Exhibit 10.37

LEASE

BY AND BETWEEN

ROTUNDA PARTNERS II,
A CALIFORNIA LIMITED LIABILITY COMPANY

AS LANDLORD

AND

SCIENTIFIC LEARNING CORPORATION,
A DELAWARE CORPORATION

AS TENANT

OCTOBER 1, 2003 (FOR REFERENCE PURPOSES ONLY)

300 FRANK H. OGAWA PLAZA

OAKLAND, CA

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TABLE OF CONTENTS

PAGE

ARTICLE 1   REFERENCE   1   1.1   References   1 ARTICLE 2   LEASED PREMISES,
TERM AND POSSESSION   3   2.1   Demise Of Leased Premises   3   2.2   Parking;
Right To Use Outside Areas   4   2.3   Commencement Date And Lease Term   4  
2.4   Delivery Of Possession   4   2.5   Acceptance Of Possession   4   2.6  
Surrender Of Possession   4 ARTICLE 3   RENT, LATE CHARGES AND SECURITY DEPOSITS
  5   3.1   Base Monthly Rent   5   3.2   Additional Rent   5   3.3   Landlord’s
Termination Right or Rent Adjustment   5   3.4   Late Charge, And Interest On
Rent In Default   6   3.5   Payment Of Rent   6   3.6   Rental Sharing   6   3.7
  Security Deposit   6 ARTICLE 4   USE OF LEASED PREMISES AND OUTSIDE AREA   7  
4.1   Permitted Use   7   4.2   General Limitations On Use   7   4.3   Trash
Disposal   7   4.4   Signs   8   4.5   Compliance With Laws   8   4.6  
Compliance With Insurance Requirements   8   4.7   Landlord’s Right To Enter   8
  4.8   Environmental Protection   8   4.9   Reservations   9 ARTICLE 5  
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES   10   5.1   Repair And Maintenance
  10       (a)       Tenant’s Obligations   10       (b)       Landlord’s
Obligation   10   5.2   Utilities   10   5.3   Security   10   5.4   Janitorial
  10

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TABLE OF CONTENTS
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  5.5   Energy And Resource Consumption   10   5.6   Limitation Of Landlord’s
Liability   10 ARTICLE 6   ALTERATIONS AND IMPROVEMENTS   11   6.1   By Tenant  
11   6.2   Ownership Of Improvements   11   6.3   Alterations Required By Law  
12   6.4   Liens   12 ARTICLE 7   ASSIGNMENT AND SUBLETTING BY TENANT   12   7.1
  By Tenant   12   7.2   Merger, Reorganization, or Sale of Assets   13   7.3  
Landlord’s Election   13   7.4   Assignment Consideration And Excess Rentals
Defined   14   7.5   Payments   14   7.6   Effect Of Landlord’s Consent   14
ARTICLE 8   LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY   14   8.1  
Limitation On Landlord’s Liability And Release   14   8.2   Tenant’s
Indemnification Of Landlord   15 ARTICLE 9   INSURANCE   15   9.1   Tenant’s
Insurance   15   9.2   Landlord’s Insurance   16   9.3   Mutual Waiver Of
Subrogation   17 ARTICLE 10   DAMAGE TO LEASED PREMISES   17   10.1   Landlord’s
Duty To Restore   17   10.2   Insurance Proceeds   17   10.3   Landlord’s Right
To Terminate   18   10.4   Tenant’s Right To Terminate   18   10.5   Tenant’s
Waiver   18   10.6   Abatement Of Rent   18 ARTICLE 11   CONDEMNATION   19  
11.1   Tenant’s Right To Terminate   19   11.2   Landlord’s Right To Terminate  
19   11.3   Restoration   19   11.4   Temporary Taking   19   11.5   Division Of
Condemnation Award   19

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TABLE OF CONTENTS
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  11.6   Abatement Of Rent   19   11.7   Taking Defined   20 ARTICLE 12  
DEFAULT AND REMEDIES   20   12.1   Events Of Tenant’s Default   20   12.2  
Landlord’s Remedies   21   12.3   Landlord’s Default And Tenant’s Remedies   22
  12.4   Limitation Of Tenant’s Recourse   22   12.5   Tenant’s Waiver   22
ARTICLE 13   GENERAL PROVISIONS   23   13.1   Taxes On Tenant’s Property   23  
13.2   Holding Over   23   13.3   Subordination To Mortgages   23   13.4  
Tenant’s Attornment Upon Foreclosure   24   13.5   Mortgagee Protection   24  
13.6   Estoppel Certificate   24   13.7   Tenant’s Financial Information   24  
13.8   Transfer By Landlord   24   13.9   Force Majeure   25   13.10   Notices  
25   13.11   Attorneys’ Fees   25   13.12   Definitions   26    
(a)       Intentionally Deleted   26     (b)       Intentionally Deleted   26  
  (c)       Intentionally Deleted   26     (d)       Intentionally Deleted   26
    (e)       Law   26     (f)       Lender   26     (g)       Private
Restrictions   26     (h)       Rent   26   13.13   General Waivers   26   13.14
  Miscellaneous   26 ARTICLE 14   CORPORATE AUTHORITY BROKERS AND ENTIRE
AGREEMENT   27   14.1   Corporate Authority   27   14.2   Brokerage Commissions
  27

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TABLE OF CONTENTS
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  14.3   Entire Agreement   27   14.4   Landlord’s Representations   27
ARTICLE 15   OPTIONS TO EXTEND   27   15.1   Options   27   15.2   Fair Market
Rent   28   15.3   Determination   28   15.4   Arbitration   28   15.5  
Improvement Allowance   29 ARTICLE 16   RIGHT OF FIRST REFUSAL   29   16.1  
Right of First Refusal   29   16.2   Intentionally Deleted   30   16.3  
Intentionally Deleted   30   16.4   Intentionally Deleted   30 ARTICLE 17  
INTENTIONALLY DELETED   30   17.1   Intentionally Deleted   30

Exhibit A Lease Termination Agreement

Exhibit B Site Plan

Exhibit B-1 Leased Premises Location

Exhibit C Intentionally Deleted

Exhibit D Commencement Date Certificate

Exhibit E Form of Estoppel Certificate

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LEASE

        THIS LEASE, dated October 1, 2003 for reference purposes only, is made
by and between ROTUNDA PARTNERS II, a California limited liability company
(“Landlord”) and SCIENTIFIC LEARNING CORPORATION, a Delaware corporation
(“Tenant”), to be effective and binding upon the parties as of October 1, 2003
(the “Effective Date of this Lease”), conditioned upon the full execution and
delivery of the Termination Agreement attached here to as Exhibit A.

        WHEREAS, Landlord and Tenant entered into that certain Lease dated as of
March 20, 2000 (the “Original Lease”) for space in the building located at 300
Frank H. Ogawa Plaza., Oakland, CA and described as the interior space on the
fifth (5th) and sixth (6th) floors and the seventh (7th) floor penthouse
consisting of approximately 69,483 rentable square feet (the “Original
Premises”).

        WHEREAS, Landlord and Tenant have agreed to concurrently terminate the
Original Lease and enter into this Lease, for the purpose of changing the
location of the Leased Premises, extending the Lease Term, changing the rental
rate, providing for Tenant’s right of first refusal and making such other
arrangements as are more expressly set forth in this Lease.

ARTICLE 1

REFERENCE

1.1 References. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:

  Tenant’s Address for Notice:   Prior to the Commencement Date:

Scientific Learning Corporation
300 Frank H. Ogawa Plaza, Suite 500
Oakland, CA 94612

After the Commencement Date:

At the Leased Premises     Tenant’s Representative:   General Counsel    
Landlord’s Address for Notices:   300 Frank H. Ogawa Plaza, Suite 340
Oakland, CA 94612     Landlord’s Representative:
Email address:
Phone Number:
Fax Number:   Rotunda Partners, Attention Len Epstein
kate@leaseoakland.com
(510) 268-8500
(510) 834-5380

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  Intended Delivery Date:   October 1, 2003     Intended Commencement Date:  
October 1, 2003     Lease Term:   From October 1, 2003 through December 31, 2013
    Lease Expiration Date:   December 31, 2013, unless earlier terminated in
accordance with the terms of this Lease, or extended by Tenant pursuant to
Article 15.     Options to Renew:   Two (2) option(s) to renew, each for a term
of five (5) years at 95% of Fair Market Value.     First Month’s Rent:   Payable
on October 1, 2003     Tenant’s Security Deposit:   $900,000, ($300,000 of which
was deposited with Landlord under the Original Lease, and $600,000 of which
shall be deposited with Landlord concurrently with the execution of this Lease)
    Late Charge Amount:   Three Percent (3%) of the Delinquent Amount    
Tenant’s Required Liability Coverage:   $2,000,000 Combined Single Limit    
Tenant’s Broker:   ___none_________________________     Landlord’s Broker:  
___none_________________________     Property:   That certain real property
situated in the City of Oakland, State of California, improved with one
building, which real property is shown on the Site Plan attached hereto as
Exhibit “B” and is commonly known as or otherwise described as the Rotunda
Building.     Building:   That certain building on the Property in which the
Leased Premises are located commonly known as 300 Frank H. Ogawa Plaza, Oakland,
CA (the “Building”), which Building is shown outlined on Exhibit “B” hereto. The
Building contains 242,031 square feet.     Outside Areas:   The “Outside Areas”
shall mean all areas which are located outside of and contiguous to the
Building, as shown the Site Plan attached as Exhibit B, such as pedestrian
walkways, parking areas, landscaped area, open areas and enclosed trash disposal
areas.     Parking Area:   The “Parking Area” shall mean all areas marked as
such on the Site Plan attached as Exhibit B.     Leased Premises:   The “Leased
Premises” shall mean the space on the sixth (6th) floor and the seventh (7th)
penthouse floor of the Building, to consist of approximately 30,483 rentable
square feet in the location shown on the attached Exhibit B-1, entitled “Leased
Premises Location”.

