not received by Lessor on or before the date possession is so delivered by
Lessor to Lessee, Lessee’s right to cancel this Lease pursuant to this Paragraph 2(d) shall
terminate and be of no further force or effect.

          (e) Subject to (1) the prior execution and delivery of this Lease by the parties, (2) the
payment by Lessee to Lessor upon the execution and delivery of this Lease by the parties, of the
sum of Fifty-eight Thousand One Hundred Dollars ($58,100) representing the Monthly Base Rent for
the month of January 2007, (3) the payment by Lessee to Lessor concurrently with the execution and
delivery of this Lease of the sum of One Hundred Forty-eight Thousand Four Hundred Dollars
($148,400) representing the Security Deposit referred to in Paragraph 7(a), and (4) the delivery by
Lessee to Lessor of written evidence that Lessee’s commercial general liability insurance coverage
required by Paragraph 11 (a) is in effect, Lessee and Lessee’s vendors and contractors shall have
access to the Premises, after the satisfaction of all of said conditions and commencing upon the
Warranty Date for the installation by Lessee at Lessee’s expense of Lessee’s interior improvements
and trade fixtures, and for Lessee’s daily operations, and continuing through December 31, 2006.
Monthly Base Rent shall be abated until January 1, 2007, but Lessee shall pay to Lessor the
Operating Expenses and Taxes of the Property pursuant to Paragraph 5 hereof commencing on the
Warranty Date, provided that the Premises and the Building are then in the condition referred to in
Paragraph 2(c) hereof.

          (f) As used in this Lease, “term” or “term of this Lease” shall include the initial term and
the option extension period, if exercised.

     3. Option to Extend.

          (a) Lessor hereby grants to Lessee an option to extend the term of this Lease for one (1)
period of sixty (60) calendar months immediately following the expiration of the initial term (the
“option extension period”). Lessee may exercise the foregoing option to extend by giving written
notice of exercise to Lessor at least six (6) months, but not more than nine (9) months, prior to
the expiration of the initial term of this Lease (“the option exercise period”), time being of the
essence; provided that if an event of default by Lessee (as “Event of Default is defined in
Paragraph 22) under this Lease remains uncured after the expiration of notice and cure periods, if
applicable at the time of exercise of the option or on the commencement date of the option
extension period, such notice shall be void and of no force or effect. Such option extension
period, if exercised, shall be upon the same terms and conditions as the initial term of this
Lease, including the payment by Lessee of the Operating Expenses and Taxes pursuant to Paragraph 5,
except that (1) the Monthly Base Rent during the option extension period shall be determined as set
forth in Paragraph 3(c) hereof, (2) there shall be no additional option to extend, and (3) Lessee
shall accept the Premises in their then “as is” condition subject to Paragraphs 2(c) and 13(e)
which shall also apply to the option extension period. If Lessee does not exercise the option in a
timely manner, the option shall lapse, time being of the essence. Subject to the foregoing, neither
Lessor nor Lessee shall be required to perform any Tenant Improvement Work with respect to the
option extension period.

3

 

          (b) The option to extend granted to Lessee by this Paragraph 3 is granted for the
personal benefit of Lumenis Inc. (“Lumenis”) only, and shall be exercisable only by Lumenis or by
an assignee or sublessee referred to in Paragraph 17(g) as a “Permitted Affiliate.” Said option may
not be assigned or transferred by Lumenis to, or exercised by, any assignee or sublessee, except as
provided in Paragraph 17(g).

          (c) The initial Monthly Base Rent for the Premises during the option extension period shall
be determined pursuant to the provisions of this subparagraph (c) shall equal ninety-five percent
(95%) of the then current fair market monthly base rental value of the Premises on the commencement
date of the option extension period as determined by agreement between the Lessor and Lessee
reached prior to the expiration of the option exercise period, if possible, or by the process of
appraisal if the parties cannot reach agreement.

          Upon the written request by Lessee to Lessor received by Lessor no earlier than sixty-one
(61) days and no later than thirty (30) days prior to the expiration of the option exercise period
(e.g., between May 1, 2012 and June 1, 2012, if the Commencement Date is January 1, 2007) and
prior to the exercise by Lessee of the option to extend, Lessor shall give Lessee written notice
of Lessor’s good faith opinion of the amount equal to ninety-five percent (95%) of the fair market
monthly base rental value of the Premises as of the commencement of the option extension period.
Thereafter, upon the request of Lessee, Lessor and Lessee shall enter into good faith negotiations
for thirty (30) days in an effort to reach agreement on ninety-five percent (95%) of the fair
market monthly base rental for the Premises on the commencement date of the option extension
period.

          If Lessor and Lessee are unable to agree upon the amount equal to ninety-five percent (95%)
of the initial fair market monthly base rent for the Premises, and thereafter, prior to the
expiration of the option exercise period, Lessee exercises the option to extend, said amount of
the initial monthly base rental shall be determined by appraisal. The appraisal shall be performed
by one appraiser if the parties are able to agree upon one appraiser. If the parties are unable to
agree upon one appraiser, each party shall appoint an appraiser and the two appraisers shall
select a third appraiser. Each appraiser selected shall be a member of the American Institute of
Real Estate Appraisers (AIREA) with at least five (5) years of full-time commercial real estate
appraisal experience in the Santa Clara, California office/R&D/manufacturing rental market.

          If only one appraiser is selected, that appraiser shall notify the parties in simple letter
form of its determination of the amount equal to ninety-five percent (95%) of the fair market
monthly base rental for the Premises on the commencement date of the option extension period
within fifteen (15) days following its selection. Said appraisal shall be binding on the parties
as the appraised current ninety-five percent (95%) of the “fair market monthly base rental” for
the Premises which shall be based upon what a willing new lessee would pay and a willing lessor
would accept at arm’s length for premises comparable to the Premises determined with reference to
comparable premises in the vicinity of the Premises of similar age, size, quality of construction
and specifications (excluding the value of any improvements to the Premises made at Lessee’s cost)
for a lease of similar duration to this Lease and taking into consideration that there will be no
free rent, improvement allowance, or other concessions. Premises which are “comparable to the
Premises” shall not mean premises which are subleased, subject to another tenant’s expansion
rights, or leased to a tenant under a renewal or extension right. If multiple

4

 

appraisers are selected, each appraiser shall within ten (10) days of being selected make
its determination of the amount equal to ninety-five percent (95%) of the initial fair market
monthly base rental for the Premises in simple letter form. If two (2) or more of the appraisers
agree on said amount, such agreement shall be binding upon the parties. If multiple appraisers are
selected and two (2) appraisers are unable to agree on said amount, the amount equal to ninety-five
percent (95%) of the initial fair market monthly base rental for the Premises shall be determined
by taking the mean average of the appraisals; provided, that any high or low appraisal, differing
from the middle appraisal by more than ten percent (10%) of the middle appraisal, shall be
disregarded in calculating the average. Said initial monthly base rental shall be adjusted annually
on the anniversary of the commencement of the option extension period in the manner determined by
the appraiser or appraisers to be consistent with the then prevailing market practice for
comparable space in the Santa Clara, California office/R&D/manufacturing rental market.

          If
only one appraiser is selected, then each party shall pay one-half of the fees and
expenses of that appraiser. If three appraisers are selected, each party shall bear the fees and
expenses of the appraiser it selects and one-half of the fees and expenses of the third appraiser.

          (d) Thereafter, provided that Lessee has previously given timely notice to Lessor of the
exercise by Lessee of the option to extend the term, Lessor and Lessee shall execute an amendment
to this Lease stating that the initial monthly base rental for the Premises during the option
extension period, and any annual adjustments thereto, if applicable, shall be in the amounts as
determined by appraisal.

     4. Monthly Base Rent.

          (a) Subject to Paragraph 2(d), commencing on January 1, 2007 and continuing on the first day
of each calendar month thereafter during the initial term, Lessee shall pay to Lessor in monthly
installments in advance Monthly Base Rent, in lawful money of the United States, as follows:

	 	 	 	 	 	 	 	 	 
	Period

	 	Rent/sf/Month/NNN	 	Amount
	January 1, 2007 - December 31, 2007
	 	$	0.83	 	 	$	58,100	 
	January 1, 2008 - December 31, 2008
	 	$	0.87	 	 	$	60,900	 
	January 1, 2009 - December 31, 2009
	 	$	0.91	 	 	$	63,700	 
	January 1, 2010 - December 31, 2010
	 	$	0.96	 	 	$	67,200	 
	January 1, 2011
- December 31, 2011
	 	$	1.01	 	 	$	70,700	 
	January 1, 2012 - December 31, 2012
	 	$	1.06	 	 	$	74,200	 

          (b) Upon the execution and delivery of this Lease by Lessor and Lessee, Lessee shall pay to
Lessor the sum of Fifty-eight Thousand One Hundred Dollars ($58,100), representing the Monthly
Base Rent for the month of January 2007. Monthly Base Rent for a partial calendar month at the
commencement or expiration of the term shall be prorated on the basis of the actual number of days
in such calendar month.

5

 

     5. Additional Rent; Operating Expenses and Taxes.

          (a) In addition to the Monthly Base Rent payable by Lessee pursuant to
Paragraph 4, Lessee shall pay to Lessor commencing on the Warranty Date (as defined in
Paragraph 2(c)), and continuing thereafter during the term of this Lease as “Additional Rent”
all Operating Expenses of the entire Property as defined in Paragraph 5(b) and all Taxes levied or
assessed against the entire Property as Taxes are defined in Paragraph 5(c) hereof.

          (b) “Operating Expenses” as used herein shall include all direct costs actually
incurred by Lessor in the management, operation, maintenance, repair, and replacement of the
Property, including the cost of all maintenance, repairs, and restoration of the Property
performed by Lessor pursuant to Paragraphs 14(b) and 14(c) hereof, as determined in accordance
with generally accepted accounting principles (unless excluded by this Lease), including, but
not limited to:

          Personal property taxes related to the Property; any parking taxes or levies imposed on the
Property in the future by any governmental agency; a management fee not to exceed three percent
(3%) of the Monthly Base Rent payable by Lessee under this Lease, which management fee shall be
payable to Lessor, any affiliate of Lessor, or an independent property manager selected by Lessor;
water and sewer charges; waste disposal; insurance premiums for insurance coverages maintained by
Lessor pursuant to Paragraph 11(b) hereof; license, permit, and inspection fees; all charges for
electricity, heating, air conditioning, gas, and any other utilities (including, without
limitation, any temporary or permanent utility surcharge or other exaction) except to the extent
that such utilities are paid directly by Lessee pursuant to Paragraph 15(a); maintenance, repair,
and replacement of the roof membrane; maintenance and replacement of floor and window coverings;
repair, maintenance, and replacement of the heating, ventilating, air conditioning, mechanical and
electrical systems, plumbing and sewage systems (subject to the warranties set forth in Paragraph
2(c)); landscaping, gardening, and tree trimming; glazing; repair, maintenance, cleaning, sweeping,
striping, and resurfacing of the parking area; exterior Building lighting and parking lot lighting;
supplies, materials, equipment and tools used in the maintenance of the Property; costs for
accounting services incurred in the calculation of Operating Expenses and Taxes as defined herein;
and the cost of capital expenditures for any improvements or changes to the Building which are
required by laws, ordinances, or other governmental regulations adopted after the Commencement
Date, or for any items or capital expenditures voluntarily made by Lessor which are intended to
have the effect of reducing Operating Expenses, or for any items or capital expenditures required
because of Lessee’s specific use of the Premises; provided, however, that with respect to capital
improvements made to save Operating Expenses the amortization thereof shall not be at a rate
greater than the actual savings in Operating Expenses; and provided further, that except for
capital improvements required because of Lessee’s specific use of the Premises, if Lessor
voluntarily makes capital improvements or capital expenditures to the Property or is required to
make such capital improvements or capital expenditures, Lessor shall amortize the cost of said
improvements and expenditures (including insurance deductible amounts if the improvements damaged
are repaired or reconstructed) over the useful life of said improvements (together with interest on
the unamortized balance at the rate equal to the effective rate of interest actually charged to
Lessor for its borrowings for capital expenditures, but in no event in excess of ten percent (10%)
per annum) as an Operating Expense in accordance with generally accepted accounting principles.
Operating Expenses shall also include any other expenses or charges, whether or not described

6

 

herein, not specifically excluded by other provisions of this Lease, which in accordance with
generally accepted accounting principles would be considered an expense of managing, operating,
maintaining, and repairing the Property.

          (c) Real property taxes and assessments levied or assessed against the
Property, during the term of this Lease are referred to herein as
“Taxes.”

          As used herein, “Taxes” shall mean:

                    (1) all real estate taxes, assessments and any other taxes levied or
assessed against the Property, including the Land, the Building, and all improvements located
thereon, and including any increase in Taxes resulting from a reassessment following any
transfer of ownership of the Property or any interest therein or following any improvements to
the Property; and

                    (2) all other taxes which may be levied in lieu of real estate taxes,
assessments, and other fees, charges, and levies, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind and nature by any authority having the direct or
indirect power to tax, including without limitation any governmental authority or any
improvement or other district or division thereof, for public improvements, services, or
benefits which are assessed, levied, confirmed, imposed, or become a lien (1) upon the Property, and/or
any legal or equitable interest of Lessor in any part thereof; or (2) upon this transaction or
any document to which Lessee is a party creating or transferring any interest in the Property; and
(3) any tax or excise, however described, imposed in addition to, or in substitution partially or
totally of, any tax previously included within the definition of “Taxes” or any tax the nature of
which was previously included in the definition “Taxes.”

                    Not included within the definition of “Taxes” are any net income, profits, transfer,
franchise, estate, gift, rental income, or inheritance taxes imposed by any governmental
authority. “Taxes” also shall not include penalties or interest charges assessed on delinquent
Taxes.

                    With respect to any assessments which may be levied against or upon the Property, or the
Land, which under applicable Laws then in force may be evidenced by improvement or other bonds, or
may be paid in annual installments, only the amount of such annual installment (with appropriate
proration of any partial year) and statutory interest shall be included within the computation of
the annual Taxes levied against the Property.

          (d) Notwithstanding anything in Paragraphs 5(b) or 5(c) to the contrary, the
following costs (“Costs”) shall be excluded from the definition of Operating Expenses:

                    (1) Costs occasioned by the act, omission or violation of law by
Lessor, or its respective agents, employees or contractors;

                    (2) Costs for which Lessor receives reimbursement from others,
including reimbursement from insurance; Lessor shall exercise commercially reasonable efforts
to collect such amounts;

7

 

                    (3) Interest, charges, fees, and like carrying costs incurred on
debt or payments on any deed of trust or ground lease on the Property of which Lessor is
debtor, trustor, or lessee;

                    (4) Costs incurred in repairing, maintaining or replacing any structural
elements of the Building for which Lessor is responsible pursuant to Paragraph 14(a) hereof;

                    (5) Any wages, bonuses or other compensation of employees of
Lessor, including fringe benefits, or any fee, office overhead, general and administrative
expenses, or accounting charges paid to Lessor or its affiliates for management
and administration of the Property in excess of the management fee referred to in Paragraph 5(b);

                    (6) Costs in the nature of depreciation, amortization or other expense
reserves;

                    (7) Leasing expenses and broker commissions payable by Lessor;

                    (8) Costs incurred as a result of casualties or by the exercise of the
power of eminent domain;

                    (9) Costs which are properly capitalized under generally accepted
accounting principles, except to the extent those costs (including interest thereon) are
incurred after the Warranty Date and are amortized on a straight line basis over the useful life of the
capital item in question, determined in accordance with Paragraph 5(b) above;

                    (10) Costs incurred in connection with containing, removing, or
otherwise remediating any Hazardous Materials as defined in Paragraph 9(a), except to the
extent caused by the release or emission of the Hazardous Materials in question by Lessee or its
employees, agents, contractors, invitees, sublessees, successors or assigns;

                    (11) Overhead profit increments paid to Lessor’s subsidiaries or
affiliates for management or other services on or to the building or for supplies or other
materials to the extent that the cost of the services, supplies, or materials exceeds the cost that
would have been paid had the services, supplies, or materials been provided by unaffiliated parties on a
competitive basis;

                    (12) Costs to correct any construction defect, building code or other
violation, or to comply with any covenant, condition, restriction, underwriter’s requirement
or applicable Laws existing or in effect on or before the Warranty Date;

                    (13) Insurance costs for coverages not customarily paid by tenants of
comparable premises in the Santa Clara, California office/R&D/manufacturing rental market
(unless required by Lessor’s mortgage lender), and earthquake insurance deductibles except to
the extent used for repair and reconstruction and unless such deductible amounts are amortized
over the useful life of the repaired or reconstructed improvements so damaged on a straight
line basis, in which case Lessee shall pay such amortized amount monthly during the balance of the
term;

                    (14) advertising and marketing expenses;

8

 

                    (15) costs with respect to the creation of a mortgage or a superior lease

or in connection with a sale of the Property;

                    (16) penalties and interest for late payment of any obligation of Lessor,

                    (17) any compensation paid to clerks, attendants, or other persons in
commercial concessions operated by Lessor;

                    (18) costs for sculpture, paintings, or other objects of art (and insurance
thereon or extraordinary security in connection therewith);

                    (19) wages, salaries, or other compensation paid to any executive
employees above the grade of building manager;

                    (20) attorneys’ fees, costs, disbursements, and other expenses incurred
in connection with negotiations or disputes with tenants other than Lessee, or in connection
with leasing, renovating or improving space for tenants or other occupants or in connection with
the financing or refinancing of the Building or the Land or otherwise in connection with Lessor’s
business, except that there shall not be excluded from Operating Expenses attorneys’ fees and
costs paid by Lessor to Lessor’s property tax counsel employed to contest any property tax
assessment levied against the Property or to secure a reduction of the property taxes assessed
against the Property, provided that Lessee shall receive credit against future Taxes for any
refund received; and

                    (21) except as otherwise expressly provided herein, any other expense
that under generally accepted accounting principles and practices consistently applied would
not be considered a normal maintenance or operating expense.

          Lessor shall at all times use its best efforts to operate the Property in an economically
reasonable manner at costs not disproportionately higher than those experienced by other
comparable premises in the market area in which the Property is located.

          (e) The first monthly installment of Operating Expenses and Taxes shall be
payable on or before the Warranty Date; thereafter Operating Expenses and Taxes shall be paid
in monthly installments, concurrently with Monthly Base Rent, based upon Lessor’s good faith
annual estimate of Operating Expenses and Taxes. Lessee’s initial payment is based upon
Lessor’s estimate of Operating Expenses and Taxes for the year in question, and the monthly
payments thereof (and future payments) are subject to increase or decrease as determined by
Lessor to reflect an accurate estimate of actual Operating Expenses and Taxes. Within ninety
(90) days after the end of each calendar year, Lessor shall deliver to Lessee a statement of
actual Operating Expenses and Taxes for such calendar year. Within thirty (30) days after its receipt
of such statement, Lessee shall pay Lessor the amount of any deficiency, or Lessor shall credit
Lessee (or, if such adjustment is at the end of the Term, pay Lessee) the amount of any
excess, in Lessee’s payment of its of Operating Expenses and Taxes over actual Operating Expenses and
Taxes for such calendar year.

