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Exhibit 10.7

AMENDMENT NO. 1
 
This Amendment No. 1 (this “Amendment”) is executed as of December ____, 2006,
between INDUSTRIAL PROPERTIES CORPORATION, a Texas corporation (“Landlord”), and
NANO-PROPRIETARY, INC., a Delaware corporation (“Tenant”), for the purpose of
amending the Lease Agreement between Landlord and Tenant dated February 6, 2004
(the “Lease”). Capitalized terms used herein but not defined shall be given the
meanings assigned to them in the Lease.
 
RECITALS:
 
Pursuant to the terms of the Lease, Tenant is currently leasing Suites 105, 106,
107, 108 and 109 consisting of 16,111 square feet of space in the building
located at 3006 Longhorn Boulevard, Austin, Travis County, Texas, commonly known
as 3006 Longhorn Boulevard (the “Building”). Tenant desires to extend the Term
for a period of 12 months, and Landlord has agreed to such extension on the
terms and conditions contained herein.
 
AGREEMENTS:
 
For valuable consideration, whose receipt and sufficiency are acknowledged,
Landlord and Tenant agree as follows:
 
1.    Extension of Term. The Term is hereby extended such that it expires at
5:00 p.m., Austin, Texas time, on February 14, 2008, rather than February 14,
2007, on the terms and conditions of the Lease, as modified hereby.
 
2.    Rent.
 
(a)    Base Rent. Beginning February 15, 2007, the monthly installments of Base
Rent shall be $8,378.00.
 
(b)    Additional Rent. Beginning February 15, 2007, the monthly installments of
Reimbursable Expenses shall be as follows:
 
Tenant’s Share of Taxes:$1,283.00
Tenant’s Share of Common Area Maintenance:$367.00
Tenant’s Share of Insurance Premiums:$86.00

Tenant acknowledges and agrees that the foregoing amounts are estimates only and
that such amounts shall be adjusted in accordance with the terms of the Lease
(as amended by this Amendment).
 
 
3.    Condition of Premises. Tenant hereby accepts the Premises in their “AS-IS”
condition, and Landlord shall have no obligation for any construction or
finish-out allowance or providing to Tenant any other tenant inducement.
 

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4.    Limitation of Liability. In addition to any other limitations of
Landlord’s liability as contained in the Lease, as amended to date, the
liability of Landlord (and its partners, shareholders or members) to Tenant (or
any person or entity claiming by, through or under Tenant) for any default by
Landlord under the terms of the Lease or any matter relating to or arising out
of the occupancy or use of the Premises and/or other areas of the Building shall
be limited to Tenant’s actual direct, but not consequential, damages therefor
and shall be recoverable only from the interest of Landlord in the Building, and
neither Landlord nor any principal or affiliate of Landlord shall be personally
liable for any deficiency.
 
5.    Notices. All notices and other communications given pursuant to the Lease
shall be in writing and shall be 1) mailed by first class, United States mail,
postage prepaid, certified, with return receipt requested, and addressed to the
parties hereto at the address listed below, 2) hand delivered to the intended
addressee, 3) sent by nationally recognized overnight courier, or 4) sent by
facsimile transmission during the hours of 9:00 a.m. and 4:00 p.m. Dallas, Texas
time on a business day, followed by a confirmatory letter. Notice sent by
certified mail, postage prepaid, shall be effective three business days after
being deposited in the United States mail; all other notices shall be effective
upon delivery to the address of the addressee (even if such addressee refuses
delivery thereof). The parties hereto may change their addresses by giving
notice thereof to the other in conformity with this provision. Landlord and
Tenant hereby agree not to conduct the transactions or communications
contemplated by the Lease, as amended hereby, by electronic means, except by
facsimile transmission as specifically set forth in this Section 5; nor shall
the use of the phrase “in writing” or the word “written” be construed to include
electronic communications except by facsimile transmissions as specifically set
forth in this Section 5. The addresses for notice set forth below shall
supersede and replace any addresses for notice set forth in the Lease.
 

Landlord:
Industrial Properties Corporation
100 McKinney Avenue, Suite 700
Dallas, Texas 75201
Attention: Lee Halford, Jr.
Telecopy No.: 214.661.1001

 

with a copy to: 
Crow Holdings
2100 McKinney Avenue, Suite 700
Dallas, Texas 75201
Attention: Asset Manager - IPC - DASA
Telecopy No.: 214.661.8041

 

Tenant:
Nano-Proprietary, Inc.
3006 Longhorn Boulevard, Suite 106
Austin, Texas 78758
Attention: Thomas Bijou
Telecopy No.: 512.339.5021

 
6.    Brokerage. Landlord and Tenant each warrant to the other that it has not
dealt with any broker or agent in connection with the negotiation or execution
of this Amendment other than DASA Management, L.P., whose commission shall be
paid by Landlord pursuant to a separate written agreement. Tenant and Landlord
shall each indemnify the other against all costs, expenses, attorneys’ fees, and
other liability for commissions or other compensation claimed by any other
broker or agent claiming the same by, through, or under the indemnifying party.
 

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7.    Determination of Charges. Landlord and Tenant agree that each provision of
the Lease (as amended by this Amendment) for determining charges and amounts
payable by Tenant (including provisions regarding Additional Rent) is
commercially reasonable and, as to each such charge or amount, constitutes a
statement of the amount of the charge or a method by which the charge is to be
computed for purposes of Section 93.012 of the Texas Property Code.
 
8.    Prohibited Persons and Transactions. Tenant represents and warrants to
Landlord that Tenant is currently in compliance with, and shall at all times
during the Term (including any extension thereof) remain in compliance with, the
regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of
the Treasury (including those named on OFAC’s Specially Designated Nationals and
Blocked Persons List) and any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action relating thereto.
 
9.    Ratification. Tenant hereby ratifies and confirms its obligations under
the Lease, and represents and warrants to Landlord that Tenant has no defenses
thereto. Additionally, Tenant further confirms and ratifies that, as of the date
hereof, 5) the Lease is and remains in good standing and in full force and
effect, 6) Tenant has no claims, counterclaims, set-offs or defenses against
Landlord arising out of the Lease or in any way relating thereto or arising out
of any other transaction between Landlord and Tenant, and 7) all tenant
finish-work allowances provided to Tenant under the Lease or otherwise, if any,
have been paid in full by Landlord to Tenant, and Landlord has no further
obligations with respect thereto.
 
10.          Binding Effect; Governing Law. Except as modified hereby, the Lease
shall remain in full effect and this Amendment shall be binding upon Landlord
and Tenant and their respective successors and assigns. If any inconsistency
exists or arises between the terms of the Lease and the terms of this Amendment,
the terms of this Amendment shall prevail. This Amendment shall be governed by
the laws of the State of Texas.
 
11.          Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.
 
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 

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Executed as of the date first written above.
 
LANDLORD:
 
INDUSTRIAL PROPERTIES CORPORATION,
a Texas corporation
 
 
By:_______________________________ 
Name: _____________________________
Title: ______________________________
 
    TENANT:
NANO-PROPRIETARY, INC.,
a Delaware corporation
 
 
By:_______________________________ 
Name: _____________________________
Title: ______________________________

 
 
 
 
 
 
 
 
 
 
 
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