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  Original Build-out Space   n/a     Tenant’s Parking Spaces   40 Spaces    
Tenant’s Percentage Share:   n/a     Base Year:   n/a     Base Monthly Rent:  
The term “Base Monthly Rent for the Leased Premises shall mean the following:

      Period
Oct 1, 2003 - Dec 31, 2008   Monthly Amount
$2.57 per rentable sq. ft.         Jan 1, 2009 - Dec 31, 2009   $2.69 per
rentable sq. ft.         Jan 1, 2010 - Dec 31, 2010   $2.82 per rentable sq. ft.
        Jan 1, 2011 - Dec 31, 2011   $2.95 per rentable sq. ft.         Jan 1,
2012 - Dec 31, 2012   $3.09 per rentable sq. ft.         Jan 1, 2013 - Dec 31,
2013   $3.23 per rentable sq. ft.

  Permitted Use:   General Office, research and development, marketing, sales
and other related lawful uses.     Exhibits:   The term “Exhibits” shall mean
the Exhibits of this Lease which are described as follows:         Exhibit “A” -
Termination Agreement.         Exhibit “B” - Site Plan showing the Property, the
Outside Areas, the Parking Area and delineating the Building in which the Leased
Premises are to be located.         Exhibit “B-1” - Map showing the Leased
Premises Location         Exhibit “C” - Deleted         Exhibit “D” -
Commencement Date Certificate         Exhibit “E” - Form of Tenant Estoppel
Certificate

ARTICLE 2

LEASED PREMISES, TERM AND POSSESSION

2.1 Demise Of Leased Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord, for the Lease Term and upon the terms and subject
to the conditions of this Lease, that certain interior space described in
Article 1 as the Leased Premises, reserving and excepting to Landlord the right
to sixty-five percent (65%) of all assignment consideration and excess rentals
as provided in Article 7 below. Tenant’s lease of the Leased Premises, together
with the appurtenant right to use the Outside Areas as described in
Paragraph 2.2 below, shall be conditioned upon and be subject to the continuing
compliance by Tenant with (i) all the terms and conditions of this Lease, and
(ii) all Laws governing the use of the Leased Premises and the Property.

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2.2 Parking; Right To Use Outside Areas. As an appurtenant right to Tenant’s
right to the use and occupancy of the Leased Premises, Tenant shall have the
right to use the Outside Areas in conjunction with its use of the Leased
Premises solely for the purposes for which they were designated and intended and
for no other purposes whatsoever. Tenant’s right to so use the Outside Areas
shall be subject to the limitations on such use as set forth in Article 1 and
shall terminate concurrently with any termination of this Lease. Subject to the
agreement between the City of Oakland and the Landlord with respect to the
parking lot, Tenant shall have the nonexclusive right to use 40 parking spaces
located in the Parking Area or in the Dalziel Building (located on Frank H.
Ogawa Plaza), at the prevailing rate which with respect to the Parking Area is
currently (and shall be for the first twelve months of the term) not more than
$100 per month for each space, payable concurrently with Base Monthly Rent to
either the Landlord, or, at Landlord’s direction, to any entity operating the
parking facility. The parties agree that if, at any time during the term of the
Lease, the number of spaces rented by Tenant in a given month falls below 40
spaces, then Landlord shall have the right to reduce the number of guaranteed
spaces for the next month to as little as 110% of the number of spaces used in
the prior month. Landlord agrees to use reasonable efforts to accommodate
Tenant’s request for parking spaces in addition to Tenant’s guaranteed amount.
Landlord hereby covenants that so long as Tenant pays for 20 spaces or more
Landlord shall provide a parking attendant for the Parking Area 7 days a week,
during the hours of 8:00 am to 6:00 pm Monday through Friday and 10:00 am to
3:00 pm Saturday and Sunday. Landlord agrees that Tenant’s parking spaces shall
be located in the Parking Area, except that, if at any point, Tenant requests an
increase in spaces over the number it was using in the prior month, the new
spaces may be located in the Dalziel Building to the extent that additional
spaces are not available in the Parking Area, provided that, as spaces in the
Parking Area become available, Tenant’s spaces will, if Tenant so requests, be
moved to the Parking Area.

2.3 Commencement Date And Lease Term. Subject to Paragraph 2.4 below, the term
of this Lease shall begin, and the Commencement Date shall be deemed to have
occurred on the actual Delivery Date, as determined pursuant to Section 2.4
below. The term of this Lease shall in all events end on the Lease Expiration
Date (as set forth in Article 1) unless extended or sooner terminated in
accordance with the terms of this Lease. The Lease Term shall be that period of
time commencing on the Commencement Date and ending on the Lease Expiration Date
(the “Lease Term”).

2.4 Delivery Of Possession. Landlord shall deliver to Tenant possession of the
Leased Premises on October 1, 2003.

2.5 Acceptance Of Possession. It is agreed that by occupying the Leased
Premises, Tenant shall be deemed to have accepted same and to have acknowledged
that the Leased Premises are in the condition called for hereunder, subject to
reasonable punchlist items (to be identified by Tenant in a written notice to
Landlord given within thirty (30) days of such occupancy) and latent defects.

2.6 Surrender Of Possession. Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant’s equipment,
trade fixtures, furniture, supplies, wall decorations and other personal
property from within the Leased Premises, the Building and the Outside Areas,
and shall vacate and surrender the Leased Premises to Landlord in as good
condition, broom clean, as existed at the Commencement Date, damage by casualty
or condemnation (which events shall be governed by Articles 10 and 11) and
reasonable wear and tear excepted. Except for such reasonable wear and tear,
Tenant shall (i) repair all damage to the Leased Premises, the exterior of the
Building and the Outside Areas caused by Tenant’s removal of Tenant’s property,
(ii) patch and refinish, to Landlord’s reasonable satisfaction, all penetrations
made by Tenant or its employees to the roof, floor, interior or exterior walls
or ceiling of the Leased Premises and the Building, whether such penetrations
were made with Landlord’s approval or not, and (iii) repair all stained or
damaged ceiling tiles, wall coverings and floor coverings if damage was caused
by Tenant. Additionally, to the extent that Landlord shall have notified Tenant
in writing at the time that particular improvements were completed that it
desired to have certain improvements made by Tenant or at the request of Tenant
removed at the expiration or sooner termination of the Lease, Tenant shall, upon
the expiration or sooner termination of the Lease, remove any such improvements
constructed or installed by Landlord or Tenant and repair all damage caused by
such removal; provided however, Tenant shall not be required to remove any
improvements installed prior to the Commencement Date. If the Leased Premises
are not surrendered to Landlord in the condition required by this paragraph at
the expiration or sooner termination of this Lease, Landlord may, at Tenant’s
expense, so remove Tenant’s signs, property and/or improvements not so removed
and make such repairs and replacements not so made or hire, at Tenant’s expense,
independent contractors to perform such work. Tenant shall be liable to Landlord
for all reasonable costs incurred by Landlord in returning the Leased Premises
to the required condition. Tenant shall pay to Landlord the amount of all
reasonable costs so incurred within ten (10) days of Landlord’s billing Tenant
for same. Tenant shall indemnify Landlord against loss or liability resulting
from delay by Tenant in surrendering the Leased Premises, including, without
limitation, any claims made by any succeeding Tenant or any losses to Landlord
with respect to lost opportunities to lease to succeeding tenants.

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ARTICLE 3

RENT, LATE CHARGES AND SECURITY DEPOSITS

3.1 Base Monthly Rent.

(a) Commencing on the Commencement Date (as determined pursuant to Paragraph 2.3
above) and continuing throughout the Lease Term, Tenant shall pay to Landlord,
without prior demand therefor, in advance on the first day of each calendar
month, the amount set forth as Base Monthly Rent.

3.2 Additional Rent. In addition to the Base Monthly Rent for the Original
Build-out Space, Tenant shall pay to Landlord as additional rent (the
“Additional Rent”) the following amounts:

         (a) Landlord’s share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.

        (b) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and

        (c) Any amounts due Landlord from Tenant in the event Tenant leases
space pursuant to its right of first refusal under Article 16.

        (d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.

3.3 Landlord’s Termination Right or Rent Adjustment. In the event that as of
June 1, 2009, the then Fair Market Rent (as defined and determined in accordance
with Sections 15.3 and 15.4, below) of the Leased Premises is greater than the
Base Monthly Rent due and payable under this Lease on such date, then Landlord
shall have the right but not the obligation to require Tenant either (1) to
agree to increase the Base Monthly Rent hereunder to the then Fair Market Rent
of the Leased Premises, or (2) to terminate this Lease. On or before June 1,
2009 Landlord shall send a written notice to Tenant informing Tenant of
Landlord’s estimate of the then Fair Market Rent. Following Tenant’s receipt of
such notice, the then Fair Market Rent for the Leased Premises shall be
determined in accordance with the terms of Section 15.3 below. Within ten (10)
business days of the determination of the then Fair Market Rent for the Leased
Premises, Tenant shall send a notice to Landlord evidencing its election to
either agree to amend the Base Monthly Rent hereunder to be equal to the then
Fair Market Rent, or to terminate this Lease on the date specified in Tenant’s
notice, which shall be no later than 180 days following the date of such notice.
Tenant’s failure to respond to Landlord’s notice shall be deemed to be Tenant’s
election to accept the then Fair Market Rent.