          (f) Lessee or its accountants shall have the right to inspect and audit Lessor’s
books and records with respect to this Lease once each calendar year to verify actual
Operating Expenses and/or Taxes. Lessor’s books and records shall be kept in accord with generally

9

 

accepted accounting principles. Lessee shall promptly deliver to Lessor a copy of such
audit, without expense to Lessor. If Lessee’s audit of the Operating Expenses or Taxes for any year
reveals an overcharge, the amount of the overcharge shall be credited against Operating Expenses
and/or Taxes next due hereunder or paid directly to Lessee, if this Lease shall have terminated. If
Lessee’s audit of the Operating Expenses or Taxes for any year reveals an undercharge, Lessee shall
promptly reimburse Lessor an amount equal to such undercharge. If Lessee’s audit of the Operating
Expenses and/or Taxes for any year reveals a net overcharge of more than five percent (5%), Lessor
promptly shall reimburse Lessee for the cost of the audit; otherwise, Lessee shall bear the cost of
Lessee’s audit.

          (g) Notwithstanding the expiration or termination of this Lease, within thirty (30) days
after receipt by Lessee of an invoice from Lessor for any Operating Expenses or Taxes payable by
Lessee for the calendar year in which this Lease expires or terminates, Lessee shall pay to Lessor
any such amount due as shown on such invoice. Lessee’s obligations under this subparagraph (g)
shall survive the expiration or termination of this Lease.

     6. Payment of Rent.

          (a) All rent shall be due and payable by Lessee in lawful money of the United
States of America at the address of Lessor set forth in Paragraph 24, “Notices,” without
deduction or offset and without prior demand or notice, unless otherwise specified herein.
Monthly Base Rent shall be payable monthly, in advance, on the first (1st) day of each
calendar month during the term of this Lease (except that the Monthly Base Rent for the month of
January 2007 shall be paid by Lessee upon the execution and delivery of this Lease by Lessor and
Lessee pursuant to Paragraph 3(b) hereof). Lessee’s obligation to pay the Operating Expenses and
Taxes of the Property shall commence on the Warranty Date, and shall continue thereafter
during the term of this Lease as billed by Lessor. The term “rent” as used in this Lease shall
include all sums payable by Lessee hereunder.

          (b) If any installment of Monthly Base Rent, Additional Rent or any other
sum due from Lessee is not received by Lessor within five (5) days after the same is due,
Lessee shall pay to Lessor an additional sum equal to five percent (5%) of the amount overdue as a
late charge. The parties agree that this late charge represents a fair and reasonable estimate of
the
costs that Lessor will incur by reason of the late payment by Lessee. Acceptance of any late
charge shall not constitute a waiver of Lessee’s default with respect to the overdue amount.
Any
amount not paid within ten (10) days after Lessee’s receipt of written notice that such amount
is
due shall bear interest from the date due until paid at the lesser rate of (1) the prime rate
of
interest as published in the “Wall Street Journal,” plus two percent (2%) or (2) the maximum
rate
allowed by law (the “Interest Rate”) in addition to the late payment charge.

          Initials:
Lessor [ILLEGIBLE]      
Lessee [ILLEGIBLE]

     7. Security Deposit.

          (a) Concurrently with the execution and delivery of this Lease by Lessor and Lessee, Lessee
shall deposit with Lessor the sum of One Hundred Forty-eight Thousand Four Hundred Dollars
($148,400) (the “Security Deposit”), as security for Lessee’s faithful performance of Lessee’s
obligations under this Lease. If Lessee fails to pay Monthly Base Rent,

10

 

accepted accounting principles. Lessee shall promptly deliver to Lessor a copy of such
audit, without expense to Lessor. If Lessee’s audit of the Operating Expenses or Taxes for any year
reveals an overcharge, the amount of the overcharge shall be credited against Operating Expenses
and/or Taxes next due hereunder or paid directly to Lessee, if this Lease shall have terminated. If
Lessee’s audit of the Operating Expenses or Taxes for any year reveals an undercharge, Lessee shall
promptly reimburse Lessor an amount equal to such undercharge. If Lessee’s audit of the Operating
Expenses and/or Taxes for any year reveals a net overcharge of more than five percent (5%), Lessor
promptly shall reimburse Lessee for the cost of the audit; otherwise, Lessee shall bear the cost of
Lessee’s audit.

          (g) Notwithstanding the expiration or termination of this Lease, within thirty (30) days
after receipt by Lessee of an invoice from Lessor for any Operating Expenses or Taxes payable by
Lessee for the calendar year in which this Lease expires or terminates, Lessee shall pay to Lessor
any such amount due as shown on such invoice. Lessee’s obligations under this subparagraph (g)
shall survive the expiration or termination of this Lease.

     6. Payment of Rent.

          (a) All rent shall be due and payable by Lessee in lawful money of the United
States of America at the address of Lessor set forth in Paragraph 24, “Notices,” without
deduction or offset and without prior demand or notice, unless otherwise specified herein.
Monthly Base Rent shall be payable monthly, in advance, on the first (1st) day of each
calendar month during the term of this Lease (except that the Monthly Base Rent for the month of
January 2007 shall be paid by Lessee upon the execution and delivery of this Lease by Lessor and
Lessee pursuant to Paragraph 3(b) hereof). Lessee’s obligation to pay the Operating Expenses and
Taxes of the Property shall commence on the Warranty Date, and shall continue thereafter
during the term of this Lease as billed by Lessor. The term “rent” as used in this Lease shall
include all sums payable by Lessee hereunder.

          (b) If any installment of Monthly Base Rent, Additional Rent or any other
sum due from Lessee is not received by Lessor within five (5) days after the same is due,
Lessee shall pay to Lessor an additional sum equal to five percent (5%) of the amount overdue as a
late charge. The parties agree that this late charge represents a fair and reasonable estimate of
the
costs that Lessor will incur by reason of the late payment by Lessee. Acceptance of any late
charge shall not constitute a waiver of Lessee’s default with respect to the overdue amount.
Any
amount not paid within ten (10) days after Lessee’s receipt of written notice that such amount
is
due shall bear interest from the date due until paid at the lesser rate of (1) the prime rate
of
interest as published in the “Wall Street Journal,” plus two percent (2%) or (2) the maximum
rate
allowed by law (the “Interest Rate”) in addition to the late payment charge.

          Initials:
Lessor [ILLEGIBLE]      
Lessee [ILLEGIBLE]

     7. Security Deposit.

          (a) Concurrently with the execution and delivery of this Lease by Lessor and Lessee, Lessee
shall deposit with Lessor the sum of One Hundred Forty-eight Thousand Four Hundred Dollars
($148,400) (the “Security Deposit”), as security for Lessee’s faithful performance of Lessee’s
obligations under this Lease. If Lessee fails to pay Monthly Base Rent,

10

 

Additional Rent, or any other sum due hereunder within applicable notice and cure periods
referred to in Paragraph 22, or any other Event of Default by Lessee occurs (as defined in
Paragraph 22, including applicable notice and cure periods referred to therein), Lessor may use,
apply or retain all or any portion of the Security Deposit for the payment of any amount due Lessor
or to reimburse or compensate Lessor for any liability, cost, expense, loss or damage (including
attorneys’ fees) which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all
or any portion of the Security Deposit, Lessee shall within ten (10) days after written request
therefor deposit an amount with Lessor sufficient to restore the Security Deposit to the original
amount required by this Lease. Lessor shall not be required to keep all or any part of the Security
Deposit separate from its general accounts. Lessor agrees that the Security Deposit shall be
reduced to Seventy-four Thousand Two Hundred Dollars ($74,200) on the first day of the calendar
month after Lessee has delivered written evidence reasonably satisfactory to Lessor that Lessee had
positive net income for its previous fiscal year.

          (b) In the event that Lessor has funded more than Two Hundred Ten Thousand Dollars ($210,000)
($3.00 psf) of Additional Tenant Improvement Allowance, within ten (10) business days after the
last installment of Additional Tenant Improvement Allowance has been funded, Lessee shall deliver
to Lessor an unconditional, irrevocable standby letter of credit (“Letter of Credit”) in an amount
(“Original LC Amount”) equal to the amount of the Secured Tenant Improvement Allowance. The
parties agree that the Secured Tenant Improvement Allowance shall be equal to the excess amount
(if any) paid by Lessor for the construction of the Tenant Improvement Work over and above the sum
of (i) the Tenant Improvement Allowance of Eight Hundred Forty Thousand Dollars ($840,000) ($12.00
psf), plus (ii) Two Hundred Ten Thousand Dollars ($210,000) ($3.00 psf). The Letter of Credit
shall be issued by a bank reasonably acceptable to Lessor, in favor of Lessor as beneficiary, with
Letter of Credit draw language consistent with this Paragraph 7(b). Lessee shall renew the Letter
of Credit annually or cause the issuing bank to issue a new Letter of Credit to Lessor in the
amount of the remaining balance at least thirty (30) days prior to the expiration of the existing
Letter of Credit. Failure by Lessee to cause the issuing bank to renew the Letter of Credit, or to
issue a new Letter of Credit in the amount of the remaining balance, that is delivered to Lessor
at least thirty (30) days prior to the expiration of the existing Letter of Credit shall be a
default by Lessee which shall give Lessor the right to draw on the existing Letter of Credit.

          If Lessee fails to pay to Lessor any monthly amount necessary to amortize the Additional
Tenant Improvement Allowance pursuant to Paragraph 13(b), within five (5) days after said amount
is due Lessor may, upon prior written notice to Lessee, draw upon the Letter of Credit for the
payment to Lessor of the amount then past due, plus any additional amount to compensate Lessor for
any liability, cost, expense, loss or damage (including reasonable attorneys’ fees) which Lessor
may suffer or incur by reason of Lessee’s non-payment,

          The Letter of Credit shall be (i) “callable” at sight upon delivery to the issuer of a draw
request, (ii) subject to the terms of this paragraph, maintained in effect, whether through
renewal or extension, for the entire period from the date of execution of this Lease and
continuing until the date (the “LC Expiration Date”) that is ten (10) days after the expiration of
the initial term, (iii) subject to the International Standby Practices 1998, International Chamber
of Commerce Publication No. 590, (iv) fully assignable by
Lessor, and (v) permit partial draws. In
addition to the foregoing, the form and terms of the Letter of Credit shall be acceptable to
Lessor, in Lessor’s reasonable discretion, and shall provide, among other things, in effect that:

11

 

(A) Lessor, or its then managing member (or its property manager if authorized by Lessor), shall
have the right to draw down an amount up to the face amount of the Letter of Credit upon the
presentation to the Bank of Lessor’s (or Lessor’s then managing agent’s) written statements that
(1) such amount is due to Lessor under the terms and conditions of Paragraph 7(b) of this Lease, or
(2) Lessee has filed a voluntary petition under the Federal Bankruptcy Code, it being understood
that if Lessor or its managing member is a limited liability company, corporation, partnership or
other entity, then such statement shall be signed by a managing member (if a limited liability
company), an officer (if a corporation), a general partner (if a partnership), or any authorized
party (if another entity); (B) the Letter of Credit will be honored by the issuing bank without
inquiry as to the accuracy thereof and regardless of whether the Lessee disputes the content of
such statement; and (C) provided that no default by Lessee under this Paragraph 7(b) of this Lease
remains uncured, the amount of the Letter of Credit shall decline as of the last day of each
calendar month in accordance with the schedule attached hereto as Exhibit “D” and incorporated
herein by reference. If a default by Lessee under this Paragraph 7(b) of this Lease remains uncured
as of the end of any calendar month, the amount of the Letter of Credit shall not decline, but
shall remain unchanged.

          (c) Within thirty (30) days after the expiration or earlier termination of the term hereof
and after Lessee has vacated the Premises Lessor shall return to Lessee (or at Lessor’s option, to
the last assignee, if any, of Lessee’s interest herein), that portion of the Security Deposit
referred to in Paragraph 7(a) not used or applied by Lessor. Unless otherwise expressly agreed in
writing by Lessor, no part of the Security Deposit shall be considered to be held in trust, to
bear interest or other increment for its use, or to be prepayment for any moneys to be paid by
Lessee under this Lease. Provided that no Event of Default (as defined in Paragraph 22) remains
uncured following the expiration of all applicable notice and cure periods, Lessor shall return to
Lessee on the LC expiration Date the Letter of Credit referred to in Paragraph 7(b).

     8. Use. Lessee shall have the right to use the Premises for research and
development, general offices, administration, sales, storage, shipping and
receiving,
manufacturing and warehousing, and for such other uses permitted by applicable zoning
ordinances and any covenants, conditions, and restrictions affecting the Property, and for no
other use or purpose without Lessor’s prior written consent. Notwithstanding the foregoing,
use of the Premises for the manufacture of integrated circuits is expressly prohibited. Any use of
the
Premises by any sublessee or assignee pursuant to Paragraph 17 shall comply with the
provisions
of this Paragraph 8.

     9. Environmental Matters.

          (a) The term “Hazardous Materials” as used in this Lease shall mean any
product, substance, or waste whose presence, use, manufacture, disposal, transportation, or
release, is regulated or monitored by any governmental authority pursuant to Environmental
Laws. Hazardous Materials shall include, but not be limited to hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.

          (b) “Environmental Laws” shall mean and include any Federal, State, or local
statute, law, ordinance, code, rule, regulation, order, or decree regulating, relating to, or
imposing
liability or standards of conduct concerning, any hazardous, toxic, or dangerous waste,

12

 

     substance, element, compound, mixture or material, as now or at any time hereafter in effect
including, without limitation, California Health and Safety Code §§25100 et seq., §§25300 et seq.,
Sections 25281(f) and 25501 of the California Health and Safety Code, Section 13050 of the Water
Code, the Federal Comprehensive Environmental Response, Compensation and Liability Act, as amended,
42 U.S.C. §§9601 et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act, 42 U.S.C.
§§9601 et seq., the Federal Toxic Substances Control Act, 15 U.S.C. §§2601 et seq., the Federal
Resource Conservation and Recovery Act as amended, 42 U.S.C. §§6901 et seq., the Federal Hazardous
Material Transportation Act, 49 U.S.C. §§1801 et seq., the Federal Clean Air Act, 42 U.S.C. §7401
et seq., the Federal Water Pollution Control Act, 33 U.S.C. §1251 et seq., the River and Harbors
Act of 1899, 33 U.S.C. §§401 et seq., and all rules and regulations of the EPA, the California
Environmental Protection Agency, or any other state or federal department, board or any other
agency or governmental board or entity generally having jurisdiction over the environment, as any
of the foregoing have been, or are hereafter amended.

          (c) Lessee shall not use, store, or transport to or from the Premises or the
Property, or dispose of any Hazardous Materials without Lessor’s prior written consent, except
(1) ordinary and customary office supplies and cleaning materials which are used in the normal
course of Lessee’s agreed use of the Premises, and (2) such other Hazardous Materials the
generation, possession, storage, use, transportation, or disposal of which in the quantities
used by
Lessee do not require a permit from any governmental authority. All such Hazardous Materials
(1) shall be used, stored, transported, and disposed of in strict compliance with
Environmental
Laws, and (2) shall be stored on the Premises only in limited quantity required for Lessee’s
business at the Premises. Except as otherwise specifically permitted by this Paragraph 9(c),
Lessee shall not use, store, transport, or dispose of any Hazardous Materials in or about the
Premises or the Property. Without limiting the generality of the foregoing, Lessee shall, at
its
sole cost, comply with all Environmental Laws relating to its use of Hazardous Materials. If
Hazardous Materials are discovered at or about the Premises or the Property in violation of
Environmental Laws and such Hazardous Materials were used, stored, transported, or disposed
of by Lessee, then Lessee shall, at Lessee’s sole expense, promptly take all action necessary
to cause the Property to comply with all Environmental Laws with respect to such Hazardous
Materials. Upon Lessor’s request, Lessee shall deliver to Lessor (1) a copy of Lessee’s
current
Hazardous Materials Management Plan, if any, and any amendments or supplements thereto, or
replacements thereof, from time to time during the term of this Lease, and (2) a copy of all
Hazardous Materials reports or plans filed by Lessee with the City of Santa Clara, if any,
even
though Lessee’s Hazardous Materials Management Plan and any such reports or plans filed with
the City show that Lessee is not currently using any reportable Hazardous Materials on the
Premises.

          (d) If Lessee knows, or has reasonable cause to believe, that Hazardous
Materials have come to be located in, on, under or about the Premises, Lessee shall
immediately
give written notice of such fact to Lessor and provide Lessor with a copy of any report,
notice,
claim or other documentation which Lessee has in its possession concerning the presence of
such
Hazardous Materials.

          (e) Lessee shall indemnify, defend with counsel reasonably acceptable to
Lessor, and hold Lessor harmless from any and all claims, damages, fines, judgments, penalties,
costs, liabilities or losses (including, without limitation, any and all sums paid
for settlement of

13

 

claims, attorneys’ fees, consultant and expert fees) (“Claims”) arising during or after the
term (as such may be extended) from the use, storage, transportation, release, disposal, discharge,
or emission of Hazardous Materials at or about the Premises or the Property by Lessee, or Lessee’s
employees, agents, contractors, invitees, or sublessees (collectively, “Lessee Parties”), in
violation of Environmental Laws or the terms of this Lease. Without limitation of the foregoing,
this indemnification shall include any and all costs incurred due to any investigation of the site
or any cleanup, removal or restoration mandated by a federal, state or local agency or political
subdivision and any repairs to the Property required in connection therewith. The foregoing
indemnity shall survive the expiration or earlier termination of this Lease.

          (f) Prior to the expiration of the term and the surrender of possession of the Premises by
Lessee to Lessor, in the event that Lessee or any sublessee during the term of this Lease has used
Hazardous Materials on the Premises for which a permit is required, Lessee shall obtain at
Lessee’s expense an environmental closure report certified by the appropriate department of the
City of Santa Clara (“Certified Closure Report”) and a copy of such Certified Closure Report shall
be delivered to Lessor if such report is required by the City of Santa Clara or applicable law.
Such closure shall include the removal and remediation at Lessee’s expense of any Hazardous
Materials in, on, under, or about the Premises released or discharged by Lessee, its Permitted
Affiliates, sublessees, assignees, employees, agents, contractors, or invitees (i) referred to in
the environmental closure report prepared by the City of Santa Clara, or (ii) as may be required
by the City as a condition to the issuance by the City of a Certified Closure Report that does not
recommend or require further clean up or other similar action.

          (g) To the current actual knowledge of Harold Balzer, Manager of Lessor, and David Balzer,
Facilities Manager of Lessor, except as disclosed to Lessee in writing by Lessor or as contained
in any environmental site assessment report delivered by Lessor to Lessee prior to the execution
of this Lease, (1) no Hazardous Materials are present on the Property or the soil, surface water
or groundwater thereof, (2) no underground storage tanks are present on the Property, and (3) no
action, proceeding or claim is pending or threatened regarding the Property concerning any
Hazardous Materials or pursuant to any environmental law. Lessor shall be responsible (at no cost
to Lessee), and Lessor shall indemnify, defend with counsel reasonably acceptable to Lessee, and
hold Lessee harmless from all Claims arising from or incurred as a result of Hazardous Materials
being present on the Property at any time due to acts or omissions of Lessor or its employees,
agents, contractors, tenants, invitees, or other third parties (excluding Lessee and any Lessee
Parties). Lessee shall not be responsible under this Lease, and Lessor hereby releases Lessee from
liability for any Hazardous Materials present on the Premises that were not released by Lessee or
its employees, agents, contractors, invitees, or sublessees.

          (h) Notwithstanding anything to the contrary herein, Lessee shall have the right to perform a
phase I environmental site assessment of the Property and any phase II environmental
investigations of the Property that Lessee feels are reasonably necessary, provided that Lessee
shall promptly deliver copies thereof to Lessor upon receipt thereof.

          (i) The provisions of this Paragraph 9 shall survive the expiration or earlier termination of
the term of this Lease.