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3.4 Late Charge, And Interest On Rent In Default.. Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant when the same becomes due, Tenant shall immediately pay to
Landlord a late charge in an amount equal to the amount set forth in Article 1
as the “Late Charge Amount,” and if any Additional Rent is not received by
Landlord when the same becomes due, Tenant shall immediately pay to Landlord a
late charge in an amount equal to 3% of the Additional Rent not so paid;
provided, however, that once but only once in any twelve (12) month period
during the Lease Term, Tenant shall be entitled to written notice of non-receipt
of Base Monthly Rent or Additional Rent from Landlord, and Tenant shall not be
liable for any Late Charge Amount or other late charge hereunder if such
installment of Base Monthly Rent or Additional Rent is received by Landlord
within ten (10) days after Tenant’s receipt of such notice from Landlord.
Landlord and Tenant agree that this late charge represents a reasonable estimate
of such costs and expenses and is fair compensation to Landlord for the
anticipated loss Landlord would suffer by reason of Tenant’s failure to make
timely payment. In no event shall this provision for a late charge be deemed to
grant to Tenant a grace period or extension of time within which to pay any
rental installment or prevent Landlord from exercising any right or remedy
available to Landlord upon Tenant’s failure to pay each rental installment due
under this Lease when due, including the right to terminate this Lease. If any
rent remains delinquent for a period in excess of ten (10) calendar days after
notice from Landlord, then, in addition to such late charge, Tenant shall pay to
Landlord interest on any rent that is not so paid from said tenth day at the
then maximum rate of interest not prohibited or made usurious by Law until paid.

3.5 Payment Of Rent. Except as specifically provided otherwise in this Lease,
all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant’s obligation to pay
Base Monthly Rent and all Additional Rent shall be appropriately prorated at the
commencement and expiration of the Lease Term. The failure by Tenant to pay any
Additional Rent as required pursuant to this Lease when due shall be treated the
same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have
had Tenant failed to pay the Base Monthly Rent when due.

3.6 Rental Sharing. If at any point during the during the period from October 1,
2003 through March 31, 2009, Landlord shall have received an aggregate of
$6,000,000 or more in rental payments (including operating expense pass-through
expenses and similar payments) relating to the fifth (5th) floor space of the
Leased Premises under the Original Lease, then from such point forward through
March 31, 2009, Landlord shall pay to Tenant, within thirty (30) days of
receipt, 25% of any amounts by which the aggregate rental payments, pass-through
expenses and similar expenses collected by Landlord exceeds the sum of
$6,000,000. Tenant shall have the right to inspect Landlord’s books and records
to verify such amounts, upon giving reasonable notice to Landlord.

3.7 Security Deposit.

        (a) Tenant deposited a net amount of $300,000 with Landlord as the
Security Deposit under the Original Lease (the $400,000 originally deposited
less $100,000 returned to Tenant under the terms of the Original Lease).
Concurrently with execution of this Lease Tenant shall increase the Security
Deposit to a total of $900,000 by making an additional $600,000 deposit with
Landlord, as security for the performance by Tenant of the terms of this Lease
to be performed by Tenant, and not as prepayment of rent.

        (b) Landlord may apply such portion or portions of the Security Deposit
as are reasonably necessary for the following purposes: (i) to remedy any
default by Tenant in the payment of Base Monthly Rent or Additional Rent or a
late charge or interest on defaulted rent, or any other monetary payment
obligation of Tenant under this Lease; (ii) to repair damage to the Leased
Premises, the Building or the Outside Areas caused or permitted to occur by
Tenant; (iii) to clean and restore and repair the Leased Premises, the Building
or the Outside Areas following their surrender to Landlord if not surrendered in
the condition required pursuant to the provisions of Article 2, and (iv) to
remedy any other default of Tenant to the extent permitted by Law including,
without limitation, paying in full on Tenant’s behalf any sums claimed by
materialmen or contractors of Tenant to be owing to them by Tenant for work done
or improvements made at Tenant’s request to the Leased Premises. In this regard,
Tenant hereby waives any restriction on the uses to which the Security Deposit
may be applied as contained in Section 1950.7(c) of the California Civil Code
and/or any successor statute. In the event the Security Deposit or any portion
thereof is so used, Tenant shall pay to Landlord, promptly upon demand, an
amount in cash sufficient to restore the Security Deposit to the full original
sum or shall replenish the letter of credit, if applicable. Landlord shall not
be deemed a trustee of the Security Deposit. Landlord may use the Security
Deposit in Landlord’s ordinary business and shall not be required to segregate
it from Landlord’s general accounts. Tenant shall not be entitled to any
interest on any cash Security Deposit held by Landlord. If Landlord transfers
the Building or the Property during the Lease Term, Landlord may pay the
Security Deposit to any subsequent owner in conformity with the provisions of
Section 1950.7 of the California Civil Code and/or any successor statute, in
which event the transferring landlord shall be released from all liability for
the return of the Security Deposit.

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ARTICLE 4

USE OF LEASED PREMISES AND OUTSIDE AREA

4.1 Permitted Use. Tenant shall be entitled to use the Leased Premises solely
for the “Permitted Use” as set forth in Article 1 and for no other purpose
whatsoever. Tenant shall have the right to vacate the Leased Premises at any
time during the Term of this Lease, provided Tenant maintains the Leased
Premises in the same condition as if fully occupied and as otherwise required by
the terms of this Lease. Tenant shall have the right to use the Outside Areas in
conjunction with its Permitted Use of the Leased Premises solely for the
purposes for which they were designed and intended and for no other purposes
whatsoever.

4.2 General Limitations On Use. Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property. Tenant shall not operate any equipment within
the Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building, or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not (i) install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building or (ii) affix any equipment or make any penetrations or cuts in
the floors, ceiling or walls of the Leased Premises, without Landlord’s prior
written consent, which consent shall not be unreasonably withheld; provided,
however, that it shall be reasonable for Landlord to withhold its consent if
Tenant’s proposed installations or penetrations impact the structural integrity
of the Building. Tenant shall not place any loads upon the floors, walls,
ceiling or roof systems which could endanger the structural integrity of the
Building or damage its floors, foundations or supporting structural components.
Tenant shall not place any explosive, flammable or harmful fluids or other waste
materials in the drainage systems of the Leased Premises, the Building, the
Outside Areas or the Property. Tenant shall not drain or discharge any fluids in
the landscaped areas or across the paved areas of the Property. Tenant shall not
use any of the Outside Areas for the storage of its materials, supplies,
inventory or equipment and all such materials, supplies, inventory or equipment
shall at all times be stored within the Leased Premises. Tenant shall not commit
nor permit to be committed any waste in or about the Leased Premises, the
Building, the Outside Areas or the Property.

4.3 Trash Disposal. Landlord shall provide trash bins or other adequate garbage
disposal facilities within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of all
of its trash, garbage and waste. All such trash, garbage and waste temporarily
stored in such areas shall be stored in such a manner so that it is not visible
from outside of such areas, and Landlord shall cause such trash, garbage and
waste to be regularly removed from the Property. Tenant shall keep the Leased
Premises in a clean, safe and neat condition and keep the Outside Areas (except
the trash enclosure areas) free and clear of all of Tenant’s trash, garbage,
waste and/or boxes, pallets and containers containing same at all times.

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4.4 Signs. Other than business identification signs allowed pursuant to this
Section, Tenant shall not place or install on or within any portion of the
Leased Premises, the exterior of the Building, the Outside Areas or the Property
any sign, advertisement, banner, placard, or picture which is visible from the
exterior of the Leased Premises.

4.5 Compliance With Laws. Tenant shall abide by and shall promptly observe and
comply with, at its sole cost and expense, all Laws respecting the use and
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property including, without limitation, all Laws governing the use and/or
disposal of Hazardous Materials (except that Tenant shall not be responsible for
any Hazardous Materials at the Leased Premises, the Building, the Outside Areas
or the Property not introduced by Tenant, its agents, employees or invitees),
and shall defend with competent counsel, indemnify and hold Landlord harmless
from any claims, damages or liability resulting from Tenant’s failure to so
abide, observe, or comply. Tenant’s obligations hereunder shall survive the
expiration or sooner termination of this Lease.

4.6 Compliance With Insurance Requirements. With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provision of this Lease, copies of which have been or will, upon Tenant’s
written request therefor, be provided to Tenant, Tenant shall not conduct nor
permit any other person to conduct any activities nor keep, store or use (or
allow any other person to keep, store or use) any item or thing within the
Leased Premises, the Building, the Outside Areas or the Property which (i) is
prohibited under the terms of any such policies, (ii) could result in the
termination of the coverage afforded under any of such policies, (iii) could
give to the insurance carrier the right to cancel any of such policies, or
(iv) could cause an increase in the rates (over standard rates) charged for the
coverage afforded under any of such policies. Tenant shall comply with all
requirements of any insurance company, insurance underwriter, or Board of Fire
Underwriters which are necessary to maintain, at standard rates, the insurance
coverages carried by either Landlord or Tenant pursuant to this Lease.

4.7 Landlord’s Right To Enter. Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant
reasonable notice and subject to Tenant’s reasonable security measures for the
purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgagees or tenants; (iii) making necessary
alterations approved by Tenant, additions or repairs; (iv) posting notices, and
(v) performing any of Tenant’s obligations when Tenant has failed to do so
beyond any applicable notice and cure period. Landlord shall have the right to
enter the Leased Premises during normal business hours and during all reasonable
times, subject to Tenant’s reasonable security measures, for purposes of
supplying any maintenance or services agreed to be supplied by Landlord.
Landlord shall have the right to enter the Outside Areas during normal business
hours for purposes of (i) inspecting the exterior of the Building and the
Outside Areas; (ii) posting notices of nonresponsibility (and for such purposes
Tenant shall provide Landlord at least thirty days’ prior written notice of any
work to be performed on the Leased Premises); and (iii) supplying any services
to be provided by Landlord. Any entry into the Leased Premises or the Outside
Areas obtained by Landlord in accordance with this paragraph shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into, or
a detainer of, the Leased Premises, or an eviction, actual or constructive of
Tenant from the Leased Premises or any portion thereof. In exercising its rights
under this Section, Landlord shall use commercially reasonable efforts to
minimize interference with Tenant’s use of the Leased Premises and the Outside
Areas.

4.8 Environmental Protection. Tenant’s obligations under this Section shall
survive the expiration or termination of this Lease.

        (a) As used herein, the term “Hazardous Materials” shall mean any toxic
or hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances, materials
or wastes regulated now or in the future under any of the following statutes or
regulations and any and all of those substances included within the definitions
of “hazardous substances,” “hazardous materials,” “hazardous waste,” “hazardous
chemical substance or mixture,” “imminently hazardous chemical substance or
mixture,” “toxic substances,” “hazardous air pollutant,” “toxic pollutant,” or
“solid waste” in the (a) Comprehensive Environmental Response, Compensation and
Liability Act of 1990 (“CERCLA” or “Superfund”), as amended by the Superfund
Amendments and Reauthorization Act of 1986 (“SARA”), 42 U.S.C. § 9601 et seq.,
(b) Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6901 et
seq., (c) Federal Water Pollution Control Act (“FSPCA”), 33 U.S.C. § 1251 et
seq., (d) Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., (e) Toxic Substances
Control Act (“TSCA”), 14 U.S.C. § 2601 et seq., (f) Hazardous Materials
Transportation Act, 49 U.S.C. § 1801, et seq., (g) Carpenter-Presley-Tanner
Hazardous Substance Account Act (“California Superfund”), Cal. Health & Safety
Code § 25300 et seq., (h) California Hazardous Waste Control Act, Cal. Health &
Safety code § 25100 et seq., (i) Porter-Cologne Water Quality Control Act
(“Porter-Cologne Act”), Cal. Water Code § 13000 et seq., (j) Hazardous Waste
Disposal Land Use Law, Cal. Health & Safety codes § 25220 et seq., (k) Safe
Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”), Cal. Health
& Safety code § 25249.5 et seq., (l) Hazardous Substances Underground Storage
Tank Law, Cal. Health & Safety code § 25280 et seq., (m) Air Resources Law, Cal.
Health & Safety Code § 39000 et seq., and (n) regulations promulgated pursuant
to said laws or any replacement thereof, or as similar terms are defined in the
federal, state and local laws, statutes, regulations, orders or rules. Hazardous
Materials shall also mean any and all other biohazardous wastes and substances,
materials and wastes which are, or in the future become, regulated under
applicable Laws for the protection of health or the environment, or which are
classified as hazardous or toxic substances, materials or wastes, pollutants or
contaminants, as defined, listed or regulated by any federal, state or local
law, regulation or order or by common law decision, including, without
limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and
other chlorinated solvents, (ii) any petroleum products or fractions thereof,
(iii) asbestos, (iv) polychlorinted biphenyls, (v) flammable explosives,
(vi) urea formaldehyde, (vii) radioactive materials and waste, and
(viii) materials and wastes that are harmful to or may threaten human health,
ecology or the environment.

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        (b) Notwithstanding anything to the contrary in this Lease, Tenant, at
its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials by Tenant, its subtenants, their respective
agents, employees, contractors or invitees (collectively, the “Tenant Parties”).
Tenant shall not store, use or dispose of any Hazardous Materials except for
diminimus amounts typically used in offices and/or those Hazardous Materials
listed in a Hazardous Materials management plan (“HMMP”) which Tenant shall
deliver to Landlord upon execution of this Lease and update at least annually
with Landlord (“Permitted Materials”) which may be used, stored and disposed of
provided (i) such Permitted Materials are used, stored, transported, and
disposed of in strict compliance with applicable laws, (ii) such Permitted
Materials shall be limited to the materials listed on and may be used only in
the quantities specified in the HMMP, and (iii) Tenant shall provide Landlord
with copies of all material safety data sheets and other documentation required
under applicable Laws in connection with Tenant’s use of Permitted Materials as
and when such documentation is provided to any regulatory authority having
jurisdiction, in no event shall Tenant cause or permit to be discharged into the
plumbing or sewage system of the Building or onto the land underlying or
adjacent to the Building any Hazardous Materials. Tenant shall be solely
responsible for and shall defend, indemnify, and hold Landlord and its agents
harmless from and against all claims, costs and liabilities, including
attorneys’ fees and costs, arising out of or in connection with Tenant’s
storage, use and/or disposal of Hazardous Materials. If the presence of
Hazardous Materials on the Leased Premises caused or permitted by Tenant results
in contamination or deterioration of water or soil, then Tenant shall promptly
take any and all action necessary to clean up such contamination as required by
Law, but the foregoing shall in no event be deemed to constitute permission by
Landlord to allow the presence of such Hazardous Materials.

4.9 Reservations. Landlord reserves the right from time to time to grant,
without the consent or joinder of Tenant, such easements, rights of way and
dedications that Landlord deems necessary, and to cause the recordation of
parcel maps and covenants, conditions and restrictions, so long as such
easements, rights of way, dedications and covenants, conditions and restrictions
do not materially and adversely affect the use of the Leased Premises by Tenant,
materially and adversely affect Tenant’s parking rights, and do not prohibit any
Permitted Use. Tenant agrees to execute any documents reasonably request by
Landlord to effectuate any such easement rights, dedications, maps or covenants,
conditions and restrictions.

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ARTICLE 5

REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

5.1 Repair And Maintenance. Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building,
the Outside Areas, and the Property.

        (a) Tenant’s Obligations. Tenant shall, at all times during the Lease
Term and at its sole cost and expense, continuously keep and maintain the Leased
Premises, excluding all Improvements, but including alterations, fixtures and
furnishings, in good order, condition and repair, subject to the provisions of
this Article 5 and Article 10. At Landlord’s option, if Tenant fails to repair
and maintain within a reasonable time following Landlord’s notice to Tenant that
such repair and maintenance is necessary, Landlord may make such repair and
maintenance. Within thirty (30) days of its receipt of Landlord’s invoice,
Tenant shall pay to Landlord Landlord’s out-of-pocket costs incurred in
connection with such repair and maintenance.

        (b) Landlord’s Obligation. Landlord shall at its sole cost and expense,
(i) regularly clean and at all times during the Lease Term, maintain in good
condition and repair all portions of the Property (including the Leased
Premises) except those required to be maintained by Tenant pursuant to
Section 5.1(a) above.

5.2 Utilities. Landlord shall provide at its sole cost and expense, adequate
gas, water and electricity to the Leased Premises, provided that if Tenant
requires HVAC after normal business hours (which shall be from 8:00 a.m. to 7:00
p.m., Monday through Friday, and from 9:00 a.m. to 1:00 p.m. on Saturdays)
Landlord may charge Tenant $40.00 for the first hour for each zone for which
after hours HVAC is requested, and $15.00 for each additional hour for each
zone. Tenant shall be responsible for arranging for telephone service n Tenant’s
own name, at Tenant’s sole cost and expense.

5.3 Security. Landlord shall provide, at its sole cost and expense, a security
guard service, twenty four hours a day, seven days a week, to provide security
for the Leased Premises, the Building, the Outside Areas and the Property. In
addition, Landlord, at its sole cost and expense, shall provide escort services
from the Leased Premises to parking spaces provided hereunder, if requested to
do so by Tenant, but only on Monday through Friday after 7:00 p.m.

5.4 Janitorial. Landlord shall provide at its sole cost and expense, adequate
janitorial services to the Leased Premises, Monday through Friday, consistent
with customary and reasonable janitorial practices in class A office buildings
in the San Francisco Bay area.

5.5 Energy And Resource Consumption. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems with the Property and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.

5.6 Limitation Of Landlord’s Liability. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant’s property or loss of Tenant’s business or profits, nor shall Tenant be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of (i) Landlord’s failure to provide security services or systems within
the Property for the protection of the Leased Premises, the Building or the
Outside Areas, or the protection of Tenant’s property or Tenant’s employees,
invitees, agents or contractors, or (ii) Landlord’s failure to perform any
maintenance or repairs to the Leased Premises, the Building, the Outside Areas
or the Property until Tenant shall have first notified Landlord, in writing, of
the need for such maintenance or repairs, and then only after Landlord shall
have had a reasonable period of time following its receipt of such notice within
which to perform such maintenance or repairs (not to exceed thirty (30) days),
or (iii) any failure, interruption, rationing or other curtailment in the supply
of water, electric current, gas or other utility service to the Leased Premises,
the Building, the Outside Areas or the Property from whatever cause (other than
to the extent caused by Landlord’s negligence or willful misconduct), or
(iv) the unauthorized intrusion or entry into the Leased Premises by third
parties (other than Landlord).