     10. Taxes on Lessee’s Property. Lessee shall pay before delinquency any and all
taxes, assessments, license fees, and public charges levied, assessed, or imposed and which

14

 

become payable during the initial term and any extension thereof upon Lessee’s equipment,
fixtures, furniture, and personal property installed or located in the Premises.

     11. Insurance.

          (a) Lessee shall, at Lessee’s sole cost and expense, provide and keep in force commencing with
the commencement date of Lessee’s early access to the Premises and continuing during the Lease
term, a commercial general liability insurance policy with a recognized casualty insurance company
qualified to do business in California, insuring against any and all liability occasioned by any
occurrence in, on, about, or related to the Property, or arising out of the condition, use,
occupancy, alteration or maintenance of the Property, having a combined single limit for both
bodily injury and property damage in an amount not less than Three Million Dollars ($3,000,000) per
occurrence. Lessee’s liability insurance policy shall contain cross liability endorsements, shall
contain contractual liability coverage and shall include Lessor and Lessor’s property manager as
additional insureds. All such insurance carried by Lessee shall be in a form reasonably
satisfactory to Lessor and its mortgage lender and shall be carried with companies that have a
general policyholder’s rating of not less than “A” and a financial rating of not less than Class
“X” in the most current edition of Best’s Insurance Reports; shall provide that such policies shall
not be subject to reduction or cancellation except after at least thirty (30) days’ prior written
notice to Lessor; and shall be primary and not contributory. Prior to the early occupancy of the
Premises by Lessee, and upon renewal of such policies not less than thirty (30) days prior to the
expiration of the term of such coverage, Lessee shall deliver to Lessor certificates of insurance
confirming such coverage, together with evidence of the payment of the premium therefor. If Lessee
fails to procure and maintain the insurance required hereunder within five (5) days after receipt
by Lessee of written notice from Lessor, Lessor may, but shall not be required to, order such
insurance at Lessee’s expense and Lessee shall reimburse Lessor for all costs incurred by Lessor
with respect thereto. Lessee’s reimbursement to Lessor for such amounts shall be deemed Additional
Rent, and shall include all sums disbursed, incurred or deposited by Lessor, including Lessor’s
costs, expenses and reasonable attorneys’ fees with interest thereon at the Interest Rate.

          (b) Subject to the provisions of Paragraphs 5(a), 5(b), and 5(d), Lessor shall obtain and
carry in Lessor’s name, as insured, during the term of this Lease, “all risk” property insurance
coverage in an amount equal to the full replacement cost of the Building (with rental loss
insurance coverage for a period of one year) (“Lessor’s property insurance”), flood insurance (but
only if required by Lessor’s lender), commercial general liability insurance, and insurance
against such other risks or casualties as Lessor shall reasonably determine, including, but not
limited to, insurance coverages required of Lessor by the beneficiary of any deed of trust which
encumbers the Property (including earthquake and terrorism insurance coverage, but only if
required by Lessor’s lender), insuring Lessor’s interest in the Property, any other improvements
to the Property constructed by Lessor, or by Lessee with Lessor’s prior written approval, in an
amount not less than the full replacement cost of the Building and all other Improvements from
time to time. The proceeds of any such insurance shall be payable solely to Lessor and Lessee
shall have no right or interest therein. Lessor shall have no obligation to insure against loss by
Lessee to Lessee’s equipment, furniture, fixtures, inventory, or other personal property of Lessee
in, on, or about the Premises occurring from any cause whatsoever. Lessor’s commercial general
liability insurance shall provide for contractual liability coverage of Lessor’s indemnity
referred to in Paragraph 12(b).

15

 

          (c) Notwithstanding anything to the contrary contained in this Lease, the parties release each
other, and their respective authorized representatives, employees, officers, directors,
shareholders, managers, members, assignees, subtenants, and property managers, from any Claims for
damage to the Property and to the fixtures, personal property, leasehold improvements and
alterations of either Lessor or Lessee in or on the Property that are caused by or result from
risks required by this Lease to be insured against or actually insured against under any property
insurance policies carried by the parties and in force at the time of any such damage, whichever is
greater. This waiver applies whether or not the loss is due to the negligent acts or omissions of
Lessor or Lessee or their respective authorized representatives, shareholders, managers, members,
assignees, subtenants, successors, officers, directors, employees, agents, contractors, or
invitees. All of Lessor’s and Lessee’s repair and indemnity obligations under this Lease shall be
subject to the waiver contained in this Paragraph 11 (c).

          (d) Each party shall cause each property insurance policy obtained by it to provide that the
insurance company waives all right of recovery by way of subrogation against either party in
connection with the above waiver and any damage covered by any policy; provided, however, that
such provision or endorsement shall not be required if the applicable policy of insurance permits
the named insured to waive rights of subrogation on a blanket basis, in which case the blanket
waiver shall be acceptable. Neither party shall be liable to the other for any property loss or
damage caused by fire or any of the risks insured against (or required to be insured against)
under any insurance policy carried pursuant to this Lease.

     12. Indemnification.

          (a) Subject to Paragraphs 12(c) and 12(d), Lessee shall indemnify, defend, and hold Lessor
harmless from all Claims, suits, actions, or liabilities for personal injury, death or for loss or
damage to property (1) that arise from any activity, work, or thing done or permitted by Lessee in
or about the Property, (2) for bodily injury or damage to property which arises in or about the
Property to the extent the injury or damage to property results from the negligent acts or
omissions of Lessee, its employees, agents, or contractors, or (3) that are based on any Event of
Default by Lessee in the performance of any obligation on Lessee’s part to be performed under this
Lease, except to the extent caused by the negligent or willful misconduct of Lessor or its
employees, agents, or contractors or a breach by Lessor of its obligations under this Lease. Lessee
also waives all claims against Lessor for damages to property, or to goods, wares, and merchandise
stored in, upon, or about the Premises or the Property, and for injuries to persons in, upon, or
about the Premises or the Property from any cause arising at any time, except as may be caused by
the negligence or willful misconduct of Lessor or its employees, agents or contractors or the
breach by Lessor of its obligations under this Lease.

          (b) Subject to Paragraphs 11(c) and 11(d), Lessor shall indemnify, defend, and hold Lessee
harmless from Claims for personal injury, death or for loss or damage to property (1) that arise
from bodily injury or damage to property in or about the Property to the extent the injury or
damage to property results from the negligent acts or omissions of Lessor, its employees, agents
or contractors, or (2) that are based on any breach or default by Lessor in the performance of any
obligation on Lessor’s part to be performed under this Lease, except to the extent caused by the
negligent or willful misconduct of Lessee or its employees, agents or contractors or a breach by
Lessee of its obligations under this Lease.

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          (c) The foregoing indemnities by Lessee and Lessor shall also include
reasonable costs, expenses and attorneys’ fees incurred in connection with any indemnified
claim or incurred by the indemnitee in successfully establishing the right to indemnity. The
indemnitor shall have the right to assume the defense of any claim subject to the foregoing indemnities
with counsel reasonably satisfactory to the indemnitee. The indemnitee agrees to cooperate fully
with the indemnitor and its counsel in any matter where the indemnitor elects to defend, provided
the indemnitor shall promptly reimburse the indemnitee for reasonable costs and expenses incurred
in connection with its duty to cooperate.

          The foregoing indemnities are conditioned upon the indemnitee providing reasonably prompt
notice to the indemnitor of any claim or occurrence that is likely to give rise to a claim, suit,
action or liability that will fall within the scope of the foregoing indemnities, along with
sufficient details that will enable the indemnitor to make a reasonable investigation of the claim.

          When the claim is caused by the joint negligence or willful misconduct of Lessee and Lessor
or by the indemnitor party and a third party unrelated to the indemnitor party (except
indemnitor’s agents, officers, employees or invitees), the indemnitor’s duty to indemnify and
defend shall be proportionate to the indemnitor’s allocable share of joint negligence or willful
misconduct.

          (d) Notwithstanding anything to the contrary contained herein, neither party
shall be liable to the other, or to any of the employees, agents, contractors, or invitees of
the other for any damage because of any act or negligence of any owner or occupant of adjoining
or contiguous property (other than that belonging to such party or its affiliates or
subsidiaries) or other third person, or for overflow, breakage, or leakage of water, steam, gas, or
electricity from pipes, wires, or otherwise in the Building.

     13. Tenant Improvement Work: Condition of the Building.

          (a) Lessee shall cause to be performed all hard and soft cost work associated
with improvement of the Premises and the Building for Lessee’s use (“Tenant Improvement
Work”) pursuant to a space plan of the Building (the “Space Plan”) mutually approved by the
parties. Any material changes to the approved Space Plan shall also require the prior written
approval of both Lessor and Lessee. Each party agrees that it will not unreasonably withhold,
condition or delay its approval of the Space Plan or any material changes thereto.

          The Tenant Improvement Work shall be performed by a general contractor selected by Lessee
pursuant to a construction contract between Lessee and the contractor describing the Tenant
Improvement Work, the cost thereof, and the scheduled completion date. The contractor selected by
Lessee and the construction contract shall be subject to Lessor’s written approval, which shall
not be unreasonably withheld, conditioned or delayed.

          (b) Lessor shall contribute the sum of Eight Hundred Forty Thousand Dollars
($840,000) ($12.00 per rentable square foot of the Premises) as a tenant improvement
allowance (“Tenant Improvement Allowance”) which shall be applied to the cost of the Tenant
Improvement Work. Lessor shall also contribute an additional sum of up to Five Hundred Sixty
Thousand Dollars ($560,000) ($8.00 per rentable square foot of the Premises) (the “Additional
Tenant Improvement Allowance”) toward the Tenant Improvement Work, subject to (1) the

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written approval by Lessor and Lessee of the written scope of the additional Tenant Improvement
Work and the cost thereof (such approval shall not be unreasonably withheld, conditioned or
delayed), and (2) Lessee’s agreement to amortize the amount of the Additional Tenant Improvement
Allowance by making equal monthly payments, plus ten percent (10%) interest per year on the unpaid
balance thereof from time to time, to Lessor commencing on January 1, 2007 and continuing in equal
monthly installments during the initial term of this Lease. Lessee shall provide a Letter of Credit
to Lessor to secure the portion, if any, of the Tenant Improvement Allowance defined as the Secured
Tenant Improvement Allowance in accordance with Paragraph 7 above. Lessor shall make disbursements
of the Tenant Improvement Allowance and the Additional Tenant Improvement Allowance directly to
Lessee’s contractor promptly following the receipt by Lessor of copies of invoices submitted to
Lessee by Lessee’s contractor that have been approved for payment by Lessee. Lessee shall pay the
entire balance of the cost, if any, of the Tenant Improvement Work in excess of the Tenant
Improvement Allowance and the Additional Tenant Improvement Allowance promptly upon receipt by
Lessee of invoices for such costs.

          (c) Lessee shall cause the Tenant Improvement Work to be constructed in accordance with all
applicable laws, in a good and workmanlike manner, free of defects and using new materials and
equipment of good quality. Lessee shall cause Lessee’s contractor to correct at the contractor’s
expense any defects in the Tenant Improvement Work noted by Lessee or by Lessor prior to the
expiration of the warranty period for the Tenant Improvement Work. Any needed repairs to the
Tenant Improvement Work thereafter shall be performed by Lessor and included in Operating Expenses
pursuant to Paragraph 5 if the nature of such repairs is that it falls under Lessor’s maintenance
and repair obligations, otherwise such repairs shall be made by Lessee at Lessee’s expense.

          (d) Lessor warrants that the Building will be in the condition required by Paragraph 2(c),
including in compliance with the Americans With Disabilities Act (ADA) on the Warranty Date.
Lessee shall give written notice to Lessor of any defect in any of the foregoing elements of the
Building within one hundred twenty (120) days after the Warranty Date, and Lessor shall cause any
such defect specified by Lessee to be repaired, at Lessor’s expense, as soon as possible. Any
needed repairs to any of the foregoing elements of the Building of which Lessee gives Lessor
written notice after such period shall be performed by Lessor and included in Operating Expenses
pursuant to Paragraph 5.

          (e) Subject to the payment by Lessor of the Tenant Improvement Allowance and the Additional
Tenant Improvement Allowance and the performance by Lessor of Lessor’s obligations under
Paragraphs 2(c) and 2(d), Lessee waives all right to make repairs at the expense of Lessor, or to
deduct the costs thereof from the rent, and Lessee waives all rights under Section 1941 and 1942
of the Civil Code of the State of California.

     14. Maintenance and Repairs; Alterations: Surrender and Restoration.

          (a) Lessor shall, at Lessor’s sole expense, keep in good order, condition, and repair and
replace when necessary, the structural elements of the roof (excluding the roof membrane), the
foundation and exterior walls (except the interior faces thereof) of the Building, excluding any
alterations, structural or otherwise, made by Lessee to the Building which are not approved in
writing by Lessor prior to the construction or installation thereof by Lessee. Subject

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to the applicable conditions of Paragraphs 20 and 21 hereof, Lessor shall perform and construct,
and Lessee shall not be responsible for performing or constructing, any repairs, maintenance, or
improvements (1) required as a result of any casualty damage or as a result of any taking pursuant
to the exercise of the power of eminent domain, or (2) for which Lessor receives reimbursement from
third parties based on construction or other warranties, contractor guarantees, or insurance
claims. Lessor shall use its good faith diligent efforts to collect any such sums.

          (b) In addition to the items referred to in Paragraph 5(b), Lessor shall, repair, maintain,
and replace as needed, as an Operating Expense pursuant to Paragraph 5 hereof, the roof membrane,
ceiling glass, exterior glass and glazing, the Building’s electrical, plumbing and life safety
systems, the exterior areas of the Property outside the Building and the parking facilities
serving the Building, including without limitation, the landscaping, tree trimming, resurfacing
and restriping of the parking lot and walkways, exterior building lighting, and parking lot
lighting, and, subject to Paragraphs 5(b) and (d), Lessor shall perform or cause to be performed,
any repair, maintenance, or improvements which are properly treated as capital improvements or
capital expenditures, and shall amortize the cost thereof over their useful life, together with
interest thereon (as provided in Paragraphs 5(b) and (d)), as an Operating Expense (to the extent
properly includable as an Operating Expense pursuant to Paragraphs 5(b) and (d)) in accordance
with generally accepted accounting principles. In the event Lessee provides Lessor with written
notice of the need for any repairs to the Property, Lessor shall commence any such repairs
promptly following receipt by Lessor of such notice and Lessor shall diligently prosecute such
repairs to completion.

          (c) Subject to the foregoing, except as otherwise provided in this Lease, Lessee shall at all
times keep the Premises and the interior common areas of the Building in good and safe order,
condition, and repair. Lessee shall contract for and pay directly for the janitorial service to
the Premises and the interior common areas of the Building. Lessee shall execute and maintain in
full force and effect at Lessee’s expense throughout the term a service contract with an
authorized air conditioning service company for periodic service, repairs, and replacement of
parts to service the portion of the HVAC system serving the Premises. Lessor shall have the right
to obtain on a semi-annual basis an inspection report of the HVAC system from an HVAC service firm
designated by Lessor for the purpose of monitoring the performance of the HVAC maintenance and
repair work performed by Lessee’s HVAC service firm. The cost of such inspection report shall be
an Operating Expense pursuant to Paragraph 5(b). Subject to the release of claims and waiver of
subrogation contained in Paragraphs 11(c) and 11(d), if Lessor is required to make any repairs by
reason of Lessee’s negligent acts or omission to act, Lessor may add the cost of such repairs to
the next installment of rent which shall thereafter become due, and Lessee shall promptly pay the
same upon receipt of an invoice therefor.

          (d) Lessee may, from time to time, at its own cost and expense and without the consent of
Lessor make nonstructural alterations to the interior of the Premises, the cost of which in any
one instance is Twenty-five Thousand Dollars ($25,000) or less, and the aggregate cost of all such
work during the term of this Lease does not exceed One Hundred Thousand Dollars ($100,000),
provided that Lessee first notifies Lessor in writing of any such nonstructural alterations.
Otherwise, Lessee shall not make any alterations, improvements, or additions to the Premises or to
any other part of the Building without delivering to Lessor a complete set of plans and
specifications for such work and obtaining Lessor’s prior written consent thereto, which

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consent shall not be unreasonably withheld, conditioned or delayed. If any nonstructural
alterations to the interior of the Premise exceed Twenty-five Thousand Dollars ($25,000) in cost in
any one instance, or exceed the aggregate cost of One Hundred Thousand Dollars ($100,000) during
the term of this Lease, Lessee shall employ, at Lessee’s expense, a qualified licensed general
contractor to perform such alterations pursuant to a construction contract entered into between
Lessee and such contractor. The contractor and the construction contract shall be subject to
Lessor’s written approval prior to commencement of construction, which approval shall not be
unreasonably withheld, conditioned or delayed. Lessee shall deliver to Lessor at Lessee’s expense a
complete set of as built drawings of the Premises including such alterations upon the completion
thereof. Lessor may condition its consent to Lessee agreeing in writing to remove any such
alterations at the expiration or earlier termination of the term of this Lease and Lessee agreeing
to restore the Premises to its condition prior to such alterations at Lessee’s expense. Lessor
shall advise Lessee in writing at the time consent is granted whether Lessor reserves the right to
require Lessee to remove any alterations from the Premises prior to the expiration of this Lease.

          All alterations, trade fixtures and personal property installed in the Premises solely at
Lessee’s expense shall during the term of this Lease remain the property of Lessee, and Lessee
shall be entitled to all depreciation, amortization and other tax benefits with respect thereto.
Lessee may remove any of Lessee’s personal property, furniture, or equipment not permanently
affixed to the Premises (“Lessee’s Personal Property”) at any time and from time to time, provided
that Lessee shall repair any damage to the Premises caused by such removal. Lessor shall have no
lien or other interest whatsoever in any item of Lessee’s Personal Property. Within ten (10) days
following Lessee’s request from time to time, Lessor shall execute documents in commercially
reasonable form to evidence Lessor’s waiver of any right, title, lien or interest in any of
Lessee’s Personal Property and giving any lenders holding a security interest or lien on such
property reasonable rights of access to the Premises to remove Lessee’s Personal Property, provided
that such lenders agree to repair all damage caused by such removal and any personal property owned
by Lessor remains free of liens. Upon the expiration or sooner termination of this Lease all
alterations, fixtures and improvements to the Premises, whether made by Lessor or installed by
Lessee at Lessee’s expense, shall be surrendered by Lessee with the Premises and shall become the
property of Lessor (except for those items Lessor required Lessee to remove pursuant to the
previous paragraph); provided, however that Lessee may remove any or all of Lessee’s Personal
Property prior to or promptly following the expiration of the term, but Lessee shall repair any
damage to the Premises caused by such removal.

          (e) Lessee, at Lessee’s sole cost and expense, shall during the term of this Lease promptly
and properly observe and comply with all existing and future Laws, and the Board of Fire
Underwriters. Any structural changes or repairs or other repairs or changes of any nature to the
Building which would be considered a capital expenditure under generally accepted accounting
principles, including changes or repairs required by the ADA, any state laws governing handicapped
access or architectural barriers, and all rules, regulations and guideline promulgated under such
laws after the Warranty Date, as amended from time to time, shall be made by Lessor unless such
structural repairs or changes are required by reason of the specific nature of the use of the
Premises by Lessee, in which case Lessee shall bear the cost of such repairs or changes. If such
structural changes or repairs are required after the Warranty Date and are not required by reason
of the specific nature of Lessee’s use of the Premises, the cost of such

20

 

structural changes or repairs, except as provided in Paragraph 14(a), shall be treated as an
Operating Expense and shall be amortized in accordance with the provisions of Paragraph 5(b).