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ARTICLE 6

ALTERATIONS AND IMPROVEMENTS

6.1 By Tenant. This provision refers to alterations made to the Leased Premises
after Tenant’s initial occupancy of the Leased Premises. Tenant shall not make
any alterations to or modifications of the Leased Premises or construct any
improvements within the Leased Premises until Landlord shall have first
approved, in writing, the plans and specifications therefor, which approval
shall not be unreasonably withheld or delayed. Landlord’s approval shall be
deemed given if not denied by Landlord in a written notice to Tenant delivered
within fifteen (15) days following receipt of Tenant’s written request. Tenant’s
written request shall also contain a request for Landlord to elect whether or
not it will require Tenant to remove the subject alterations, modifications or
improvements at the expiration or earlier termination of this Lease. If such
additional request is not included, Landlord may make such election at the
expiration or earlier termination of this Lease (and for purposes of Tenant’s
removal obligations set forth in Section 2.6 above, Landlord shall be deemed to
have made the election at the time the alterations, modifications or
improvements were completed). All modifications, alterations or improvements,
once approved by Landlord, shall be made, constructed or installed by Tenant at
Tenant’s expense (including all permit fees and governmental charges related
thereto), using a licensed contractor first approved by Landlord, in substantial
compliance with the Landlord-approved plans and specifications therefor. All
work undertaken by Tenant shall be done in accordance with all Laws and in a
good and workmanlike manner using new materials of good quality. Tenant shall
not commence the making of any such modifications or alterations or the
construction of any such improvements until (i) all required governmental
approvals and permits shall have been obtained, (ii) all requirements regarding
insurance imposed by this Lease have been satisfied, (iii) Tenant shall have
given Landlord at least fifteen (15) days prior written notice of its intention
to commence such work so that Landlord may post and file notices of
non-responsibility, and (iv) if requested by Landlord, Tenant shall have
obtained contingent liability and broad form builder’s risk insurance in an
amount satisfactory to Landlord in its reasonable discretion to cover any perils
relating to the proposed work not covered by insurance carried by Tenant
pursuant to Article 9. In no event shall Tenant make any modification,
alterations or improvements whatsoever to the Outside Areas or the exterior or
structural components of the Building including, without limitation, any cuts or
penetrations in the floor, roof or exterior walls of the Leased Premises (except
to the extent Tenant has obtained Landlord’s approval pursuant to Section 4.2).
As used in this Article, the term “modifications, alterations and/or
improvements” shall include, without limitation, the installation of additional
electrical outlets, overhead lighting fixtures, drains, sinks, partitions,
doorways, or the like. Notwithstanding the foregoing, Tenant, without Landlord’s
prior written consent, shall be permitted to make non-structural alterations to
the Building, provided that: (a) such alterations do not exceed $7,500
individually, (b) Tenant shall timely provide Landlord the notice required,
(c) Tenant shall notify Landlord in writing within thirty (30) days of
completion of the alteration and deliver to Landlord a set of the plans and
specifications therefor, either “as built” or marked to show construction
changes made, and (d) Tenant shall, upon Landlord’s request, remove the
alteration at the termination of the Lease and restore the Leased Premises to
their condition prior to such alteration.

6.2 Ownership Of Improvements. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant’s inventory,
equipment, movable furniture, wall decorations and trade fixtures) shall be
deemed real property and a part of the Leased Premises, but shall remain the
property of Tenant during the Lease. Any such modifications, alterations or
improvements, once completed, shall not be altered or removed from the Leased
Premises during the Lease Term without Landlord’s written approval first
obtained in accordance with the provisions of Paragraph 6.1 above. At the
expiration or sooner termination of this Lease, all such modifications,
alterations and improvements other than Tenant’s inventory, equipment, movable
furniture, wall decorations and trade fixtures, shall automatically become the
property of Landlord and shall be surrendered to Landlord as part of the Leased
Premises as required pursuant to Article 2, unless Landlord shall require Tenant
to remove any of such modifications, alterations or improvements in accordance
with the provisions of Article 2, in which case Tenant shall so remove same.
Landlord shall have no obligations to reimburse Tenant for all or any portion of
the cost or value of any such modifications, alterations or improvements so
surrendered to Landlord. All modifications, alterations or improvements which
are installed or constructed on or attached to the Leased Premises by Landlord
and/or at Landlord’s expense shall be deemed real property and a part of the
Leased Premises and shall be property of Landlord. All lighting, plumbing,
electrical, heating, ventilating and air conditioning fixtures, partitioning,
window coverings, wall coverings and floor coverings installed by Tenant shall
be deemed improvements to the Leased Premises and not trade fixtures of Tenant.
Landlord shall have no lien or interest whatsoever in any of Tenant’s property
or equipment located in the Leased Premises or elsewhere, and Landlord waives
any such liens and interests.

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6.3 Alterations Required By Law. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant’s use or occupancy of the Leased
Premises, (ii) Tenant’s application for any permit or governmental approval, or
(iii) Tenant’s making of any modifications, alterations or improvements to or
within the Leased Premises.

6.4 Liens. Tenant shall keep the Property and every part thereof free from any
lien, and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant’s interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within ten days after the same has been recorded. Tenant’s failure to
do so shall be conclusively deemed a material default under the terms of this
Lease.

ARTICLE 7

ASSIGNMENT AND SUBLETTING BY TENANT

7.1 By Tenant. Except in connection with a Permitted Transfer, Tenant shall not
sublet the Leased Premises or any portion thereof or assign its interest in this
Lease, whether voluntarily or by operation of Law, without Landlord’s prior
written consent which shall not be unreasonably withheld. Any attempted
subletting or assignment without Landlord’s prior written consent (except a
Permitted Transfer), at Landlord’s election, shall constitute a default by
Tenant under the terms of this Lease. The acceptance of rent by Landlord from
any person or entity other than Tenant, or the acceptance of rent by Landlord
from Tenant with knowledge of a violation of the provisions of this paragraph,
shall not be deemed to be a waiver by Landlord of any provision of this Article
or this Lease or to be a consent to any subletting by Tenant or any assignment
of Tenant’s interest in this Lease. Without limiting the circumstances in which
it may be reasonable for Landlord to withhold its consent to an assignment or
subletting, Landlord and Tenant acknowledge that it shall be reasonable for
Landlord to withhold its consent in the following instances:

        (a) the proposed assignee or sublessee is a governmental agency;

        (b) the use of the Leased Premises by the proposed assignee or sublessee
would involve occupancy by other than a Permitted Use as set forth in Article 1,
would entail any alterations which would lessen the value of the leasehold
improvements in the Leased Premises, or would require increased services by
Landlord;

        (c) the financial worth of the proposed assignee does not meet the
credit standards applied by Landlord at the time of the proposed assignment;

        (d) the proposed assignee or sublessee in the ten years prior to the
assignment or sublease has filed for bankruptcy protection, has been the subject
of an involuntary bankruptcy, or has been adjudged insolvent;

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        (e) Landlord has experienced a previous default by or is in litigation
with the proposed assignee or sublessee;

        (f) the use of the Leased Premises by the proposed assignee or sublessee
will violate any applicable law, ordinance or regulation;

        (g) the proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article 7;

        (h) in the case of a subletting of less than the entire Leased Premises,
if the subletting would result in the division of any floor of the Building into
more than two subleased parcels or would require improvements to be made outside
of the Leased Premises;

        (i) the proposed transferee is an existing tenant in the Building and
the Landlord at that time has comparable available space for lease in the
Building.

7.2 Merger, Reorganization, or Sale of Assets. Each of the following shall be
deemed a voluntary assignment of Tenant’s interest in this Lease: (a)
dissolution, merger, consolidation or other reorganization of Tenant; or (b) at
any time that the capital stock of Tenant is not publicly traded on a recognized
exchange, the sale or transfer in one or more transactions to one or more
related parties of a controlling percentage of the capital stock of Tenant; or
(c) or the sale or transfer of all or substantially all of the assets of Tenant.
The phrase “controlling percentage” means the ownership of and the right to vote
stock possessing more than fifty percent of the total combined voting power of
all classes of Tenant’s capital stock issued, outstanding and entitled to vote
for the election of directors. If Tenant is a partnership, a withdrawal or
change, voluntary, involuntary or by operation of Law, of any general partner,
or the dissolution of the partnership, shall be deemed a voluntary assignment of
Tenant’s interest in this Lease. Notwithstanding the foregoing, Tenant (or any
Permitted Transferee, as defined herein) may, without Landlord’s prior written
consent and without being subject to any of the provisions of this Article 7,
including without limitation, Landlord’s right to recapture any portion of the
Leased Premises, sublet the Leased Premises or assign this Lease to
(individually, a “Permitted Transferee,” collectively, “Permitted Transferees”):
(i) a subsidiary, affiliate, parent, division, entity or joint venture
controlling, controlled by or under common control with Tenant; or (ii) a
successor corporation related to Tenant by merger, consolidation, nonbankruptcy
reorganization, or government action; or (iii) a purchaser of all or
substantially all of the assets of Tenant; provided that either (1) Tenant shall
remain primarily liable under the Lease (except in the event it is not the
surviving entity in the merger) or (2) that any Permitted Transferee under (i),
(ii) or (iii) above has a net worth equal to or greater than Tenant’s and does
not have any contingent or off-balance sheet liabilities that make it less
credit worthy than Tenant as of the date of this Lease. In the event any
proposed assignee or subtenant under (i), (ii) or (iii) above has a net worth
less than Tenant or has contingent or off-balance sheet liabilities that make it
less credit worthy than Tenant, Landlord’s consent (pursuant to Section 7.1
above) shall be required and all of the terms and conditions of this Article 7
shall apply, except that Landlord shall not be entitled to terminate this Lease
pursuant to Section 7.3, and Landlord shall not be entitled to any assignment
consideration or excess rentals pursuant to Section 7.5 of this Lease. If any
proposed assignee or subtenant under (i), (ii) or (iii) above does not qualify
as a Permitted Transferee because it has a net worth which is less than Tenant
or has contingent or off-balance sheet liabilities that make it less
creditworthy than Tenant, then in the event Landlord nevertheless consents
(pursuant to the provisions of Section 7.1 above) to such proposed assignee or
subtenant, such proposed assignee or subtenant shall constitute a Permitted
Transferee under this Lease.

7.3 Landlord’s Election. If Tenant shall desire to assign its interest under the
Lease or to sublet all or any portion of the Leased Premises, except in
connection with a Permitted Transfer Tenant must first notify Landlord, in
writing, of its intent to so assign or sublet, at least twenty (20) days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or sublessee, the
property assignee’s or sublessee’s intended use of the Leased Premises, current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles) of such proposed assignee or sublessee, the form of documents to be
used in effectuating such assignment or subletting and such other information as
Landlord may reasonably request. Landlord shall have a period of twenty (20)
days following receipt of such notice and the required information within which
to do one of the following: (i) consent to such requested assignment or
subletting subject to Tenant’s compliance with the conditions set forth in
Paragraph 7.4 below, or (ii) refuse to so consent to such requested assignment
or subletting, provided that such consent shall not be unreasonably refused, or
(iii) in the case of an assignment of this Lease or sublet of any part of the
Leased Premises for the remainder of the term, terminate this Lease. During such
ten (10) day period, Tenant covenants and agrees to supply to Landlord, upon
request, all necessary or relevant information which Landlord may reasonably
request respecting such proposed assignment or subletting and/or the proposed
assignee or sublessee. Notwithstanding the foregoing, if Landlord elects to
terminate the Lease as provided herein, Landlord shall notify Tenant thereof
during such ten (10) day period and Tenant shall either (i) accept Landlord’s
termination or (ii) rescind its request for consent to the assignment or
subletting, in which case the Lease shall continue in full force and effect
between Tenant and Landlord.

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7.4 Assignment Consideration And Excess Rentals Defined. For purposes of this
Article, including any amendment to this Article by way of addendum or other
writing, the term “assignment consideration” shall mean all consideration to be
paid by the assignee to Tenant or to any other party on Tenant’s behalf or for
Tenant’s benefit as consideration for such assignment, after deduction for
reasonable leasing commissions and reasonable legal fees incurred by Tenant in
connection with such assignment and, the cost of tenant improvements made by
Tenant at Tenant’s sole cost and expense to prepare the Leased Premises for the
assignee, but without deduction for any other costs or expenses. The term
“excess rentals” shall mean all consideration to be paid by the sublessee to
Tenant or to any other party on Tenant’s behalf or for Tenant’s benefit for the
sublease of the Leased Premises in excess of the rent due to Landlord under the
terms of this Lease for the same period, after deduction for reasonable leasing
commissions and reasonable legal fees incurred by Tenant in connection with such
sublease and the cost of tenant improvements made by Tenant at Tenant’s sole
cost and expense to prepare the Leased Premises for the subtenant, but without
deduction for any other costs or expenses. Tenant agrees that sixty-five percent
(65%) of any assignment consideration and/or excess rentals arising from any
assignment or subletting by Tenant which is to be paid to Landlord pursuant to
this Article now is and shall then be the property of Landlord and not the
property of Tenant.

7.5 Payments. All payments required by this Article to be made to Landlord shall
be made in cash in full as and when they become due. At the time Tenant,
Tenant’s assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant’s assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.

7.6 Effect Of Landlord’s Consent. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation
to pay rent and to perform all of the other obligations to be performed by
Tenant hereunder. Consent by Landlord to one or more assignments of Tenant’s
interest in this Lease or to one or more sublettings of the Leased Premises
shall not be deemed to be a consent to any subsequent assignment or subletting.

ARTICLE 8

LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY

8.1 Limitation On Landlord’s Liability And Release. Landlord shall not be liable
to Tenant for, and Tenant hereby releases Landlord and its partners, principals,
members, officers, agents, employees, lenders, attorneys, and consultants from,
any and all liability, whether in contract, tort or on any other basis, for any
injury to or any damage sustained by Tenant, Tenant’s agents, employees,
contractors or invitees, any damage to Tenant’s property, or any loss to
Tenant’s business, loss of Tenant’s profits or other financial loss of Tenant
resulting from or attributable to the condition of, the management of, the
repair or maintenance of, the protection of, the supply of services or utilities
to, the damage in or destruction of the Leased Premises, the Building, the
Property or the Outside Areas, including without limitation (i) the failure,
interruption, rationing or other curtailment or cessation in the supply of
electricity, water, gas or other utility service to the Property, the Building
or the Leased Premises; (ii) the vandalism or forcible entry into the Building
or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises, (v) the
existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems to
function properly (such as the HVAC systems); (vii) the blockage of access to
any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord’s negligence, willful misconduct, or
Landlord’s failure to perform an obligation expressly undertaken pursuant to
this Lease after a reasonable period of time (not to exceed 15 days) shall have
lapsed following receipt of written notice from Tenant to so perform such
obligation. In this regard, Tenant acknowledges that it is fully apprised of the
provisions of Law relating to releases, and particularly to those provisions
contained in Section 1542 of the California Civil Code which reads as follows:

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  “A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”  

Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.

8.2 Tenant’s Indemnification Of Landlord. Tenant shall defend with competent
counsel satisfactory to Landlord any claims made or legal actions filed or
threatened against Landlord with respect to the violation of any Law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party, occurring within the
Leased Premises or resulting from Tenant’s use or occupancy of the Leased
Premises, the Building or the Outside Areas, or resulting from Tenant’s
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord’s partners,
principals, members, employees, agents and contractors harmless from any loss
liability, penalties, or expense whatsoever (including any loss attributable to
vacant space which otherwise would have been leased, but for such activities)
resulting therefrom, except to the extent proximately caused by the negligence
or willful misconduct of Landlord or Landlord’s failure to perform an obligation
expressly undertaken pursuant to this Lease after a reasonable period of time
not to exceed 15 days shall have lapsed following receipt of written notice from
Tenant to so perform such obligation. This indemnity agreement shall survive the
expiration or sooner termination of this Lease. The parties acknowledge that
this paragraph has been the subject of negotiation.

ARTICLE 9

INSURANCE

9.1 Tenant’s Insurance. Tenant shall maintain insurance complying with all of
the following:

        (a) Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:

          (i) Comprehensive general liability insurance insuring Tenant against
liability for personal injury, bodily injury, death and damage to property
occurring within the Leased Premises, or resulting from Tenant’s use or
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant’s activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant’s Required Liability
Coverage (as set forth in Article 1), which insurance shall contain a “broad
form liability” endorsement insuring Tenant’s performance of Tenant’s
obligations to indemnify Landlord as contained in this Lease.

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          (ii) Fire and property damage insurance in so-called “fire and
extended coverage” form insuring Tenant against loss from physical damage to
Tenant’s personal property, inventory, trade fixtures and equipment within the
Leased Premises with coverage for the full actual replacement cost thereof;

          (iii) Plate glass insurance, at actual replacement cost;

          (iv) Pressure vessel insurance, if applicable;

          (v) Workers’ compensation insurance and any other employee benefit
insurance sufficient to comply with all laws; and

          (vi) With respect to making of alterations or the construction of
improvements or the like undertaken by Tenant, contingent liability and
builder’s risk insurance, in an amount and with coverage reasonably satisfactory
to Landlord.

        (b) Each policy of liability insurance required to be carried by Tenant
pursuant to this paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property: (i) shall, except with respect to insurance
required by subparagraph (a)(vi) above, name Landlord, and such others as are
designated by Landlord, as additional insureds; (ii) shall be primary insurance
providing that the insurer shall be liable for the full amount of the loss, up
to and including the total amount of liability set forth in the declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to Landlord
with Best’s ratings of at least A and XI; (v) shall provide that such policy
shall not be subject to cancellation, lapse or change except after at least
thirty days prior written notice to Landlord, and (vi) shall contain a so-called
“severability” or “cross liability” endorsement. Each policy of property
insurance maintained by Tenant with respect to the Leased Premises or the
Property or any property therein (i) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty days prior
written notice to Landlord and (ii) shall contain a waiver and/or a permission
to waive by the insurer of any right of subrogation against Landlord, its
partners, principals, members, officers, employees, agents and contractors,
which might arise by reason of any payment under such policy or by reason of any
act or omission of Landlord, its partners, principals, members, officers,
employees, agents and contractors.