          (f) Lessee shall surrender the Premises (including the Tenant Improvement Work) by the last
day of the Lease term or any earlier termination date, with all of the improvements to the Premises
and the interior common areas of the Building, parts, and surfaces thereof clean and free of debris
and in good operating order, condition, and state of repair, except for ordinary wear and tear and
except for damage caused by casualty, the elements, acts of God or other force majeure events, a
taking by eminent domain, maintenance that is Lessor’s responsibility hereunder, Hazardous
Materials not released or emitted in violation of Laws by Lessee or its agents, employees or
contractors, and alterations or other improvements made by Lessee with Lessor’s prior written
consent which Lessee is not required to remove as a condition to Lessor’s approval of such
alterations or improvements. “Ordinary wear and tear” shall not include any damage or deterioration
that would have been prevented by commercially reasonable maintenance practice or by Lessee
performing all of its obligations under this Lease. The obligations of Lessee shall include the
repair of any damage occasioned by the installation, maintenance, or removal of Lessee’s trade
fixtures, furnishings, equipment, and alterations, and the restoration by Lessee of the Premises to
its condition prior to any alterations, additions, or improvements made by Lessee, subject to the
exceptions set forth in the first sentence of this subparagraph (f) (1) if Lessor’s consent thereto
was conditioned upon such removal and restoration upon expiration or sooner termination of the
Lease term pursuant to Paragraph 14(d), or (2) if Lessee made any such alterations, additions, or
improvements without obtaining Lessor’s prior written consent in breach of Paragraph 14(d), and
within a reasonable time after the expiration or sooner termination of the Lease term Lessor gives
written notice to Lessee requiring Lessee to perform such removal and restoration. Lessee’s
obligations under this Paragraph 14 shall survive the expiration or earlier termination of this
Lease.

     15. Utilities and Services.

          (a) Lessee shall contract for and pay directly the cost of all electricity, telephone, gas,
water, heat and air conditioning service, janitorial service, refuse pick-up, sewer charges, and
all other utilities or services supplied to or consumed by Lessee, its agents, employees,
contractors, and invitees, on or about the Premises and the common areas of the Building.

          (b) Lessor shall not be liable to Lessee for any interruption or failure of any utility
services to the Building or the Premises which is not caused by the negligence or willful acts of
Lessor, or Lessor’s employees, agents, or contractors. Lessee shall not be relieved from the
performance of any covenant or agreement in this Lease because of any such interruption or
failure. If the Premises should become not reasonably suitable for Lessee’s use 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 which does not result from Lessee’s release
or emission of such Hazardous Material, and in any of the foregoing cases the interference with
Lessee’s use of the Premises persists for seven (7) consecutive days or more, then Lessee shall be
entitled to an equitable abatement of rent thereafter to the extent of the interference with
Lessee’s use of the Premises occasioned thereby and until the interference ceases. If the
interference persists for more than ninety (90) consecutive days, Lessee shall have the right to
terminate this Lease by giving written notice of termination to Lessor.

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     16. Liens. Lessee agrees to keep the Property free from all liens arising out of any
improvement work performed by Lessee or arising out of any other work performed, materials
furnished, or obligations incurred by Lessee. Lessee shall give Lessor at least ten (10) days prior
written notice before commencing any work of improvement on the Premises approved in writing by
Lessor pursuant to Paragraph 14(d), the contract price for which exceeds Twenty-five Thousand
Dollars ($25,000). Lessor shall have the right to post notices of non-responsibility with respect
to any such work. If Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense, defend and protect itself, Lessor and the Property
against the same, and shall pay and satisfy any such adverse judgment that may be rendered thereon
or provide a lien release bond in accordance with applicable law before the enforcement thereof
against Lessor or the Property.

     17. Assignment and Subletting.

          (a) Except as otherwise provided in this Paragraph 17, Lessee shall not assign this Lease, or
any interest therein, voluntarily or involuntarily, and shall not sublet the Premises or any part
thereof, or any right or privilege appurtenant thereto, without the prior written consent of
Lessor in each instance pursuant to the terms and conditions set forth below, which consent shall
not be unreasonably withheld, delayed, or conditioned, subject to the following provisions.

          (b) Prior to any assignment or sublease which Lessee desires to make, Lessee shall provide to
Lessor the name and address of the proposed assignee or sublessee, true and complete copies of all
documents relating to Lessee’s prospective agreement to assign or sublease, a copy of a current
financial statement for such proposed assignee or sublessee, and Lessee shall specify in writing
all consideration to be received by Lessee for such assignment or sublease in the form of lump sum
payments, installments of rent, or otherwise. For purposes of this Paragraph 17, the term
“consideration” shall include all money or other consideration to be received by Lessee for such
assignment or sublease. Within fifteen (15) days after the receipt of such documentation and other
information, Lessor shall (1) notify Lessee in writing that Lessor elects to consent to the
proposed assignment or sublease subject to the terms and conditions hereinafter set forth; or (2)
notify Lessee in writing that Lessor refuses such consent, specifying reasonable grounds for such
refusal.

          If Lessee shall propose to sublease more than fifty percent (50%) of the rentable square feet
of the Premises for substantially the remainder of the initial term, or the option extension
period, as applicable, except to one or more “Permitted Affiliates” (as defined in Paragraph
17(g)), it shall so notify Lessor in writing, specifying the proposed commencement date of the
proposed sublease. Lessee may give such notification prior to locating a proposed sublessee and
shall otherwise not be required to comply with the requirements of the previous paragraph. After
its receipt of such notice from Lessee, Lessor may notify Lessee that Lessor elects to terminate
this Lease, effective as of the proposed sublease commencement date specified in Lessee’s notice.
If Lessor elects to terminate this Lease pursuant to the foregoing provision, upon the effective
date of termination, Lessor and Lessee shall each be released and discharged from any liability or
obligation to the other under this Lease accruing thereafter with respect to the Property, except
for any obligations then outstanding and except for any indemnity obligations or other obligations
which survive the expiration or termination of this Lease by the

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express terms hereof, and Lessee agrees that Lessor may enter into a direct lease with a proposed
assignee or sublessee, if any, without any obligation or liability to Lessee.

          (c) In deciding whether to consent to any proposed assignment or sublease,
Lessor may take into account whether or not reasonable conditions have been satisfied,
including, but not limited to, the following:

               (1) In Lessor’s reasonable judgment, the proposed assignee or subtenant is engaged in such a
business, that the Premises, or the relevant part thereof, will be used in such a manner which
complies with Paragraph 8 hereof entitled “Use” and Lessee or the proposed assignee or sublessee
submits to Lessor documentary evidence reasonably satisfactory to Lessor that such proposed use
constitutes a permitted use of the Premises pursuant to the ordinances and regulations of the City
of Santa Clara;

               (2) The proposed assignee or sublessee shall be a reputable person or entity with sufficient
financial net worth so as to reasonably indicate that it will be able to meet its obligations
under this Lease or the sublease in a timely manner;

               (3) The proposed assignment or sublease shall be subject to approval by Lessor’s mortgage
lender, but only if Lessor’s mortgage lender so requires under the express terms of its written
agreement with Lessor; and Lessor shall use its good faith efforts to obtain such approval
promptly following Lessee’s request; and

               (4) Lessor’s consent to the assignment or sublease shall be in a separate instrument
containing the relevant provisions of this Paragraph 17 and otherwise in form reasonably
acceptable to Lessor and its counsel.

          (d) As a condition to Lessor’s granting its consent to any assignment or
sublease, (1) Lessor may require that Lessee reimburse Lessor for Lessor’s reasonable
attorneys’ fees incurred in the negotiation, preparation, and review by Lessor and Lessor’s counsel of
the documentation relating to the proposed assignment or sublease, including Lessor’s consent
thereto, not to exceed One Thousand Dollars ($1,000); (2) Lessor may require that Lessee pay
to Lessor, as and when received by Lessee, fifty percent (50%) of the amount of any excess of
the consideration to be received by Lessee in connection with said assignment or sublease over
and above the rental amount fixed by this Lease and payable by Lessee to Lessor, after deducting
only (A) any improvement allowance or other economic concessions (space planning allowance,
moving expenses, etc.) paid by Lessee to assignee or sublessee in connection with such
assignment or sublease; (B) a standard leasing commission payable by Lessee in consummating
such assignment or sublease (C) reasonable attorneys’ fees incurred by Lessee and Lessor in
connection with such assignment or sublease; (D) the unamortized cost of any tenant
improvements paid for by the Additional Tenant Improvement Allowance, provided, that Lessee
has made all monthly payments to Lessor required by Paragraph 13(b) with respect to the
Additional Tenant Improvement Allowance through the effective date of the assignment or
sublease and Lessee confirms in writing Lessee’s obligation to pay the balance thereof in
accordance with Paragraph 13(b) notwithstanding such assignment or sublease; and (E) the
unamortized balance (on a straight line basis) of the cost of any other tenant improvements
paid for by Lessee pursuant to and in compliance with Paragraph 14(d); and (3) Lessee and the

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proposed assignee or sublessee shall demonstrate to Lessor’s reasonable satisfaction that each of
the criteria referred to in subparagraph (c) above is satisfied.

          (e) Each assignment or sublease agreement to which Lessor has consented shall be an
instrument in writing which complies with the provisions of this Paragraph 17 and in form
reasonably satisfactory to Lessor, and shall be executed by both Lessee and the assignee or
sublessee, as the case may be. Each such assignment or sublease agreement shall recite that it is
and shall be subject and subordinate to the provisions of this Lease, that the assignee or
sublessee accepts such assignment or sublease, that Lessor’s consent thereto shall not constitute
a consent to any subsequent assignment or subletting by Lessee or the assignee or sublessee, and,
except as otherwise set forth in a sublease approved by Lessor, agrees to perform all of the
obligations of Lessee hereunder (to the extent such obligations relate to the portion of the
Premises assigned or subleased or as appropriate), and that the termination of this Lease shall,
at Lessor’s sole election, constitute a termination of every such assignment or sublease.

          (f) In the event Lessor shall consent to an assignment or sublease, except as otherwise
provided in Paragraphs 17(g) or 17(h), Lessee shall remain primarily liable for all obligations
and liabilities of Lessee under this Lease, including, but not limited to, the payment of rent.

          (g) Notwithstanding the foregoing, Lessee may, without Lessor’s prior written consent, and
without any participation by Lessor in assignment and subletting proceeds, assign this Lease or
sublet all or any portion of the Premises to a subsidiary, affiliate, division or corporation
controlled by or under common control with Lessee, or to a successor corporation to Lessee by
merger, consolidation or reorganization, or to a purchaser of substantially all of Lessee’s
business operations conducted on the Premises (each, a “Permitted Affiliate”); provided, that
except as specified hereafter (and except in cases where Lessee does not survive the transaction),
Lessee shall remain primarily liable for all obligations and liabilities of Lessee under this
Lease, including, but not limited to, the payment of rent. Lessee’s foregoing rights to assign
this Lease or to sublet the Premises shall be subject to the following conditions: (1) there shall
be no uncured Event of Default (as defined in Paragraph 22) by Lessee under this Lease; (2) in the
case of an assignment or subletting to a Permitted Affiliate, Lessee shall remain liable to Lessor
hereunder to the extent Lessee survives the transaction, (3) if as a result of a merger,
consolidation, or reorganization Lessee is not a surviving entity, the transferee or successor
entity to Lessee shall have on the effective date of such transaction a net worth as shown on its
current balance sheet certified by an officer of the assignee or sublessee (hereinafter
“transferee”) or successor entity at least equal to that of Lessee immediately prior to the
effective date of the assignment or sublease, or, if less, financial resources sufficient, in
Lessor’s reasonable good faith judgment, to perform the obligations under the assignment or
sublease, as applicable; and (4) the transferee or successor entity shall expressly assume in
writing Lessee’s obligations hereunder accruing from and after the effective date of such
assignment or subletting.

          (h) The sale or transfer of Lessee’s capital stock in a public offering pursuant to an
effective registration statement filed by Lessee with the Securities and Exchange Commission or
otherwise in connection with any other bona fide financing transaction shall not be deemed an
assignment, subletting, or other transfer of this Lease or the Premises, provided, that in the
event of the sale, transfer or issuance of Lessee’s securities in connection with a

24

 

merger, consolidation, or reorganization in which Lessee is not a surviving entity, the
conditions set forth in Paragraph 17(g)(1), (3), and (4) shall apply.

          (i) Subject to the provisions of this Paragraph 17 any assignment or sublease without Lessor’s
prior written consent (where such consent is required hereunder) shall at Lessor’s election be
void. The consent by Lessor to any assignment or sublease shall not constitute a waiver of the
provisions of this Paragraph 17, including the requirement of Lessor’s prior written consent, with
respect to any subsequent assignment or sublease. If Lessee shall purport to assign this Lease, or
sublease all or any portion of the Premises, without Lessor’s prior written consent (if such
consent is required hereunder), Lessor may collect rent from the person or persons then or
thereafter occupying the Premises and apply the net amount collected to the rent reserved herein,
but no such collection shall be deemed a waiver of Lessor’s rights and remedies under this
Paragraph 17, or the acceptance of any such purported assignee, sublessee, or occupant, or a
release of Lessee from the further performance by Lessee of covenants on the part of Lessee herein
contained.

          (j) Lessee shall not hypothecate or encumber its interest under this Lease or any rights of
Lessee hereunder, or enter into any license or concession agreement respecting all or any portion
of the Premises, without Lessor’s prior written consent which shall not be unreasonably withheld,
subject to all of the provisions of this Paragraph 17.

          (k) In the event of any sale or exchange of the Premises by Lessor and assignment of this
Lease by Lessor, Lessor shall, upon providing Lessee with written confirmation that Lessor has
transferred any security deposit and Letter of Credit held by Lessor, to Lessor’s successor in
interest and upon the assumption by the transferee of all of Lessor’s obligations hereunder
accruing from and after the effective date of such assignment, be and hereby is entirely relieved
of all liability under any and all of Lessor’s covenants and obligations contained in or derived
from this Lease with respect to the period commencing with the consummation of the sale or
exchange and assignment.

          (l) The parties acknowledge that Lessor has the remedy described in California Civil Code
Section 1951.4 (Lessor may continue the Lease in effect after Lessee’s breach and abandonment and
recover rent as it becomes due, if Lessee has right to sublet or assign, subject only to
reasonable limitations).

     18. Non-Waiver.

          (a) No waiver of any provision of this Lease shall be implied by any failure of Lessor to
enforce any remedy for the violation of that provision, even if that violation continues or is
repeated. Any waiver by Lessor or Lessee of any provision of this Lease must be in writing.

          (b) No receipt of Lessor of a lesser payment than the rent required under this Lease shall be
considered to be other than on account of the earliest rent due, and no endorsement or statement
on any check or letter accompanying a payment or check shall be considered an accord and
satisfaction. Lessor may accept checks or payments without prejudice to Lessor’s right to recover
all amounts due and pursue all other remedies provided for in this Lease.

25

 

          Lessor’s receipt of monies from Lessee after giving notice to Lessee terminating this Lease
shall in no way reinstate, continue, or extend the Lease term or affect the termination notice
given by Lessor before the receipt of those monies. After serving notice terminating this Lease,
filing an action, or obtaining final judgment for possession of the Premises, Lessor may receive
and collect any rent, and the payment of that rent shall not waive or affect such prior notice,
action, or judgment.

     19. Holding Over. Lessee shall vacate the Premises and deliver the same to Lessor in
the condition required by this Lease upon the expiration or sooner termination of this Lease. In
the event of holding over by Lessee after the expiration or termination of this Lease without
Lessor’s written consent, such holding over shall be on a month-to-month tenancy and all of the
terms and provisions of this Lease shall be applicable during such period, except that Lessee
shall pay Lessor as Monthly Base Rent during such holdover an amount equal to one hundred fifty
percent (150%) of the Monthly Base Rent in effect at the expiration of the term. If such holdover
is without Lessor’s written consent, Lessee shall also be liable to Lessor for all costs,
expenses, and consequential damages incurred by Lessor as a result of such holdover. The rental
payable during such holdover period shall be payable to Lessor on demand.

     20. Damage or Destruction.

          (a) In the event of a total destruction of the Building and Improvements during the lease
term from any cause, either party may elect to terminate this Lease effective as of the date of
the casualty by giving written notice of termination to the other party within thirty (30) days
after the casualty occurs. A total destruction shall be deemed to have occurred for this purpose
if the Building and Improvements are destroyed to the extent of sixty-five percent (65%) or more
of the replacement cost thereof. If this Lease is not terminated, Lessor shall repair and restore
the Building and Improvements in a diligent manner and this Lease shall continue in full force and
effect, except that Monthly Base Rent and Additional Rent shall be abated in accordance with
Paragraph 20(f) below.

          (b) Subject to Paragraph 20(d), in the event of a partial destruction of the Building and
Improvements to an extent less than sixty-five percent (65%) of the replacement cost thereof and
if the damage thereto can be repaired, reconstructed, or restored within a period of two hundred
ten (210) days from the date of such casualty, and if the casualty is from a cause which is
insured (or required to be insured) under Lessor’s “all risk” property insurance, or is insured
under any other coverage then carried by Lessor, Lessor shall forthwith repair the same, and this
Lease shall continue in full force and effect, except that Monthly Base Rent and Additional Rent
shall be abated in accordance with Paragraph 20(f) below. If any of the foregoing conditions is
not met, Lessor shall have the option of either repairing and restoring the Building and
Improvements, or terminating this Lease effective as of the date of the casualty by giving written
notice of termination to Lessee within thirty (30) days after the casualty, subject to the
provisions of Paragraph 20(c). Notwithstanding anything to the contrary contained in this
Paragraph 20, except as set forth in Paragraph 20(d), Lessor shall not have the right to terminate
this Lease if the cost to repair the damage to the Building and Improvements would cost less than
five percent (5%) of the replacement cost of the Building and Improvements, regardless of whether
or not the casualty is insured. Notwithstanding anything to the contrary contained in this
Paragraph 20, if the cost to repair the damage to the Building and Improvements exceeds five
percent (5%) of the replacement cost of the Building and Improvements, and Lessor elects to

26

 

terminate this Lease, Lessee may nullify the effect of such termination by giving Lessor written
notice within ten (10) days after receipt by Lessee of Lessor’s notice of termination that Lessee
elects to repair the damage to the Building and Improvements at Lessee’s sole cost (to the extent
the costs exceed the proceeds received by Lessor from Lessor’s property insurance), in which event
this Lease shall remain in effect, provided that Rent abatement shall not extend beyond the date
that the restoration is substantially completed.

          (c) In the event of a partial destruction of the Building and Improvements to
an extent equal to or exceeding twenty-five percent (25%), but less than sixty-five percent
(65%) of the replacement cost thereof, or in the event the damage thereto cannot be repaired,
reconstructed, or restored within a period of two hundred ten (210) days from the date of
such casualty, Lessee may terminate this Lease by giving written notice of termination to Lessor
within thirty (30) days after the casualty. The foregoing shall not affect Lessor’s
termination rights under subparagraph (b) above.