        (c) Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by Tenant pursuant to this Article, a copy of
such policy (appropriately authenticated by the insurer as having been issued,
premium paid) or a certificate of the insurer certifying in form satisfactory to
Landlord that a policy has been issued, premium paid, providing the coverage
required by this Paragraph and containing the provisions specified herein. With
respect to each renewal or replacement of any such insurance, the requirements
of this Paragraph must be complied with not less than thirty days prior to the
expiration or cancellation of the policies being renewed or replaced. Landlord
may, at any time and from time to time, inspect and/or copy any and all
insurance policies required to be carried by Tenant pursuant to this Article. If
Landlord’s Lender, insurance broker, advisor or counsel reasonably determines at
any time that the amount of coverage set forth in Paragraph 9.1(a) for any
policy of insurance Tenant is required to carry pursuant to this Article is not
adequate, then Tenant shall increase the amount of coverage for such insurance
to such greater amount as Landlord’s Lender, insurance broker, advisor or
counsel reasonably deems adequate.

9.2 Landlord’s Insurance. With respect to insurance maintained by Landlord:

        (a) Landlord shall maintain, as the minimum coverage required of it by
this Lease, fire and property damage insurance in so-called “fire and extended
coverage” form insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building with coverage of not less than
one hundred percent (100%) of the full actual replacement cost thereof and
against loss of rents for a period of not less than six months. Such fire and
property damage insurance, at Landlord’s election but without any requirements
on Landlord’s behalf to do so, (i) may be written in so-called “all risk” form,
excluding only those perils commonly excluded from such coverage by Landlord’s
then property damage insurer; (ii) may provide coverage for physical damage to
the improvements so insured for up to the entire full actual replacement cost
thereof; (iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or
flood; and/or (iv) may provide coverage for loss of rents for a period of up to
twelve months. Landlord shall not be required to cause such insurance to cover
any of Tenant’s personal property, inventory, and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises. Landlord shall use commercially reasonable efforts
to obtain such insurance at competitive rates.

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        (b) Landlord shall maintain comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Three Million Dollars ($3,000,000). Landlord may carry such greater
coverage as Landlord or Landlord’s Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.

        (c) Landlord may maintain any other insurance which in the opinion of
its insurance broker, advisor or legal counsel is prudent in carry under the
given circumstances, provided such insurance is commonly carried by owners of
property similarly situated and operating under similar circumstances.

9.3 Mutual Waiver Of Subrogation. Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and its respective partners, principals, members,
officers, agents, employees and servants, from any and all liability for loss,
damage or injury to the property of the other in or about the Leased Premises or
the Property which is caused by or results from a peril or event or happening
which is covered by insurance actually carried and in force at the time of the
loss by the party sustaining such loss; provided, however, that such waiver
shall be effective only to the extent permitted by the insurance covering such
loss and to the extent such insurance is not prejudiced thereby.

ARTICLE 10

DAMAGE TO LEASED PREMISES

10.1 Landlord’s Duty To Restore. If the Leased Premises, the Building or the
Outside Area are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, the
Building or the Outside Area, as the case may be, to the extent then allowed by
law, to substantially the same condition in which it existed as of the
Commencement Date. Landlord’s obligation to restore shall be limited to the
improvements constructed by Landlord. Landlord shall have no obligation to
restore any alterations made by Tenant to the Leased Premises or any of Tenant’s
personal property, inventory or trade fixtures. Upon completion of the
restoration by Landlord, Tenant shall forthwith replace or fully repair all of
Tenant’s personal property, inventory, trade fixtures to like or similar
conditions as existed at the time immediately prior to such damage or
destruction.

10.2 Insurance Proceeds. All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either
Paragraph 10.3 or 10.4, all insurance proceeds available from insurance carried
by Tenant which cover loss of property that is Landlord’s property or would
become Landlord’s property on termination of this Lease shall be paid to and
become the property of Landlord, and the remainder of such proceeds shall be
paid to and become the property of Tenant. If this Lease is not terminated
pursuant to either Paragraph 10.3 or 10.4, all insurance proceeds available from
insurance carried by Tenant which cover loss to property that is Landlord’s
property shall be paid to and become the property of Landlord, and all proceeds
available from such insurance which cover loss to property which would only
become the property of Landlord upon the termination of this Lease shall be paid
to and remain the property of Tenant. The determination of Landlord’s property
and Tenant’s property shall be made pursuant to Paragraph 6.2.

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10.3 Landlord’s Right To Terminate. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:

        (a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction or by any peril which would have been covered by the
insurance Landlord is required to maintain pursuant to Section 9.2 (an “Insured
Peril”) to such an extent that the estimated cost to restore the Building
exceeds the lesser of (i) the insurance proceeds available from insurance
actually carried by Landlord (or which Landlord was required to carry pursuant
to Section 9.2(a) hereof) plus the amount of any deductible (up to a maximum
amount of five percent (5%) of the replacement cost of the Building), plus any
amount that the Tenant agrees in writing to contribute towards restoration, or
(ii) fifty percent of the then actual replacement cost of the Building;

        (b) The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease, provided, however, that, subject to the requirements of the holder
of any deed of trust encumbering the Property, Landlord shall not have the right
to terminate this Lease if Tenant notifies Landlord, within thirty (30) days
after Tenant receives Landlord’s written notice of termination pursuant to this
Section 10.3, that Tenant will pay for the cost of restoration of the Leased
Premises, in excess of any insurance proceeds to be received by Landlord.

        (c) The Building is damaged by any peril and, because of the laws then
in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.

10.4 Tenant’s Right To Terminate. If the Leased Premises, the Building or the
Outside Area are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord’s architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have the
option to terminate this Lease in the event any of the following occurs, which
option may be exercised only by delivery to Landlord of a written notice of
election to terminate within thirty (30) days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:

        (a) If the time estimated to substantially complete the restoration
exceeds nine (9) months from and after the date the architect’s or construction
consultant’s written opinion is delivered; or

        (b) If the damage occurred within twelve months of the last day of the
then current Lease Term, unless at the time of damage or destruction, Tenant has
an option to extend, in which case this Lease shall not terminate if Tenant
elects to exercise its option to extend.

10.5 Tenant’s Waiver. Landlord and Tenant agree that the provisions of
Paragraph 10.4 above, captioned “Tenant’s Right To Terminate”, are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of such Civil Code Sections and the
provisions of any successor Civil Code Sections or similar laws hereinafter
enacted.

10.6 Abatement Of Rent. In the event of damage to the Leased Premises which does
not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion in the degree to which Tenant’s use of the Leased Premises is
impaired by such damage.

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ARTICLE 11

CONDEMNATION

11.1 Tenant’s Right To Terminate. Except as otherwise provided in Paragraph 11.4
below regarding temporary takings, Tenant shall have the option to terminate
this Lease if, as a result of any taking, (i) all of the Leased Premises is
taken, or (ii) twenty-five percent (25%) or more of the Leased Premises is taken
and the part of the Leased Premises that remains cannot, within a reasonable
period of time, be made reasonably suitable for the continued operation of
Tenant’s business, or (iii) or a portion of the Outside Area is taken such that
the parking available to Tenant is reduced by more than thirty-five percent
(35%), and the Landlord does not, within a reasonable period of time, provide
alternative parking arrangements within a reasonable walking distance of the
Leased Premises. Tenant must exercise such option within a reasonable period of
time, to be effective on the later to occur of (i) the date that possession of
that portion of the Leased Premises that is condemned is taken by the condemnor
or (ii) the date Tenant vacated the Leased Premises.

11.2 Landlord’s Right To Terminate. Except as otherwise provided in
Paragraph 11.4 below regarding temporary takings, Landlord shall have the option
to terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) twenty-five percent (25%) or more of the Leased Premises
is taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of Tenant’s business, or (iii) because of the laws then in force, the
Leased Premises may not be used for the same use being made before such taking,
whether or not restored as required by Paragraph 11.3 below. Any such option to
terminate by Landlord must be exercised within a reasonable period of time, to
be effective as of the date possession is taken by the condemnor.

11.3 Restoration. If any part of the Leased Premises or the Building is taken
and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable for Tenant’s continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.

11.4 Temporary Taking. If a portion of the Leased Premises is temporarily taken
for a period of one year or less and such period does not extend beyond the
Lease Expiration Date, this Lease shall remain in effect. If any portion of the
Leased Premises is temporarily taken for a period which exceeds one year or
which extends beyond the Lease Expiration Date, then the rights of Landlord and
Tenant shall be determined in accordance with Paragraphs 11.1 and 11.2 above.

11.5 Division Of Condemnation Award. Any award made for any taking of the
Property, the Building, or the Leased Premises, or any portion thereof, shall
belong to and be paid to Landlord, and Tenant hereby assigns to Landlord all of
its right, title and interest in any such award; provided, however, that Tenant
shall be entitled to receive any portion of the award that is made specifically
(i) for the taking of personal property, inventory or trade fixtures belonging
to Tenant, (ii) for the interruption of Tenant’s business or its moving costs,
or (iii) for the value of any leasehold improvements installed and paid for by
Tenant. The rights of Landlord and Tenant regarding any condemnation shall be
determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Superior Court of Alameda County to terminate this Lease and/or
otherwise allocate condemnation awards between Landlord and Tenant in the event
of a taking of the Leased Premises.

11.6 Abatement Of Rent. In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the Base
Monthly Rent shall be reduced in the same proportion that the area of that part
of the Leased Premises so taken (less any addition to the area of the Leased
Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking.

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11.7 Taking Defined. The term “taking” or “taken” as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.