          Furthermore, if such casualty is from a cause which is not insured under Lessor’s “all risk”
property insurance, or is not required by this Lease to be insured under any other insurance
carried by Lessor or required hereunder to be carried by Lessor, Lessor may elect to repair and
restore the Building and Improvements (provided that Lessee has not elected to terminate this Lease
pursuant to the first sentence of this Paragraph 20(c)), or Lessor may terminate this Lease
effective as of the date of the casualty by giving written notice of termination to Lessee, subject
to the limitations of Paragraph 20(b). Lessor’s election to repair and restore the Building and
Improvements or to terminate this Lease, shall be made and written notice thereof shall be given to
Lessee within forty-five (45) days after the casualty. Notwithstanding the foregoing, (1) if Lessor
has not obtained all necessary governmental permits for the restoration and commenced construction
of the restoration within one hundred twenty (120) days after the casualty, Lessee may terminate
this Lease by written notice to Lessor given at any time prior to the actual commencement of
construction of the restoration; or (2) if Lessor elects to repair and restore the Building and
Improvements under subparagraph (b) or (c) above, but the repairs and restoration are not
substantially completed within two hundred ten (210) days after the casualty plus the period of any
delays in the completion of the repairs and restoration caused by strikes, labor disputes,
unavailability of materials, inclement weather, or acts of God (“force majeure delays”), Lessee may
terminate this Lease by written notice to Lessor given within thirty (30) days after the expiration
of said period of two hundred ten (210) days after the casualty (plus the period of any force
majeure delays, but not by more than sixty (60) additional days), provided that the repairs and
restoration have not been substantially completed prior to the receipt of such notice by Lessor.

          (d) Notwithstanding anything to the contrary contained in this Paragraph 20,
if at any time during the last twelve (12) months of the initial term of this Lease or at any
time during the last twelve (12) months of the option period, if exercised, there is damage to the
Building and Improvements for which the cost to repair exceeds five percent (5%) of the
replacement cost of the Building and Improvements, whether or not an insured loss, Lessor
may, at Lessor’s option, terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor’s election to do so within
fifteen (15) days after the date of such damage. Provided, however, that if Lessor elects to
terminate this Lease and Lessee is not then in default hereunder and provided further that the partial
destruction of the Building and Improvements is to an extent less than sixty-five percent
(65%)

27

 

of the replacement cost thereof and the damage can be repaired, reconstructed, or restored within a
period of two hundred ten (210) days following the date of the casualty, then Lessee may negate
Lessor’s election to terminate this Lease by (1) exercising such option within ten (10) days after
receipt of Lessor’s termination notice (but not later than the date on which such option expires),
and (2) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof)
needed to make the repairs. Subject to the foregoing conditions, if Lessee duly exercise such
option during such period and provides Lessor with funds (or adequate assurance thereof) to cover
any shortage in insurance proceeds, Lessor shall, at Lessor’s expense, repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to
exercise such option prior to the expiration date of the option and provide such funds or assurance
during such period, or if either of the foregoing conditions with respect to the extent of the
destruction or the restoration period is not satisfied, then this Lease shall terminate as of the
date set forth in the first sentence of this subparagraph (d).

          (e) If this Lease is not terminated by Lessor or Lessee pursuant to the foregoing provisions,
Lessor shall complete the repairs in a diligent manner and this Lease shall continue in full force
and effect, except that Monthly Base Rent and Additional Rent shall be abated in accordance with
Paragraph 20(f) below.

          (f) Subject to the limitation in the last sentence of Paragraph 20(b) above in the event of
repair, reconstruction, or restoration as provided herein, the Monthly Base Rent and Additional
Rent shall be abated proportionally in the ratio which the Lessee’s use of the Premises is
impaired during the period of such repair, reconstruction, or restoration, from the date of the
casualty until such repair, reconstruction or restoration is completed.

          (g) With respect to any destruction of the Building and Improvements which Lessor is
obligated to repair, or may elect to repair, under the terms of this Paragraph 20, the provisions
of Section 1932, Subdivision 2, and of Section 1933, Subdivision 4, of the Civil Code of the State
of California are waived by the parties. Lessor’s obligation to repair and restore the Building
and Improvements shall include the Tenant Improvement Work referred to in Paragraph 13(a). Lessor
shall also repair and restore any other leasehold improvements constructed thereafter by Lessor,
or by Lessee with Lessor’s prior written consent. Lessor’s time for completion of the repairs and
restoration of the Building and Improvements referred to above shall be extended by a period equal
to any delays caused by strikes, labor disputes, unavailability of materials, inclement weather,
or acts of God, but not by more than forty-five (45) days.

          (h) In the event of termination of this Lease pursuant to any of the provisions of this
Paragraph 20, the Monthly Base Rent and Additional Rent shall be apportioned on a per diem basis
and shall be paid to the date of the casualty. In no event shall Lessor be liable to Lessee for
any damages resulting to Lessee from the occurrence of such casualty, or from the repairing or
restoration of the Building and Improvements, or from the termination of this Lease as provided
herein, nor shall Lessee be relieved thereby from any of Lessee’s obligations hereunder, except to
the extent and upon the conditions expressly set forth in this Paragraph 20, and except in the
event of termination of this Lease by either party in which case Lessee shall be relieved of its
obligations under this Lease that accrue from and after the date of such termination, except for
obligations which survive the expiration or termination of this Lease by the express provisions
hereof.

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     21. Eminent Domain.

          (a) If the whole or any substantial part of the Property is taken or condemned by any
competent public authority for any public use or purpose, the term of this Lease shall end upon
the earlier to occur of the date when the possession of the part so taken shall be required for
such use or purpose or the vesting of title in such public authority. Rent shall be apportioned as
of the date of such termination. Lessee shall be entitled to receive any damages separately
awarded by the court for (1) leasehold improvements installed at Lessee’s expense or other
property owned by Lessee, and (2) reasonable costs of moving by Lessee to another location in
Santa Clara County, California. The entire balance of the award shall be the property of Lessor.

          (b) If there is a partial taking of the Property by eminent domain which is not a substantial
part of the Property and the balance of the Property remains reasonably suitable for continued use
and occupancy by Lessee for the purposes referred to in Paragraph 8, Lessor shall complete any
necessary repairs in a diligent manner and this Lease shall remain in full force and effect with a
just and proportionate abatement of the Monthly Base Rent and Additional Rent, based on the extent
to which Lessee’s use of the Property is impaired thereafter. If after a partial taking, the
Property is not reasonably suitable for Lessee’s continued use and occupancy for the uses permitted
herein, Lessee may terminate this Lease effective on the earlier of the date title vests in the
public authority or the date possession is taken. Subject to the provisions of Paragraph 21(a), the
entire award for such taking shall be the property of Lessor.

     22. Remedies. If Lessee fails to make any payment of rent or any other sum due
under this Lease for ten (10) days or more after receipt by Lessee of written notice from
Lessor
stating that the same is due and owing; or if Lessee breaches any other term of this Lease
for
thirty (30) days or more after receipt by Lessee of written notice from Lessor (unless such
default
is reasonably incapable of cure within thirty (30) days and Lessee commences cure within
thirty
(30) days and diligently prosecutes the cure to completion within a reasonable time); or if
Lessee
breaches any provision of this Lease and such breach is not curable; or if Lessee’s interest
herein, or any part thereof, is assigned or transferred, either voluntarily or by operation
of law
(except as expressly permitted by other provisions of this Lease); or if Lessee makes a
general
assignment for the benefit of its creditors; or if this Lease is rejected (1) by a bankruptcy
trustee
for Lessee, (2) by Lessee as debtor in possession, or (3) by failure of Lessee as a bankrupt
debtor
to act timely in assuming or rejecting this Lease; then any of such events shall constitute
an event
of default and breach of this Lease by Lessee and Lessor may, at its option, elect the
remedies
specified in either subparagraph (a) or (b) below. Any such rejection of this Lease referred
to
above shall not cause an automatic termination of this Lease. Whenever in this Lease
reference
is made to a default by Lessee, such reference shall refer to an event of default after any
notice
and expiration of the cure period provided for in this Paragraph 22, or elsewhere in this
Lease (an “Event of Default”).

          (a) Lessor may repossess the Premises and remove all persons and property therefrom. If
Lessor repossesses the Premises because of an Event of Default by Lessee, this Lease shall
terminate and Lessor may recover from Lessee:

               (1) the worth at the time of award of the unpaid rent which had been earned at the time
of termination including interest thereon at a rate equal to the Federal discount

29

 

rate plus one percent (1%), or the maximum legal rate of interest, whichever is less, from the
time of termination until paid;

               (2) the worth at the time of award of the amount by which the unpaid rent which would have
been earned after termination until the time of award exceeds the amount of such rental loss that
Lessee proves could have been reasonably avoided, including interest thereon at a rate equal to the
Federal discount rate plus one percent (1%) per annum, or the maximum legal rate of interest,
whichever is less, from the time of termination until paid;

               (3) the worth at the time of award of the amount by which the unpaid rent for the balance of
the term after the time of award exceeds the amount of such rental loss for the same period that
Lessee proves could be reasonably avoided, discounted at the discount rate published by the
Federal Reserve Bank of San Francisco for member banks at the time of award plus one percent (1%);
and

               (4) any other amount necessary to compensate Lessor for all the detriment proximately caused
by Lessee’s breach or by Lessee’s failure to perform its obligations under this Lease or which in
the ordinary course of things would be likely to result therefrom.

          (b) If Lessor does not repossess the Premises, then this Lease shall continue in effect for
so long as Lessor does not terminate Lessee’s right to possession and Lessor may enforce all of
its rights and remedies under this Lease, including the right to recover the rent and other sums
due from Lessee hereunder. For the purposes of this Paragraph 22, the following do not constitute
a repossession of the Premises by Lessor or a termination of the Lease by Lessor:

               (1) Acts of maintenance or preservation by Lessor or efforts by Lessor to relet the Premises;
or

               (2) The appointment of a receiver by Lessor to protect Lessor’s interests under this Lease.

     23. Lessee’s Personal Property. If any personal property of Lessee remains on the
Premises after (1) Lessor terminates this Lease pursuant to Paragraph 22 above following an Event
of Default by Lessee, or (2) after the expiration of the Lease term or after the termination of
this Lease pursuant to any other provisions hereof, Lessor shall give written notice thereof to
Lessee pursuant to applicable law. Lessor shall thereafter release, store, and dispose of any such
personal property of Lessee in accordance with the provisions of applicable law.

     24. Notices.

          (a) All notices, statements, demands, requests, or consents given hereunder by either party
to the other shall be in writing and shall be personally delivered, or shall be sent by a
recognized overnight delivery service, or shall be sent by United States mail, first class, or
registered or certified, return receipt requested, postage prepaid, and addressed to the parties
as follows:

30

 

	 	 	 	 	 
	 

	 	Lessor:
	 	HDP Associates, LLC
	 

	 	 	 	1000 C Commercial Street
	 

	 	 	 	San Carlos, California 94070
	 
	 	 	 	 
	 

	 	 	 	Attention: Harold Balzer
	 
	 	 	 	 
	 

	 	Lessee:
	 	After the Commencement Date:
	 
	 	 	 	 
	 

	 	 	 	Lumenis Inc.
	 

	 	 	 	5302 Betsy Ross Drive
	 

	 	 	 	Santa Clara, California 95054
	 

	 	 	 	Attention: Vice President, R&D
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Lumenis Inc.
	 

	 	 	 	5302 Betsy Ross Drive 
	 

	 	 	 	Santa Clara, California 95054
	 

	 	 	 	Attention: General Counsel
	 
	 	 	 	 
	 

	 	 	 	Prior to the Commencement Date:
	 
	 	 	 	 
	 

	 	 	 	Lumenis Inc.
	 

	 	 	 	2400 Condensa Street
	 

	 	 	 	Santa Clara, California 95051
	 

	 	 	 	Attention: Vice President R&D
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Lumenis Inc.
	 

	 	 	 	2400 Condensa Street 
	 

	 	 	 	Santa Clara, California 95051
	 

	 	 	 	Attention: General Counsel

Copies sent as indicated above shall not alone be considered effective notice to a party. Either
party may change its address for notice by giving written notice to the other party of the new
address for notice in accordance with subparagraph (b) below.

          (b) When personally delivered to the recipient, notice shall be effective on delivery; when
mailed first class to the last address known to the party giving notice, notice shall be effective
on delivery; when mailed by certified mail with return receipt requested, notice shall be
effective on receipt if delivery is confirmed by a return receipt; when delivered by recognized
overnight delivery service with charges prepaid or charged to sender’s account, notice is
effective on delivery if delivery is confirmed by the delivery service. Delivery of notice to
Lessee shall not be deemed effective until delivery of both the original notice and the copy are
made pursuant to this subparagraph 24(b) to the addresses listed in subparagraph 24(a) above.

     25. Estoppel Certificates. Lessee and Lessor shall within fifteen (15) days following
request by the other party (the “Requesting Party”), execute and deliver to the Requesting Party
an Estoppel Certificate (1) certifying that this Lease has not been modified and certifying that
this Lease is in full force and effect, or, if modified, stating the nature of such modification
and

31

 

certifying that this Lease, as so modified, is in full force and effect; (2) stating the date to
which the rent and other charges are paid in advance, if at all; (3) stating the amount of any
security deposit and/or letter of credit held by Lessor; (4) acknowledging that there are not, to
the responding party’s knowledge, any uncured material defaults on the part of the Requesting Party
hereunder, or if there are uncured material defaults on the part of the Requesting Party following
the expiration of all applicable notice and cure periods, stating the nature of such uncured
material defaults; and (5) any other provisions reasonably requested by either party.

     26. Parking. Lessee shall have the use of all parking spaces on the Property for the
term of the Lease, including the option extension period if the Option to Extend is exercised.
Lessor shall not at any time during the term of this Lease, as extended, reduce the number of
parking spaces available on the Property.

     27. Signage. Lessee shall have the right to erect at Lessee’s expense at least two
(2) monument signs and at least three (3) exterior Building signs, each with Lessee’s name and
logo, subject to Lessor’s approval of the size, design and locations of the monument sign and the
Building signage, which approval shall not be unreasonably withheld, conditioned or delayed and
subject to Lessee obtaining necessary City of Santa Clara approvals and complying with applicable
City of Santa Clara ordinances and regulations with respect to such signage. Lessee shall not
place any other signs on or about the exterior of the Building or the areas of Property outside of
the Building without Lessor’s prior written consent, which consent shall not be unreasonably
withheld, conditioned, or delayed. Lessee shall promptly remove all such signage at Lessee’s
expense upon the expiration or sooner termination of this Lease.

     28. Real Estate Brokers. Subject to the execution and delivery of this Lease by the
parties and the payment by Lessee to Lessor of the first month’s Monthly Base Rent, the Security
Deposit, and delivery to Lessor of the Letter of Credit as provided herein, Lessor shall pay a
procuring leasing commission for this transaction to Starboard TCN and Wayne Mascia Associates,
and a separate commission to CPS 

CORFAC International (“CPS”), pursuant to the terms of a
separate commission agreement between Lessor and said brokers. Lessor and Lessee acknowledge that
Starboard TCN and Wayne Mascia Associates are acting solely as the agent of Lessee in this
transaction and that CPS is acting solely as the agent for Lessor in this transaction. Lessor and
Lessee each represents to the other that it has not had any dealings with any real estate broker,
finder, or other person with respect to this Lease other than the aforementioned brokers, and each
party shall indemnify, defend, and hold harmless the other party from all damages, expenses, and
liabilities resulting from any claims that may be asserted against the other party by any broker,
finder, or other person with whom the indemnifying party has or purportedly has dealt other than
the aforementioned brokers.

     29. Subordination: Attornment.

          (a) This Lease, without any further instrument, shall at all times be subject and subordinate
to any and all mortgages and deeds of trust which may now or hereafter affect Lessor’s estate in
the real property of which the Premises form a part, and to all advances made or hereafter to be
made upon the security thereof, and to all renewals, modifications, consolidations, replacements
and extensions thereof. Lessor agrees to provide Lessee with commercially reasonable
non-disturbance agreement(s) in favor of Lessee from any existing or future mortgagee(s), ground
lessor(s) or lien holder(s) (“Lender”) of Lessor, in consideration of,

32

 

and as a condition precedent to Lessee’s agreement to be bound by the foregoing. Such commercially
reasonable non-disturbance agreements shall provide that so long as Lessee is not in default
hereunder beyond any applicable notice and cure period that upon acquiring title to the real
property of which the Premises form a part by foreclosure or otherwise (1) this Lease shall not be
terminated, and (2) such holder or other person or persons purchasing or otherwise acquiring the
real property of which the Premises form a part by foreclosure or otherwise shall recognize all of
Lessee’s rights hereunder which accrue thereafter, provided that such person or persons purchasing
or acquiring the real property of which the Premises form a part shall not be obligated to cure any
defaults by Lessor existing at the time of such purchase or acquisition (but the foregoing
provision shall not excuse the performance of obligations of Lessor to the extent such obligations
arise after such purchase or acquisition), and shall not disturb Lessee’s right to quiet enjoyment
of the Premises under the terms of this Lease, on the condition that Lessee agrees in writing to
attorn to such holder or purchaser. Said non-disturbance agreements shall be in recordable form and
shall be recorded at the election and expense of Lessee, Lessor, or the Lender.

          (b) In confirmation of such subordination, Lessee shall promptly execute any certificate or
other instrument which is in commercially reasonable form and Lessor deems proper to evidence such
subordination, without expense to Lessor; provided, however, that if any person or persons
purchasing or otherwise acquiring the real property of which the Premises are a part by any sale,
sales and/or other proceedings under such mortgages and/or deeds of trust, shall elect to continue
this Lease in full force and effect in the same manner and with like effect as if such person or
persons had been named as Lessor herein, then this Lease shall continue in full force and effect
as aforesaid, and Lessee hereby attorns and agrees upon request to attorn to such person or
persons.

     30. Breach by Lessor.

          (a) Lessor shall not be deemed in breach of this Lease unless Lessor fails within a
reasonable time to perform an obligation required to be performed by Lessor pursuant to this
Lease. For purposes of this Paragraph 30, a reasonable time shall in no event be less then thirty
(30) days after receipt by Lessor, and by the holders of any mortgage or deed of trust covering
the Premises whose name and address have been furnished to Lessee in writing for such purposes, of
written notice specifying wherein such obligation of Lessor has not been performed; provided,
however, that if the nature of Lessor’s obligation is such that more than thirty (30) days after
such notice are reasonably required for its performance, then Lessor shall not be in breach of
this Lease if performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.

          (b) In the event of a breach of this Lease by Lessor, Lessee’s sole remedy shall be to
institute an action against Lessor for damages or for injunctive or equitable relief, but Lessee
shall not have the right to rent abatement, to offset against rent, or to terminate this Lease.
Lessee expressly waives the defense of constructive eviction.

     31. Lessor’s Entry. Except in the case of an emergency and except for permitted
entry during Lessee’s normal working hours for regularly scheduled maintenance, Lessor and
Lessor’s agents shall provide Lessee with at least twenty-four (24) hours’ notice prior to
entry of the Premises by Lessor and Lessor’s agents. Such entry by Lessor and Lessor’s agents shall
not

33

 

interfere with Lessee’s operations more than reasonably necessary, and Lessor shall exercise
reasonable efforts to comply with Lessee’s reasonable security measures and Lessee’s safety
protocols, provided that such security measures and safety protocols are known by Lessor. If
required by Lessee, Lessor and Lessor’s agents shall at all times be accompanied by a
representative of Lessee during any such entry except in case of emergency. Lessor may enter the
Premises without prior notice to Lessee if Lessee has abandoned or surrendered possession of the
Premises.

     32. Attorneys’ Fees. If any action at law or in equity shall be brought to recover
any rent under this Lease, or for or on account of any breach of or to enforce or interpret any of
the provisions of this Lease or for recovery of the possession of the Premises, the prevailing
party shall be entitled to recover from the other party costs of suit and reasonable attorneys’
fees, the amount of which shall be fixed by the court and shall be made a part of any judgment
rendered.

     33. Compliance with CC&Rs. During the term of this Lease and any option extension
period, Lessee shall comply, at Lessee’s expense, with all of the covenants, conditions, and
restrictions affecting the Premises which are recorded in the Official Records of Santa Clara
County, California, and which are in effect as of the date of this Lease. Lessor agrees to provide
Lessee with a copy of such CC&Rs prior to the execution of this Lease by Lessee.

     34. Quiet Possession. So long as no Event of Default by Lessee exists under this
Lease, Lessee shall have quiet enjoyment and possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.

     35. Force Majeure. Neither Lessor nor Lessee shall be in default in the performance
of any obligation under this Lease (other than any monetary obligation) to the extent such party
is unable to perform any of its obligations on account of any prevention, delay, stoppage due to
strikes, lockouts, inclement weather, labor disputes, inability to obtain labor materials, fuels,
energy or reasonable substitutes therefor, governmental restrictions, regulations: controls,
actions or inaction (including, but not limited to, any action or inaction with respect to the
issuance of any permit or approval, or the conduct of any inspection, for the Tenant Improvement
Work), civil commotion, fire or other acts of God, acts of war, terrorism, bioterrorism, national
emergency, or any other cause of any kind beyond the reasonable control of such party (except
financial inability) (collectively “Force Majeure”).

     36. Right of First Offer to Purchase the Property. Lessor hereby grants to Lumenis
Inc. on the terms and conditions set forth herein, the right of first offer (“Right of First
Offer”) to purchase the Property, if Lessor elects to offer the Property for sale. The Right of
First Offer is personal to Lumenis Inc. and shall not be assignable to, or exercisable by, any
other person or entity (except a Permitted Affiliate as defined in Paragraph 17(g)). The exercise
of the Right of First Offer by Lumenis Inc. is conditional upon Lumenis Inc. (or a Permitted
Affiliate) being in possession of the Premises under this Lease with no uncured default by Lessee
hereunder, provided Lessor has previously given written notice of the default to Lessee and a
reasonable opportunity to cure the default.

          (a) Lessor’s right to sell the Property at any time during the period commencing on the
Commencement Date and ending on the first to occur of (i) the termination by Lessor of this Lease
on account of a default by Lessee, or (ii) the expiration of the initial term

34

 

of this Lease, and the option extension period if exercised by Lessee (the “Right of First Offer
Period”) shall be subject to the provisions of this Paragraph 36.

          (b) Subject to the provisions of subparagraph (d) hereof, in the event that Lessor desires to
sell the Property during the Right of First Offer Period, Lessor shall deliver a written offer (the
“First Offer”) to Lessee to sell the Property at least thirty (30) days prior to offering to sell
the Property to any third party. The First Offer shall contain the purchase price, which shall not
exceed its fair market value as determined by Lessor in Lessor’s good faith judgment, and the terms
of sale which Lessor is willing to accept for the Property, and information concerning all liens,
encumbrances, and exceptions to title affecting the Property. Lessee shall have thirty (30) days
after receipt of the First Offer within which to give written notice to Lessor of Lessee’s
acceptance of Lessor’s First Offer to sell the Property. Failure of Lessee to respond to and accept
the First Offer in writing within said thirty (30) day period shall be deemed a rejection of the
First Offer. If Lessee timely accepts in writing Lessor’s First Offer to sell the Property, Lessor
shall sell the Property to Lessee, and Lessee shall purchase the Property from Lessor, in
accordance with the terms and conditions of the First Offer.

          (c) If Lessee does not accept Lessor’s First Offer to sell the Property Lessor may thereafter
sell the Property to a third party purchaser. Lessor may sell the Property to a third party for a
purchase price equal to not less than one hundred percent (100%) of the purchase price set forth
in the First Offer. In the event that Lessor proposes to accept a price which is less than one
hundred percent (100%) of the purchase price set forth in the First Offer, or in the event Lessor
proposes to accept an offer to purchase that does not include any of the other material terms of
the First Offer (including title covenants, representations, or economic matters), Lessor shall
not sell the Property to a third party without first re-offering to sell the Property to Lessee in
accordance with subparagraph (b) above, except that Lessee shall have only fifteen (15) days after
receipt of any re-offer within which to accept the re-offer in writing, and failure of Lessee to
do so within such fifteen (15) day period shall be deemed a rejection of the re-offer.

          (d) A tax deferred exchange transaction in which Lessor disposes of the Property for like
kind property shall be a transaction which is subject to the Right of First Offer, provided that
Lessee shall be required to cooperate with Lessor in effecting the exchange, including acquiring
the Property from a party to the exchange other than Lessor, but such cooperation shall not
increase Lessee’s liability or expense. A transfer of the Property to the members of the limited
liability company constituting Lessor, to trusts for their benefit, or to their heirs, shall not
be a transaction which is subject to the Right of First Offer, provided that the transferees in
such a transaction shall acquire the Property subject to the Right of First Offer.

          (e) The Right of First Offer shall not apply to, and Lessee shall have no Right of First
Offer with respect to, any sale or transfer under a trustee’s power of sale upon foreclosure of a
deed of trust in favor of an unaffiliated third party institutional lender which encumbers the
Property or deed in lieu of foreclosure. Lessee agrees upon request by Lessor at any time during
the Right of First Offer Period to execute, acknowledge, and deliver to Lessor and to any
prospective mortgage lender an instrument in writing agreeing to the foregoing, and, if requested
by such prospective mortgage lender, an instrument in writing subordinating Lessee’s rights under
this Paragraph 36 to the lien of any such mortgage or deed of trust.

35

 

          (f) If Lessee accepts the First Offer, at the closing of the purchase, and upon the
payment by Lessee to Lessor of the purchase price as provided in this Paragraph 36, Lessor shall
transfer and convey fee title to the Property to Lessee subject only to (i) non-delinquent
property taxes and assessments (if any) (which shall be prorated between Lessor and Lessee as of
the date of closing), (ii) existing subleases to sublessees other than Lessee, and (iii) such
other exceptions to title that are then existing and set forth in the First Offer. If the First
Offer submitted by Lessor to Lessee provides for an all cash transaction, Lessor shall pay in full
at close of escrow the existing mortgage indebtedness encumbering the Property, including any
prepayment penalty, or cause the existing mortgage to be defeased, at Lessor’s expense.

          (g) Upon the purchase by Lessee of the Property pursuant to this Paragraph 36, Lessor shall,
within ten (10) days after delivery by Lessee to Lessor of a written acceptance of the First
Offer, deliver to Lessee a commitment for title insurance in an amount equal to the purchase price
issued by First American Title Insurance Company, covering the Property and naming Lessee as the
proposed insured in the amount of the purchase price. Lessor shall cure all meritorious title
objections of Lessee prior to the date of the closing of the purchase in order that a title
insurance policy insuring Lessee’s purchase of the Property consistent with the provisions of this
Paragraph 36 can and will be issued upon the closing of the purchase.

          (h) The closing of a purchase by Lessee of the Property shall be thirty (30) days after
delivery to Lessor by Lessee of the acceptance of the First Offer, or, if said thirtieth
(30th) day is not a regular business day, then on the next regular business day
thereafter. At the closing, Lessor shall execute and deliver into escrow a Grant Deed
transferring fee title to the Property to Lessee. Lessee shall wire transfer to the escrow holder
for delivery to Lessor at the closing the purchase price to be paid by Lessee to Lessor in
immediately available funds. The “closing” or the “closing date” of the sale and transfer shall
be the date of recordation of the Grant Deed from Lessor to Lessee.

          (i) At the closing of the sale, all real property taxes and assessments levied and assessed
against the Property for the year in which the closing of the sale occurs shall be prorated
between Lessor and Lessee as of the closing. If at the closing of the purchase the actual amount
of said taxes and assessments for the year in which the closing occurs have not yet been
established, they shall be prorated based on the prior year’s taxes levied and assessed, and when
the actual amount of the taxes and assessments for the year in which the closing occurs are
established, an adjustment shall be made between Lessor and Lessee as to the proportionate share
payable by Lessor and Lessee based on the closing date, and Lessee shall reimburse Lessor or be
reimbursed by Lessor, as the case may be, for any overage resulting from the proration made at the
closing.

          (j) At close of escrow Lessee shall assume the lien of all assessments against the Property
if the First Offer so provides.

          (k) The closing of the sale of the Property shall take place at First American Title
Insurance Company, 555 Marshall Street, Redwood City, California 94063, or at such other title
company as the parties shall agree. Lessor and Lessee shall pay escrow fees and closing costs in
accordance with Santa Clara County custom. No real estate commission shall be payable on said
sale.

36

 

          (l) Rent payable by Lessee pursuant to this Lease and all other costs and expenses
attributable to the ownership, management, and operation of the Property shall be prorated between
the parties as of the closing date.

          (m) Lessee shall be entitled possession of the Property from and after the date of the
closing of the purchase.

          (n) Each of the parties agrees to execute such other and further instruments and documents as
may be necessary or convenient to consummate the sale and transfer of the Property in accordance
with the First Offer. Upon termination of the Right of First Offer Period pursuant to subparagraph
36(a) above, Lessee shall upon request by Lessor execute, acknowledge, and deliver to Lessor a
quit claim deed or other appropriate instrument in form for recording acknowledging the
termination and release of Lessee’s rights under this Paragraph 36.

          (o) It is understood and agreed that at the closing of the sale and transfer of the Property,
if the First Offer so provides, Lessee shall assume all obligations of Lessor with respect to any
indebtedness secured by a deed of trust to which the Property is subject, including all obligations
of Lessor included in any instrument or document securing the repayment of any such loan.
Notwithstanding that Lessor may not be released and discharged by the lender, Lessee agrees to
indemnify, save and hold Lessor harmless from and against any claim, liability, obligation, or
damage, of whatever kind or nature, including attorneys’ fees, resulting from the failure of Lessee
fully and timely to perform the obligations in connection with any such loan. Such indemnity by
Lessee shall survive the closing of the sale and transfer of the Property.

     37. General Provisions.

          (a) Nothing contained in this Lease shall be deemed or construed by the parties hereto or by
any third person to create the relationship of principal and agent or of partnership or of joint
venture of any association between Lessor and Lessee, and neither the method of computation of rent
nor any other provisions contained in this Lease nor any acts of the parties hereto shall be deemed
to create any relationship between Lessor and Lessee other than the relationship of landlord and
tenant.

          (b) Each and all of the provisions of this Lease shall be binding upon and inure to the
benefit of the parties hereto, and except as otherwise specifically provided elsewhere in this
Lease, their respective heirs, executors, administrators, successors, and assigns, subject at all
times, nevertheless, to all agreements and restrictions contained elsewhere in this Lease with
respect to the assignment, transfer, encumbering, or subletting of all or any part of Lessee’s
interest in this Lease.

          (c) The captions of the paragraphs of this Lease are for convenience only and shall not be
considered or referred to in resolving questions of interpretation or construction.

          (d) This Lease is and shall be considered to be the only agreement between the parties hereto
and their representatives and agents. All prior letters of interest, negotiations, and oral
agreements between the parties have been merged into and are included herein. There are no other
representations or warranties between the parties and all reliance with respect to representations
is solely upon the representations and agreements contained in this instrument.

37

 

          (e) The laws of the State of California shall govern the validity, performance, and
enforcement of this Lease. The parties agree that any action for enforcement of this Lease or any
other dispute arising hereunder shall be filed exclusively in courts sitting in Santa Clara County,
California, and each party to this Lease hereby consents and waives any objection to the
jurisdiction and venue of such courts. Notwithstanding which of the parties may be deemed to have
prepared this Lease, this Lease shall not be interpreted either for or against Lessor or Lessee,
but this Lease shall be interpreted in accordance with the general tenor of the language in an
effort to reach an equitable result.

          (f) Time is of the essence with respect to the performance of each of the covenants and
agreements contained in this Lease.

          (g) Recourse by Lessee for breach of this Lease by Lessor shall be expressly limited to the
amount of Lessor’s interest in the Property and the rents, issues, insurance and condemnation
proceeds, sales proceeds, and profits therefrom, and in the event of any such breach or default by
Lessor Lessee hereby waives the right to proceed against any other assets of Lessor or against any
other assets of any manager or member of Lessor.

          (h) Any provision or provisions of this Lease which shall be found to be invalid, void or
illegal by a court of competent jurisdiction, shall in no way affect, impair, or invalidate any
other provisions hereof, and the remaining provisions hereof shall nevertheless remain in full
force and effect.

          (i) This Lease may be modified in writing only, signed by the parties in interest at the time
of such modification.

          (j) Each party represents to the other that the persons signing this Lease on its behalf are
properly authorized to do so. Upon the request of either party, evidence of the written authority
of such persons to sign on behalf of the other party shall be provided to the requesting party
hereto either prior to or simultaneously with the return to the requesting party of a fully
executed copy of this Lease.

          (k) No binding agreement between the parties with respect to the Premises shall arise or
become effective until this Lease has been duly executed by both Lessee and Lessor and a fully
executed copy of this Lease has been delivered to both Lessee and Lessor.

          (l) Lessor and Lessee acknowledge that the terms and conditions of this Lease constitute
confidential information of Lessor and Lessee. Neither party shall disseminate orally or in
written form a copy of this Lease, lease proposals, lease drafts, or other documentation
containing the terms, details or conditions contained herein to any third party without obtaining
the prior written consent of the other party, except to the attorneys, accountants, lenders,
investors, potential investors, potential business or merger partners, potential subtenants and
assignees or other authorized business representatives or agents of the parties, or to the extent
required to comply with applicable Laws. A violation of this
Paragraph 36(1) shall not permit
either party to terminate this Lease.

          (m) Subject to the provisions of Paragraph 30, the rights and remedies that either party may
have under this Lease or at law or in equity, upon any breach, are distinct,

38

 

separate and cumulative and shall not be deemed inconsistent with each other, and no one of them
shall be deemed to be exclusive of any other.

          (n) Except as provided in Paragraph 19, Lessor and Lessee waive any claim for consequential
damages which one may have against the other for breach of or failure to perform or observe the
requirements and obligations created by this Lease.

          (o) Lessor and Lessee each agree to and they hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the other on any
matters whatsoever arising out of or in any way connected with this Lease, the relationship of
Lessor and Lessee, Lessee’s use or occupancy of the Premises and/or any claim of injury or damage,
and any statutory remedy.

          (p) This Lease shall not be recorded by either party without the prior written consent of the
other party, which consent the other party may withhold in its sole discretion, provided that upon
the request of Lessee made following the Commencement Date, Lessee may cause to be prepared and
recorded at Lessee’s expense a memorandum of the Right of First Offer contained in Paragraph 36,
provided (1) the memorandum shall be subject to Lessor’s prior written approval, which shall not
be unreasonably withheld, conditioned, or delayed, and (2) the memorandum shall contain Paragraph
36(e) in its entirety.

          (q) Whenever this Lease requires an approval, consent, determination, selection or judgment
by either Lessor or Lessee, unless another standard is expressly set forth, such approval,
consent, determination, selection or judgment and any conditions imposed thereby shall be
reasonable and shall not be unreasonably withheld, conditioned or delayed and, in exercising any
right or remedy hereunder, each party shall at all times act reasonably and in good faith.

          (r) Any expenditure by a party permitted or required under this Lease, for which such party
demands reimbursement from the other party, shall be limited to the fair market value of the goods
and services involved, shall be reasonably incurred, and shall be substantiated by documentary
evidence available for inspection and review by the other party.

39

 

          IN
WITNESS WHEREOF, the Lessor and Lessee have duly executed this Lease as of the date
first set forth herein.

	 	 	 	 	 	 	 
	 	 	“Lessor”	 	 
	 
	 	 	 	 	 	 
	 	 	HDP ASSOCIATES, LLC,

a California limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	[ILLEGIBLE]
  8/1/06
 

     Manager
	 	 
	 
	 	 	 	 	 	 
	 	 	“Lessee”	 	 
	 
	 	 	 	 	 	 
	 	 	LUMENIS INC.

a Massachusetts corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	[ILLEGIBLE]    31/7/06
 

	 	 
	 

	 	 	 	     Its	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	
 

	 	 
	 

	 	 	 	     Its	 	 

40

 

          IN WITNESS WHEREOF, the Lessor and Lessee have duly executed this Lease as of the date
first set forth herein.

	 	 	 	 	 	 	 
	 	 	“Lessor”	 	 
	 
	 	 	 	 	 	 
	 	 	HDP ASSOCIATES, LLC,

a California limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	[ILLEGIBLE]   
8/1/06
 

     Manager
	 	 
	 
	 	 	 	 	 	 
	 	 	“Lessee”	 	 
	 
	 	 	 	 	 	 
	 	 	LUMENIS INC.

a Massachusetts corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	[ILLEGIBLE]
 

	 	 
	 

	 	 	 	     Its	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	
 

	 	 
	 

	 	 	 	     Its	 	 

 

LEGAL DESCRIPTION

     All that certain real property in the City of Santa Clara, County of Santa Clara, State of
California, described as:

PARCEL 3, as shown upon that certain Map entitled “Parcel Map,” which Map was filed
for record in the Office of the Recorder of the County of Santa Clara, State of
California on July 7, 1983 in Book 514 of Maps, at Page 31, Records of Santa Clara
County.

EXHIBIT “A”

 

 

EXHIBIT “B”

Page 1

 

 

EXHIBIT “B”

Page 2

 

 

COMMENCEMENT MEMORANDUM

Date:                                         , 2006

     This Commencement Memorandum is entered into with respect to the Lease dated July 19,
2006 (the “Lease”) between HDP Associates, LLC, a California limited liability company
(Lessor”), and Lumenis Inc., a Massachusetts corporation (“Lessee”), of the premises
located at 5302 Betsy Ross Drive, Santa Clara, California (the “Premises”).

     In accordance with the Lease, Lessor and Lessee confirm and agree as follows:

     1. That Lessee has taken possession of the Premises on the date hereof, subject to
Lessor’s obligations to be performed with respect to the condition of the Premises
pursuant to
Paragraph 2(c) of the Lease;

     2. That Lessee hereby acknowledges that under the provisions of the Lease
 the
Commencement Date of the initial term of the Lease is       , 2006
and the Expiration Date of the initial term of the Lease is December 31, 2012, subject to the
option to extend provided in Paragraph 3 of the Lease;

     3. That in accordance with the provisions of the Lease, Operating Expenses and
Taxes commence to accrue on the Warranty Date which is defined in the Lease as the first
to
occur of (1) the date of substantial completion of the Tenant Improvement Work, or (2)
October 1, 2006, and Monthly Base Rent shall commence to accrue on January 1, 2007; and

     4. Rent is due and payable by Lessee in advance on the first (1st) day of each and
every month during the term of the Lease (except that Lessee has paid the Monthly Base
Rent for
January 2007 concurrently with the execution and delivery of the Lease by Lessor and
Lessee.
Lessee’s rent checks should be made payable to HDP Associates, LLC and mailed to 1000 C
Commercial Street, San Carlos, California 94070.

AGREED AND ACCEPTED

	 	 	 	 	 	 	 	 	 	 	 
	LESSEE:	 	 	 	LESSOR:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LUMENIS INC.,	 	 	 	HDP ASSOCIATES, LLC,	 	 
	a Massachusetts corporation	 	 	 	a California limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	Name:

	 	 

	 	 	 	Name:
	 	 

	 	  
	Its:

	 	 

	 	 	 	Its:
	 	 

	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 

EXHIBIT “C”

 

 

LETTER OF CREDIT REDUCTION SCHEDULE

     (Insert amortization schedule of the Secured Tenant Improvement Allowance, when the amount is
known.)

EXHIBIT “D”exv4w18

 

Exhibit
4.18

LEASE

     THIS LEASE, dated April ___, 2006 by and between CENTURY EAST BUSINESS CENTER, L.L.C. a,
Utah limited liability company hereinafter referred to as “LESSOR” and LUMENIS INC., a
Massachusetts corporation hereinafter referred to as “LESSEE”.

     Lessor hereby leases and demises to Lessee, and Lessee leases from Lessor only for the purpose
of storage, staging, packing and otherwise preparing for shipping and distribution of laser
products and also for general office use and purposes incidental and necessary to the foregoing
purpose, and for no other purposes, approximately 11,138 square feet in a one story building
located in Salt Lake County and known as 1870 South Milestone Drive (THE ACACIA BLDG.), Unit E,F,
Salt Lake City, Utah (the “Premises”) as shown on the site plan attached as Exhibit A and which is
part of a larger business park (“Business Park”) as shown on Exhibit A and which contains areas
that are not leased to or occupied by or held for lease or occupancy by any tenant (“Common
Areas”). Lessor may, in Lessor’s sole discretion, from time to time: (a) change the Common Areas,
including, without limitation, changes in the locations, size, shape, and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction
of traffic, landscaped areas, walkways, and utility

 

 

raceways; (b) close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (c) designate other land outside the
boundaries of the Business Park to be a part of the Common Areas; (d) add additional buildings and
improvements to the Common Areas; (e) use the Common Areas while engaged in making additional
improvements, repairs, or alterations to the Business Park, or any portion thereof; and (f) do and
perform such other acts and make such other changes in, to, or with respect to the Common Areas and
Industrial Center as Landlord may, in the exercise of sound business judgment, deem to be
appropriate. All of the Lessor’s rights with respect to the Common Areas shall be subject to the
requirement that no such right shall be exercised so as to materially and permanently impair
Lessee’s use of the Premises for the purposes stated in this Lease. Material impairment for a
temporary period shall only be allowed if such action is absolutely necessary to preserve
substantive and valuable property rights or interests which cannot otherwise be reasonably
preserved or protected.

-2-

 

     1. TERM AND RENT: The term of this Lease shall be for THIRTY SIX (36) months
(“Term”) commencing on April 1, 2006 or, if Lessor’s Work is required (as hereafter defined), upon
substantial completion of Lessor’s Work (“Commencement Date”) and ending on March 31, 2009 or
thirty six months after the Commencement Date, if Lessor’s Work is required. The initial base rent
(“Base Rent”) shall be $4,567.00 per month, plus initial estimated common area maintenance charges
(“CAM”) of $1,002.00 per month (“Monthly CAM Payment Amount”) for a total of $5,569.00. Lessee’s
initial prorata share of CAM is 4.4% (“Lessee’s Share”). CAM consists of all costs of operation,
maintenance, repair and replacement of the Common Area including, but not limited to, real property
taxes and/or any substitute therefor, insurance, utilities, and maintenance, repair and replacement
costs of the Business Park including, but not limited to, snow removal, landscape maintenance, and
all exterior maintenance of the Premises and the Business Park. The initial CAM is merely an
estimate and will be adjusted by Lessor as necessary to reflect the actual costs incurred by
Lessor. Within ninety (90) days following the end of each calendar year during the term (or the
earlier termination of this Lease Term), Lessor shall provide Lessee with a statement setting forth
in reasonable detail the actual CAM for the preceding year, together with a

-3-

 

calculation of Lessee’s share thereof. Lessor will also provide an estimate of CAM for the then
current calendar year, and the new monthly amount payable by Lessee for its share of such estimated
CAM. Pending the provision of this revised monthly CAM payment obligation, the prior year’s monthly
payment amount shall be continued. Within thirty (30) days following presentation of Lessor’s
statement, Lessor shall refund to Lessee the full amount of any overpayments of CAM made by Lessee
for the preceding year or Lessee shall pay to Lessor the full amount of underpayments of CAM for
the preceding year. Similarly, for the period of time from the beginning of the then current year
to the date of the notice, reconciling payments or refunds of the monthly CAM payments made during
this period shall also be settled through payment and refund within the aforesaid 30-day period.
All sums due from Lessee to Lessor, whether denominated as such herein, shall be deemed to be
additional rent (“Additional Rent”). Base Rent and monthly payments of CAM are due and payable in
advance, without notice, and without deduction or offset on the FIRST day of each month
beginning on the Commencement Date. Lessor shall give Lessee written notice of any Base Rent or
Additional Rent that is not received by the first day of the month such rent is due, and Lessee
shall be in default if it fails to pay such Base Rent or Additional Rent within 5 days of such
notice. Such notice

-4-

 

shall be in lieu of and not in addition to any notice required by statute. Base Rent shall be
increased pursuant to the Base Rent Schedule attached hereto as Addendum A and incorporated by
reference here. The Premises are located in the M Zone of Salt Lake City, Utah. However, Lessor
does not assume responsibility for Lessee’s receipt of any approvals from any governmental agency
or utility having jurisdiction of the Premises nor shall there be any delay in the Commencement
Date or payment of Base Rent or Additional Rent or performance of any non-monetary obligations by
Tenant under this Lease caused by delays arising from any governmental or utility approvals
required for occupancy of the Premises or those caused by Lessee (collectively “Delays”). Lessor
acknowledges receipt of $1,002.00 which will be considered the CAM for the first month. The Base
Rent for the first two months of the term of this Lease are abated. All monetary obligations of
Lessee under this Lease are sometimes referred to herein as “Rent”.

Notwithstanding the foregoing, should Lessee enter the Premises, with Lessor’s prior written
consent, prior to the Commencement Date (“Early Possession Period”), the obligation to pay Base
Rent and Additional Rent shall be abated for the Early Possession Period. All other terms of this
Lease, however, including, but not limited to, Lessee’s obligation to carry the insurance and

-5-

 

provide the certificates of insurance required by Paragraph 3 of the Lease, shall be in effect
during the Early Possession period. Such Early Possession shall not change the expiration date of
the term.

     Security Deposit. Waived

1a. IMPROVEMENTS: Lessor agrees to demise Premises in accordance with Exhibit A
(“Lessor’s Work”). At Lessor’s sole option, any additional improvements by Lessee for which Lessor
has given its prior written consent and which increase the cost of construction for Lessor may,
upon Lessor’s prior written agreement, be amortized over the initial term of the Lease with
interest thereon at 10% per annum and paid by Lessee as Additional Rent in monthly payments over
the initial term of this Lease. Notwithstanding anything to the contrary, Lessor reserves the right
to make changes to the common areas including, but not limited to, driveways, entrances, landscaped
areas and parking, provided there is no material and permanent impairment to Lessee’s use of the
Premises for the purposes stated in this Lease. Material impairment for a temporary period shall
only be allowed if such action is absolutely necessary to preserve substantive and valuable
property rights or interests which cannot otherwise be reasonably preserved or protected.

-6-

 

1b. SPECIAL CONTRACTION: Lessee shall have the right at any time after the end of the
first full year of this Lease to contract and reduce the demised space from 11,138 square feet to
7,198 square feet by building a full height demising wall on grid between Suite E and Suite F.
This right may be exercised by giving written notice to Lessor at least 90 days in advance of the
date on which the Lessee intends to commence work on the demising wall. See Exhibit A. The cost
of building the demising wall shall be borne by the Lessee. Upon the date of completion of the
demising wall and vacation of the space separated thereby (which shall be a date after the end of
the first full year of this Lease)the said contraction of the demised Premises shall be effective
and the monthly base rent will thereafter be at $3,023 per month plus the CAM of $648 making the
adjusted total of $3,671 per month for the remaining balance of the term. See Addendum A Rent
Schedule. During any extension term, a pro-rated adjustment for such reduced area shall also be
applied.

1c. RENEWAL OPTION: Provided Lessee is not then in default and has not received more than
two (2) notices of default during the term of the Lease, Lessee may extend the term of this Lease
for an additional 24 months (the “Extension Option”) by giving the Lessor written notice of its
decision to extend the term of this Lease which is received by Lessor at least ninety (90) days

-7-

 

prior to the expiration of the term. The Base Rent for the Extension Option shall be as set forth
in Addendum A Base Rent Schedule.

     2. SPRINKLER SYSTEM: The Premises are equipped with an automatic sprinkler system.
Except for Lessor’s Work, any other change to the Premises by Lessee including, but not limited to
re-arrangement of Lessee’s equipment or personal property, which will change the fire rating by any
insurer or governmental or quasi-governmental agency to a higher risk than that now designated and
require a change to the fire sprinkler system, will be the responsibility and sole cost of Lessee.
In the event Lessee does not complete such changes to the sprinkler system within 20 days of
written notice from Lessor, Lessor may make such repairs and/or corrections at Lessee’s sole cost
and expense and Lessee shall reimburse Lessor for such costs, as additional rent, with the
installment of rent next coming due.

     3. INSURANCE: Lessor shall maintain a full replacement value policy of property
insurance on the Premises with all coverages, limits and deductibles as reasonably selected by
Lessor (“Lessor’s Insurance”). The cost of Lessor’s Insurance shall be included in CAM. Lessee
shall maintain general liability insurance with minimum limits of $1,000,000 per occurrence and
$3,000,000 aggregate on the then most current form used by the

-8-

 

liability insurance industry. Lessee shall name Lessor, any entity managing the Business Park, and
Lessor’s lender as additional insured on the liability insurance carried hereunder Such insurance
shall provide that it may not be canceled without at least 30 days’ written notice to Lessor.
Lessee shall deliver to Lessor a certificate of insurance on a standard insurance industry form
evidencing the coverage required in this Section prior to the earlier of the Commencement Date or
the date upon which Lessee enters the Premises. Lessee shall also maintain personal property
insurance against “all risks” at least as broad as the current ISO Special Form policy for loss to
any of Lessee’s business personal property and any alterations or improvements made by Lessee to
the Premises on a full insurable replacement cost basis with no coinsurance clause, and business
income insurance covering at least six months of loss of income and continuing expense. Lessee
shall name Lessor, any entity managing the Business Park, and Lessor’s lender as additional insured
on the personal property insurance carried hereunder.

     Waiver of Subrogation: Lessor and Lessee hereby waive any rights each may have against the
other on account of any loss or damage occasioned to Lessor or Lessee, as the case may be, their
respective property, or the Building and the Premises

-9-

 

arising in any manner covered by the fire and extended coverage insurance maintained pursuant to
this Lease, and the parties each agree to use their best efforts to have their respective insurance
companies insuring the property of either Lessor or Lessee against any such loss, waive any right
to subrogation that it may have against Lessor or Lessee, as the case may be.

     4. FIRE: If the Premises shall be destroyed by fire or other causes, or be damaged
thereby that they become untenantable and cannot be rendered tenantable within one hundred eighty
(180) days from the date of the damage, this Lease may be terminated by Lessor or by Lessee and
Rent shall be abated from the date of such destruction to the date the Lease is so terminated to
the extent the Premises are untenantable. In case damage to the Premises does not require a
termination of the Lease as above provided, Base Rent shall be abated from the date of such damage
to the repair of such damage to the extent the Premises are untenantable, and Lessor shall repair
the damages within a reasonable time, if not terminated, to the extent of any proceeds received by
Lessor from policies of insurance which Lessor is required to carry hereunder. However, if greater
than twenty-five (25%)of the Premises are unusable by Lessee, as reasonably determined by Lessor,
this Lease may be terminated by the Lessee

-10-

 

or Lessor and Lessee shall be reimbursed by Lessor for any prepaid Rent.

     5. CARE OF PREMISES: As used in this Lease, the term Hazardous Material means any
substances defined as or included in the definition of hazardous substances, hazardous wastes,
hazardous materials or toxic substances now or subsequently regulated under any applicable federal,
state or local laws or regulations. Lessee shall not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of in or about the Premises by
Lessee, its agents, employees, contractors, sublessees, or invitees without the prior written
consent of Lessor. Lessee may not install or use any storage tank on the Premises or in the
Business Park. The common area of the Business Park including, but not limited to the area
contiguous and adjacent to the Building on the Premises will be maintained by Lessor, at Lessee’s
Pro Rata Share, and kept in an orderly manner and no waste products will be allowed to accumulate.
Lessee shall remove all of its own waste products at its own expense. Notwithstanding, the
foregoing, the Lessee is entitled to the use and storage of normal cleaning, maintenance and other
materials necessary for the operation of its business in small quantities as long as the

-11-

 

same are handled, stored, utilized and disposed of in strict compliance with the law.

     Lessor represents that Lessor has not treated, stored, generated or disposed of any Hazardous
Material upon, under, about or within the Premises and, to the best of Lessor’s actual and current
knowledge, after due and diligent inquiry, no Hazardous Material is present on or under the
Premises as of the Commencement Date. Further, Lessor represents that Lessor and the Premises are
in compliance with all “Applicable Requirements” (as hereinafter defined) to its actual and current
knowledge. Lessor shall and does hereby indemnify Lessee and hold Lessee harmless from any against
any and all expenses, losses and liabilities suffered by Lessee as result of a governmental
authority ordering a cleanup, removal or other redemption by Lessee for any Hazardous Material
located on, under or about the Premises during the Lease Term caused by Lessor and/or any prior
owner, lessor or lessee. Such indemnity also shall cover any failure of the foregoing
representation of Lessor with respect to compliance with Applicable Requirements.

     Lessee shall, at Lessee’s sole cost and expense, fully, diligently, and in a timely manner
comply with all “Applicable Requirements,” which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements,

-12-

 

and restrictions of record, permits, the reasonable requirements of any applicable fire insurance
underwriter or rating bureau, and the reasonable recommendations of Lessor’s engineers and/or
consultants, relating in any manner to the Premises (including but not limited to matters
pertaining to (a) industrial hygiene, (b) environmental conditions on, in, under, or about the
Premises, including soil and groundwater conditions, and (c) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage, spill, or release of any
Hazardous Materials), now in effect or which may hereafter come into effect. Lessee shall, within
10 days after receipt of Lessor’s written request, provide Lessor with copies of all documents and
information evidencing Lessee’s compliance with any Applicable Requirements, and shall immediately
upon receipt notify Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint, or report pertaining to or involving failure by
Lessee or the Premises to comply with any Applicable Requirements. Lessee shall and does hereby
indemnify Lessor and hold Lessor harmless from any against any and all expenses, losses and
liabilities suffered by Lessor as result of a governmental authority ordering a cleanup, removal or
other redemption by Lessee for any Hazardous Materials located and brought on, under

-13-

 

or about the Premises during the Lease Term by Lessee and/or its agents.

     Lessee shall not commit, or suffer to be committed, any waste upon the Premises, or any public
or private nuisance; and shall not use said premises or suffer the same to be used for any unlawful
purpose. Lessee shall not do or permit to be done any act which will void or suspend any insurance
policy covering the Premises, or any part thereof or any appurtenant or fixture thereto or property
thereon or the building in which the Premises are located or any part thereof or any appurtenant or
fixture thereto or property thereon. Lessee shall not do or permit to be done anything on the
Premises which would constitute an unreasonable annoyance to adjoining tenants or which would
injure the reputation of the Premises or the Business Park, and Lessee shall not do or permit to be
done anything which will weaken the structural strength of the Premises.

Except as otherwise provided herein, Lessor makes no covenant or representation as to the
suitability of the Premises for any purpose. Lessee has a (30) thirty day period, beginning on the
Commencement Date, during which to notify Lessor of any defect in any improvement or system within
the Premises which are Lessor’s obligation under the Lease to repair, and Lessor agrees to repair
or restore such defect within thirty (30) days of receipt of such

-14-

 

notice by Lessee, or, if more than thirty (30) days is required to restore or repair, Lessor shall
have begun such restoration or repair within thirty (30) days and will diligently pursue such
restoration or repair to completion within a reasonable time.

     Lessee shall not make any alterations or improvements to the Premises during the term of this
Lease unless the written consent of the Lessor shall be first had and obtained, such consent not to
be unreasonably withheld or delayed. Notwithstanding the foregoing, the Lessee has previously
disclosed to Lessor plans for the attachment of certain racking and fencing to the floor of the
Premises and Lessor does hereby consent to and authorizes such action to be taken by the Lessee,
subject, of course to the obligations to restore any damage to the Premises caused by such
installation or subsequent removal. Prior to the commencement of any alterations or improvements on
the Premises Lessee shall provide to Lessor copies of plans, permits, names, addresses and
telephone numbers of contractors, sub-contractors and material suppliers, building schedule and
payment draw schedule. Upon completion of the alterations or any improvements made by Lessee to
the Premises, Lessee shall provide to Lessor an unconditional lien waiver or other documentation
satisfactory to Lessor in its sole discretion evidencing the full payment of all contractors

-15-

 

and materialmen by Lessee. Any approved improvements or alterations by Lessee, shall be
completed in a good and workmanlike manner, with all permits obtained in lien free condition and
must be completed within sixty days or be subject to the termination of this Lease at Lessor’s sole
option unless otherwise extended by Lessor. Failure by Lessee to remove any liens arising from
alterations or improvements by Lessee or its contractors or materials brought on the Premises by
Lessee or its contractors or materialmen within 10 days of Lessor’s receipt of such lien will
result in termination of the Lease at Lessor’s sole option and forfeiture of all improvements,
prepaid rent, security deposits and any other deposits held by Lessor provided that Lessor
immediately notifies Lessee. Notwithstanding anything to the contrary contained in this Lease, at
the end of the term or earlier termination of the Lease, Lessee shall remove those improvements or
alterations installed or constructed on the Premises by Lessee which Lessor specifies in writing
prior to the end of the term or, in the case of an early termination, which Lessor specifies in
writing within 60 days of the date of the early termination. Lessee shall thereafter repair any
damage caused by such removal and leave the Premises in broom clean condition. Further, Lessee
acknowledges and agrees that (1) it has no ownership interest in the Premises or any real property
of

-16-

 

 Lessor’s of which the Premises are a part, (2) Lessee’s interest in the Premises is merely
that of a tenant under this Lease, and (3) all work, improvements or alterations to the Premises
not specifically requested by Lessor in writing have been performed solely at Lessee’s request and
not at Lessor’s request.

     6. FIXTURES: Any fixtures, additions, or appurtenances attached to the Premises
during the term of this Lease by Lessee, other than removable trade fixtures for which Lessee will
repair any damage caused by their removal, are considered to be part of the real property and may
not be removed without prior written consent of the Lessor unless Lessor instructs Lessee in
writing to remove such improvements and repair all damage caused by such removal. All leasehold
improvements (as distinguished from trade fixtures and apparatus) installed in the Premises at any
time, whether by or on behalf of Tenant or by or on behalf of Landlord, shall not be removed from
the Premises at any time, unless such removal is consented to in advance by Landlord.

     7. TAXES: Lessee shall be responsible for county and city taxes upon the leasehold
improvements by or on behalf of Lessee and all personal property taxes upon Lessee’s personal
property which, if billed to Lessor, will be reimbursed to Lessor by Lessee as additional rent due
with the next installment of Rent due after written notice from Lessor. Property taxes and

-17-

 

assessments or any taxes or assessments in lieu thereof (“Property Taxes”) will be allocated to the
herein described property by the County Tax Assessor or any successor authority and Lessee will be
responsible for Lessee’s Pro Rata Share of the Property Taxes. Lessee will pay all personal
property taxes whether they are assessed to Lessee directly or to Lessor.

     8. REPAIRS AND MAINTENANCE: Except repairs, replacements or maintenance necessitated
in any manner by the negligent or intentional acts or omissions of Lessee or its agents, Lessor
shall maintain the roof, outside of the exterior walls, and foundations, at Lessor’s sole cost and
expense. Except repairs, replacements or maintenance necessitated in any manner by the negligent or
intentional acts or omissions of Lessee or its agents, Lessor shall maintain, subject to
reimbursement as part of CAM, the parking areas and walkways, plumbing and electrical systems, and
area landscaping in good condition and repair. Lessee shall maintain the balance of the Premises
and appurtenances, including, but not limited to, heating and air conditioning units, in good
condition and repair at its expense. Lessor represents and warrants that, as of the Commencement
Date, the HVAC system, roof structure, fire sprinkler system, and structural integrity of the walls
and foundation are in good condition and working order. Lessee agrees that on the last day

-18-

 

of the Term or sooner termination of the Lease, it will surrender the Premises to Lessor in as good
condition as they are as of the Commencement Date, ordinary wear and tear excepted and damage by
fire, act of God or by the elements of other casualty excepted to the extent such Lessor is
reimbursed by insurance for such loss. If Lessee shall fail to keep the Premises properly
repaired, Lessor may do so (but is not obligated), and the cost of such repair shall be paid by
Lessee with the next installment of and as Rent due hereunder.

     Lessor shall cooperate reasonably with Lessee to utilize all manufacturers’ and construction
warranties, if any, related to Lessor’s Work. When Lessor has an obligation to repair, Lessor
shall repair such item(s) or area(s) within a commercially reasonable amount of time after receipt
of written notice from Lessee, unless due to the nature of such repair, more than thirty days are
needed to repair in which case Lessor shall begin such repair within thirty days and diligently
pursue such repair to completion.

     Notwithstanding anything to the contrary in the Lease, Lessor shall have no obligation to
perform any work on or about the Business Park or Premises other than that for which Lessor is
obligated by the Lease and that which is as specifically set forth herein.

-19-

 

9. WAIVER OF CLAIMS AND INDEMNIFICATION BY LESSEE OF LESSOR: Lessee agrees to and hereby
does indemnify and save Lessor and Lessor’s partners, shareholders, members, directors, officers,
employees, agents and contractors harmless from and against any and all claims arising from the use
or occupancy of the Premises by Lessee or from any acts, omissions, or negligence of Lessee, or its
contractors, licensees, agents, servants, employees, or invitees, and from and against all costs,
expenses, and liabilities incurred in or in connection with any such claim or proceedings brought
thereon, including, but without limitation, litigation expenses and reasonable attorney’s fees.

     10. UTILITIES: Lessee shall at its sole expense secure all electrical, gas, and
telephone service which it requires in connection with its occupancy of the Premises and indemnify
and hold Lessor and its partners, officers, directors, shareholders, members, employees,
contractors and agents harmless from any claims, liability or loss because of the Lessee’s failure
to make timely payments for all such services. If any services or utilities are jointly metered
with other premises within the Business Park, Lessor shall make a reasonable determination of
Lessee’s proportionate share of the cost of such utilities and services and Lessee shall pay such
share to Lessor within thirty

-20-

 

(30) days after receipt of Lessor’s written statement. Where separately metered, Lessee shall
transfer all electrical utilities into its name as of the earlier of (a) the Early Possession Date
or (b) the Commencement Date, but in no event later than ten (10) days after the earlier of the two
dates. Failure to do so will result in cancellation of all existing electrical utilities to the
Premises by Lessor and Lessee hereby waives any claims, losses, liabilities or damages against
Lessor arising from the cancellation of such utilities. Any costs or fees to reinstate service
will be the sole responsibility of the Lessee.

     Upon Lessee’s written request, Lessor will provide Lessee a statement of the basis for the
calculation of Lessee’s proportionate share of the cost of jointly metered services or utilities.

     11. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this Lease or any interest
therein or sublet the Premises or any part thereof without first obtaining the written consent of
the Lessor. Such consent shall not be unreasonably delayed or withheld if proposed assignee or
sublessee is of good financial responsibility, in Lessor’s reasonable discretion and the use to be
made by such proposed assignee or sublessee, if different from that allowed to Lessee hereunder is
reasonably acceptable to

-21-

 

Lessor. A consent to one assignment or subletting or use by any other person shall not be deemed to
be a consent to any subsequent assignment, subletting or use, and shall not release Lessee from any
obligations pursuant to the provisions of this Lease unless agreed to by Lessor. Any such
assignment, subletting or use without Lessor’s consent shall terminate this Lease at the option of
Lessor if, after written notice of violation by Lessor, Lessee has not terminated such assignment
or sublease within 30 days after such notice. Any request by Lessee to Lessor for Lessor’s consent
to an assignment or subletting shall include a written notice, stating the proposed date of such
assignment or subletting, specifically identifying the proposed assignee or sublessee, including
but not limited to such proposed assignee’s or sublessee’s proposed use, net worth and previous
business experience. Information on the proposed assignee’s or sublessee’s net worth shall include,
but not be limited to, submission of copies to Lessor of two years’ income statements, balance
sheets and statement of changes in financial position in audited form and certified as accurate by
the proposed assignee or sublessee. Within sixty (60) days of receipt of such written notice and
all supporting information, Lessor shall, by giving written notice to Lessee of its intention to do
so: (a) withhold consent to such assignment or subletting; (b) consent to such assignment or

-22-

 

subletting; or (c) terminate the Lease, such termination to be effective thirty (30) days after
such notice from Lessor. If Lessor exercises its termination right hereunder, Lessor shall have the
right to enter into a lease or other occupancy agreement directly with the proposed assignee or
sublessee and Lessee shall have no right to any of the rents or consideration payable by such
proposed assignee or sublessee under such new lease or occupancy agreement. Lessee may, however,
elect to nullify Lessor’s election to terminate this Lease under clause (c) above by furnishing
Lessor with written notice of Lessee’s election to withdraw its request for consent to the proposed
assignment or sublease within ten (10) days of Lessee’s receipt of Lessor’s notice of termination,
in which event the Lease shall remain in effect with the existing Lessee. Lessor and Lessee
specifically agree that Lessor’s election to terminate the Lease under clause (c) above may be made
in Lessor’s sole and absolute discretion and that no test of reasonableness shall be applicable
thereto.

     Notwithstanding anything to the contrary contained in this Lease, Lessee may assign this
Lease or sublet the Premises upon notice to Lessor but without Lessor’s consent to a subsidiary,
affiliate or parent company; any firm corporation, or entity which Lessee controls, is controlled
by, or is under common control with; any partnership in which Lessee has a majority

-23-

 

interest; or to any entity which succeeds to all or substantially all of its assets whether by
merger or sale. Notwithstanding anything to the contrary in this Lease or elsewhere, in the event
of any assignment of this Lease by Lessee, Lessor shall be entitled to 100% of the profit from such
assignment which is based upon the value of this Lease. In the event of any sublease by Lessee,
Lessor shall be entitled to all sublease rent or other compensation to Lessee from a sublessee
which is in excess of the rent and other charges paid by Lessee pursuant to the Lease. This Lease
shall not be assigned or transferred by any process of insolvency or bankruptcy, either voluntary
or involuntary, nor by receivership proceedings nor by operation of law. In no event shall Lessee
be released from liability under this Lease unless Lessor specifically releases Lessee from
liability in writing.

     12. LESSEE DEFAULT AND REMEDIES FOR BREACH: If Lessee shall fail to pay the Base
Rent, CAM, Additional Rent or any other charges due or fails to provide insurance required of
Lessee under this Lease after five (5) days written notice from Lessor, then Lessor may terminate
this Lease. If Lessee shall become insolvent, or if proceedings in bankruptcy or insolvency shall
be instituted by or against the Lessee, or if the Lessee shall make an assignment for the benefit
of creditors, or if a receiver or trustee shall be appointed to Lessee’s property, and

-24-

 

Lessee cannot vacate, release, dismiss or otherwise correct such event within sixty (60) days after
such event occurs, then any such event shall be deemed a default on the part of the Lessee under
this Lease and shall give rise to all the rights and remedies of the Lessor provided by this Lease
or by law, including not by way of limitation, the immediate right to terminate this Lease and all
rights of Lessee in the leased premises, all improvements and fixtures located thereon.
Notwithstanding the above remedies for breach, prior to exercising its remedies for a non-monetary
breach, Lessor shall give Lessee written notice of such breach and allow Lessee thirty (30) days
upon receipt of written notice of such breach to cure the breach, or, if due to the nature of the
breach more than thirty (30) days is required to cure the breach, provided Lessee continues to pay
the rent and all other charges due under the Lease on a timely basis, Lessee shall have a
reasonable amount of time to cure the breach, provided it promptly commences such cure and
diligently pursues it to completion.

     In the event of any breach of this Lease by Lessee (meaning a breach of the duties or obligations
provided under this lease which has not been cured or remedied within the applicable cure period
after notice as provided herinabove, Lessor, besides all other rights or remedies it may have,
shall have the immediate

-25-

 

right to re-entry and may remove all persons and property from the Premises; such property may be
removed and stored in a public warehouse at the sole cost of the Lessee. Should Lessor elect to
re-enter or should it take possession pursuant to any notice provided for by law, it may either
terminate this Lease, or without termination it may from time to time re-let the Premises or any
part thereof for such term or terms and at such rental or rentals and upon such other terms and
conditions as Lessor in its sole discretion may deem advisable. Lessor, at its sole cost and
expense, shall have the right to make any alterations or repairs to the Premises. Rentals received
by Lessor from such re-letting shall applied as follows:

     (a) To the payment of any indebtedness other than rent due hereunder from Lessee to Lessor.

     (b) To the payment of rent due and unpaid hereunder.

     (c) To the payment of any cost of such re-letting.

The residue, if any, shall be held by the Lessor and applied to payment of future rent installments
as the same may become due and payable.

     Should the rentals received from such re-letting during any month be less than that agreed to
be paid during that month by Lessee hereunder, Lessee shall pay such deficiency to the Lessor.
Lessee shall also pay to Lessor as soon as ascertained, the cost

-26-

 

and the expense incurred by Lessor in connection with such re-letting.

     Such re-entry or re-taking of the Premises by Lessor shall not be construed as an election on
its part to terminate this Lease unless written notice of such election be given to Lessee or
unless the termination hereunder be decreed by a court of competent jurisdiction. Notwithstanding
such re-letting without termination, Lessor may at any time thereafter elect to terminate this
Lease for such previous breach. Lessor shall use reasonable efforts to mitigate its damages in the
event Lessee defaults under the terms of this Lease.

     Should Lessor at any time terminate this Lease for any breach, in addition to any other remedy
it may have, it may recover from Lessee all damages it may incur by reason of such breach
including, but not limited to, the cost of recovering the Premises, any rent and additional rent
due at the time of such termination, the worth at the time of such termination of the amount of
the Rent reserved in the Lease for the remainder of the term, any abated rent or other monetary
inducement granted by Lessor to Lessee.

     13. ABANDONMENT OF PREMISES: Lessee shall not vacate or abandon the premises during
this Term without continuing to make rental payments. If Lessee shall vacate, abandon or surrender

-27-

 

the premises, or be dispossessed by process of law or otherwise, and fails to pay the rent due
hereunder, any personal property belonging to Lessee and left on the premises shall be abandoned to
the Lessor at the option of the Lessor. In addition, any rent or other charges which have been
abated hereunder shall become immediately due and payable by Lessee to Lessor. Notwithstanding
anything contrary to the foregoing, should Lessee abandon the Premises without continuing to pay
Rent, in addition to all its rights and remedies, Lessor shall also have the right to immediate
entry and possession of the Premises without notice to Lessee.

     14. QUIET ENJOYMENT: Lessor covenants that it has full authority to execute this
Lease and upon the faithful performance of Lessee of all of the terms, conditions and covenants to
be performed by him hereunder including, but not limited to, the payment of Rent, Lessee shall be
entitled to quiet enjoyment and exclusive use of the Premises. Notwithstanding the foregoing,
Lessor and Lessor’s agents shall have the right to enter the Premises at any time, in the case of
an emergency, and otherwise at reasonable times upon reasonable notice for the purpose of showing
the same to prospective purchasers, lenders, or tenants,

-28-

 

and making such alterations, repairs, improvements, or additions to the Premises or to the Building
or the Business Park, as Lessor may reasonably deem necessary. Lessor may at any time place on or
about the Premises, Building or Business Park any ordinary “For Sale” signs, and Lessor may at any
time during the last 180 days of the term hereof place on or about the Premises any ordinary “For
Lease” signs. All such activities of Lessor shall be without abatement of rent or liability to
Tenant.

     15. ATTORNEY’S FEES: Should any legal action be instituted to interpret or enforce
any of the provisions this Lease or to compel its performance, the prevailing party shall be
entitled to recover from the other party reasonable attorney’s fees to be fixed by the court.
Should Lessee request any consent, waiver, estoppel or other approval of Lessor for any reason,
Lessee shall reimburse Lessor for all costs of review of such requests including, but not limited
to, Lessor’s reasonable attorney’s fees. Likewise, should Lessor request any consent, waiver,
estoppel or other approval of Lessee for any reason, Lessor shall reimburse Lessee for all costs of
review of such requests including, but not limited to, Lessee’s reasonable attorney’s fees.

-29-

 

     16. NOTICES: All notices to be given under this Lease shall be in writing and
delivered personally or by depositing the same in the US Mail, postage prepaid, via Registered,
Certified mail, or any nationally recognized overnight service addressed to:

Lessee:Lumenis Inc., 3959 West 1820 South, Salt Lake City, Utah 84104, ATTN: Mr. Sean
Jensen (with a copy to General Counsel, 2400 Condensa Street, Santa Clara, California, 95051, which
copy is not effective as notice)

Lessor: Century East Business Center, 1946 E. Edinger, Santa Ana, California 92705; Attention:
Willis Boyd

     17. WAIVER OF BREACH: The waiver by Lessor or Lessee of any breach of any term,
covenant or conditions of the Lease by the other shall not be deemed a waiver of such term,
covenant or condition or of any subsequent breach of the same or of any other term, covenant or
condition of this Lease.

     18. HOLDING OVER: Any holding over after the expiration of the Term with the prior
written consent of the Lessor shall be construed to be a tenancy from month to month at one and one
half times the Base Rent, plus CAM and Additional Rent as that paid according to the terms of this
Lease, and shall otherwise be on terms and conditions herein. Any holding over after the expiration
of the Term without the prior written consent of

-30-

 

Lessor shall be deemed a tenancy at sufferance immediately terminable in Lessor’s sole discretion
at two times the Base Rent, plus CAM and Additional Rent as that paid according to the terms of
this Lease, and shall otherwise be on terms and conditions herein.

     19. SALE BY LESSOR: Lessor shall have the absolute right to convey, sell, mortgage,
assign or otherwise dispose of the Premises and/or the Business Park and Lessor’s interest under
this Lease, at any time, and thereafter shall not be subject to any liability resulting from any
act or omission or event occurring after such event, so long as the purchaser or assignee in
connection with such conveyance or assignment assume and agree in writing to carry out thereafter
any and all of the covenants of the Lessor under this Lease. Notwithstanding anything to the
contrary contained in this Section, this Lease and all rights of Lessee hereunder are and shall be
subject and subordinate to the lien and security title of any mortgage, deed of trust, lien or
security interest unless otherwise stated in writing by Lessor or the holder of such mortgage, deed
of trust, lien or security interest.

     20. SUCCESSORS BOUND: The terms, covenants and conditions herein contained shall be
subject to the provisions as to

-31-

 

assignments apply to and bind the heirs, successors, executors, administrators, and assigns of both
parties.

     21. SIGNS: Notwithstanding anything herein to the contrary, Lessor agrees to allow
Lessee to construct and maintain signs with the design and color of Lessee’s trade name not to
exceed the designated black glass area above the office area with Lessor’s reasonable approval as
to size, design and location, and further subject to any approval required from any governmental
authority having jurisdiction thereof.

     22. INTEGRATION: This Lease embodies the full agreement of the parties and supersedes
any and all prior understandings or commitments concerning the subject matter of this Lease. Any
modification or amendment must be in writing and signed by both parties.

     23. BROKERS: Lessee warrants and represents that it has not dealt with any entity or
person who might claim a commission or other payment by virtue of its representation of Lessee in
this Lease transaction, other than as already specifically set forth to Lessor in writing. Lessee
shall indemnify, defend (by counsel satisfactory to Lessor) and hold harmless Lessor, it’s
partners, members, officers, directors, shareholders, employees and agents from any claim for
commission or other payment arising

-32-

 

from a party’s claim that it represented Lessee in this Lease transaction.

     24. NON-DISTURBANCE: Upon written request from Lessee, Lessor will use commercially
reasonable efforts to provide Lessee with a written non-disturbance agreement to Lessee from the
current mortgage holder in form acceptable to such mortgage holder. Unless otherwise set forth in
writing by Lessor or the holder of any mortgage, lien or security interest, this Lease and all
rights of Lessee hereunder are and shall be subject and subordinate to the lien and security
interest of any mortgage or deed of trust created after the Lease commencement date. Lessee shall
within 10 days after written notice from Lessor execute, acknowledge, and deliver to Lessor an
estoppel certificate in a form reasonably acceptable to Lessor, or any of Lessor’s lenders or any
prospective purchasers of the Premises or the Business Park as the case may be, plus such
additional information, confirmation, and statements as be reasonably requested by the Lessor.
Should Lessee fail to deliver an executed and acknowledged estoppel certificate to Lessor as
prescribed herein, Lessee hereby authorizes Lessor to act as Lessee’s attorney-in-fact in executing
such estoppel certificate or, at Lessor’s option, Lessee shall pay a fee of $100.00 per day
(“Estoppel

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Delay Fee”) for each day after the 10 days’ written notice in which Lessee fails to comply
with this requirement.

[signatures on following page]

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     This Lease is entered into as of the date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	“Lessor”
	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CENTURY EAST BUSINESS CENTER, L.L.C.

a Utah limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	“Lessee”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	LUMENIS INC. a Massachusetts corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PRINT NAME:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	TITLE:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PRINT NAME:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	TITLE:	 	 	 	 	 	 
	 	 	 	 	 	 	 

-35-

 

FIRST
AMENDMENT TO LEASE

     This First Amendment to Lease (“Amendment”) is made and entered into as of February ___
2007, by and between BOYD ENTERPRISES UTAH, L.L.C., (“Lessor”) and LUMENIS INC., a
Massachusetts corporation (“Lessee”).

WHEREAS, Lessor and Lessee are parties to that certain Lease dated April 25, 2006 (“Lease”).
Pursuant to the terms and conditions of the Lease, Lessee has leased the premises commonly
known as 1870 South Milestone Drive, Unit E,F, Salt Lake City, Utah (“Premises”).

WHEREAS, the Lease was to commence upon substantial completion of Lessor’s work.

WHEREAS, Lessor’s work is complete and there has been a key transfer (“Key Transfer”).

AGREEMENTS

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:

     1. Commencement
of Term. The commencement of the term of the Lease is hereby amended to
commence (“Commencement Date”) on June 8, 2006 to and including June 7, 2009 (“Lease
Termination Date”).

     2. Reaffirmation. Except as otherwise provided in this Amendment, all other
terms and conditions of the Lease shall remain the same and the Lease shall remain
in full force and effect.

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

	 	 	 	 	 	 	 	 	 	 	 
	LESSOR	 	 	 	LESSEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Boyd Enterprises Utah, L.L.C.	 	 	 	Lumenis Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Property Manager

	
	 	 	Its:	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its:

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