ARTICLE 12

DEFAULT AND REMEDIES

12.1 Events Of Tenant’s Default. Tenant shall be in default of its obligations
under this Lease if any of the following events occur:

        (a) Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent within three (3) days after notice from Landlord that such rent is past due
provided, however, that such notice shall be concurrent with, and not in
addition to, any notice required by applicable Laws; or

        (b) Tenant shall have done or permitted to be done any act, use or thing
in its use, occupancy or possession of the Leased Premises or the Building or
the Outside Areas which is prohibited by the terms of this Lease or Tenant shall
have failed to perform any term, covenant or condition of this Lease (except
those requiring the payment of Base Monthly Rent or Additional Rent, which
failures shall be governed by subparagraph (a) above) within thirty (30) days
after written notice from Landlord to Tenant specifying the nature of such
failure and requesting Tenant to perform same or within such longer period as is
reasonably required in the event such default is curable but not within such
thirty (30) day period, provided such cure is promptly commenced within such
thirty (30) day period and is thereafter diligently prosecuted to completion; or

        (c) Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of law; or

        (d) Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant’s (or such Guarantor’s) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or

        (e) Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or

        (f) Tenant or any Guarantor of this Lease shall have allowed (or sought)
to have entered against it a decree or order which: (i) grants or constitutes an
order for relief, appointment of a trustee, or condemnation or a reorganization
plan under the bankruptcy laws of the United States; (ii) approves as properly
filed a petition seeking liquidation or reorganization under said bankruptcy
laws or any other debtor’s relief law or similar statute of the United States or
any state thereof; or (iii) otherwise directs the winding up or liquidation of
Tenant; provided, however, if any decree or order was entered without Tenant’s
consent or over Tenant’s objection, Landlord may not terminate this Lease
pursuant to this Subparagraph if such decree or order is rescinded or reversed
within thirty days after its original entry; or

        (g) Tenant or any Guarantor of this Lease shall have availed itself of
the protection of any debtor’s relief law, moratorium law or other similar law
which does not require the prior entry of a decree or order; or

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        (h) Tenant shall have failed to pay any installment of the Termination
Fee (as defined in the Termination Agreement), and such failure shall have
remained uncured for ten (10) days following Tenant’s receipt of Landlord’s
written notice of non-payment.

12.2 Landlord’s Remedies. In the event of any default by Tenant, and without
limiting Landlord’s right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:

        (a) Landlord may, at Landlord’s election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required by Tenant, or perform Tenant’s obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.

        (b) Landlord may, at Landlord’s election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate
on the date set forth for termination in such notice, in which event Tenant
shall immediately surrender the Leased Premises to Landlord, and if Tenant fails
to do so, Landlord may, without prejudice to any other remedy which it may have
for possession or arrearages in rent, enter upon and take possession of the
Leased Premises and expel or remove Tenant and any other person who may be
occupying the Leased Premises or any part thereof, without being liable for
prosecution or any claim or damages therefor. Any termination under this
subparagraph shall not relieve Tenant from its obligation to pay to Landlord all
Base Monthly Rent and Additional Rent then or thereafter due, or any other sums
due or thereafter accruing to Landlord, or from any claim against Tenant for
damages previously accrued or then or thereafter accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease, constitute a termination of this
Lease:

          (i) Appointment of a receiver or keeper in order to protect Landlord’s
interest hereunder;

          (ii) Consent to any subletting of the Leased Premises or assignment of
this Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or

          (iii) Any action taken by Landlord or its partners, principals,
members, officers, agents, employees, or servants, which is intended to mitigate
the adverse effects of any breach of this Lease by Tenant, including, without
limitation, any action taken to maintain and preserve the Leased Premises on any
action taken to relet the Leased Premises or any portion thereof for the account
at Tenant and in the name of Tenant.

        (c) In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right and
remedies provided by California Civil Code Section 1951.4 (“Landlord may
continue 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”), as in effect on the Effective Date of this Lease.

        (d) In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord’s election, to the rights and remedies provided in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to Section 1951.2, an interest
rate equal to the maximum rate of interest then not prohibited by law shall be
used where permitted. Such damages shall include, without limitation:

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          (i) The worth at the time of the award of the unpaid rent which had
been earned at the time of termination;

          (ii) 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 that Tenant proves could be reasonably avoided, computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco, at the time of award plus one percent; and

          (iii) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant’s failure to perform Tenant’s obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises, (ii) expenses for
altering, remodeling or otherwise improving the Leased Premises for the purpose
of reletting, including removal of existing leasehold improvements and/or
installation of additional leasehold improvements (regardless of how the same is
funded, including reduction of rent, a direct payment or allowance to a new
tenant, or otherwise), (iii) broker’s fees allocable to the remainder of the
term of this Lease, advertising costs and other expenses of reletting the Leased
Premises; (iv) costs of carrying and maintaining the Leased Premises, such as
taxes, insurance premiums, utility charges and security precautions,
(v) expenses incurred in removing, disposing of and/or storing any of Tenant’s
personal property, inventory or trade fixtures remaining therein;
(vi) reasonable attorney’s fees, expert witness fees, court costs and other
reasonable expenses incurred by Landlord (but not limited to taxable costs) in
retaking possession of the Leased Premises, establishing damages hereunder, and
releasing the Leased Premises; and (vii) any other expenses, costs or damages
otherwise incurred or suffered as a result of Tenant’s default.

        (e) In the event any rent check is returned for insufficient finds, by
written notice to Tenant, Landlord may require the Tenant to pay its rent
thereafter by wire transfer or cashiers check.

12.3 Landlord’s Default And Tenant’s Remedies. In the event Landlord fails to
perform its obligations under this Lease, Landlord shall nevertheless not be in
default under the terms of this Lease until such time as Tenant shall have first
given Landlord written notice specifying the nature of such failure to perform
its obligations, and then only after Landlord shall have had thirty (30) days
following its receipt of such notice within which to perform such obligations;
provided that, if longer than thirty (30) days is reasonably required in order
to perform such obligations, Landlord shall have such longer period. In the
event of Landlord’s default as above set forth, then, and only then, Tenant may
then proceed in equity or at law to compel Landlord to perform its obligations
and/or to recover damages proximately caused by such failure to perform (except
as and to the extent Tenant has waived its right to damages as provided in this
Lease).

12.4 Limitation Of Tenant’s Recourse. If Landlord is a corporation, trust,
partnership, joint venture, limited liability company, unincorporated
association, or other form of business entity, Tenant agrees that (i) the
obligations of Landlord under this Lease shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals of such business entity, and
(ii) Tenant shall have recourse only to the property of such corporation, trust,
partnership, joint venture, limited liability company, unincorporated
association, or other form of business entity for the satisfaction of such
obligations and not against the assets of such officers, directors, trustees,
partners, joint venturers, members, owners, stockholders or principals.

12.5 Tenant’s Waiver. Landlord and Tenant agree that the provisions of
Paragraph 12.3 above are intended to supersede and replace the provisions of
California Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant
hereby waives the provisions of California Civil Code Sections 1932(1), 1941 and
1942 and/or any similar or successor law regarding Tenant’s right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease.

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ARTICLE 13

GENERAL PROVISIONS

13.1 Taxes On Tenant’s Property. Tenant shall pay before delinquency any and all
taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant’s estate in this Lease, Tenant’s ownership of property, improvements
made by Tenant to the Leased Premises or the Outside Areas, improvements made by
Landlord for Tenant’s use within the Leased Premises or the Outside Areas,
Tenant’s use (or estimated use) of public facilities or services or Tenant’s
consumption (or estimated consumption) of public utilities, energy, water or
other resources (collectively, “Tenant’s Interest”). Upon demand by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of these payments. If
any such taxes, assessments, fees or public charges are levied against Landlord,
Landlord’s property, the Building or the Property, or if the assessed value of
the Building or the Property is increased by the inclusion therein of a value
placed upon Tenant’s Interest, regardless of the validity thereof, Landlord
shall have the right to require Tenant to pay such taxes, and if not paid and
satisfactory evidence of payment delivered to Landlord at least ten days prior
to delinquency, then Landlord shall have the right to pay such taxes on Tenant’s
behalf and to invoice Tenant for the same. Tenant shall, within the earlier to
occur of (a) thirty (30) days of the date it receives an invoice from Landlord
setting forth the amount of such taxes, assessments, fees, or public charge so
levied, or (b) the due date of such invoice, pay to Landlord, as Additional
Rent, the amount set forth in such invoice. Failure by Tenant to pay the amount
so invoiced within such time period shall be conclusively deemed a default by
Tenant under this Lease. Tenant shall have the right to bring suit in any court
of competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessments, fees or public charges so paid.

13.2 Holding Over. This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over to which
Landlord has consented shall be construed to be a tenancy from month to month,
on the same terms and conditions herein specified insofar as applicable, except
that the Base Monthly Rent shall be increased to an amount equal to one hundred
fifty percent (150%) of the Base Monthly Rent payable during the last full month
immediately preceding such holding over. Tenant acknowledges that if Tenant
holds over without Landlord’s consent, such holding over may compromise or
otherwise affect Landlord’s ability to enter into new leases with prospective
tenants regarding the Leased Premises. Therefor, if Tenant fails to surrender
the Leased Premises upon the expiration or termination of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from and against all
claims resulting from such failure, including, without limiting the foregoing,
any claims made by any succeeding tenant founded upon such failure to surrender,
and any losses suffered by Landlord, including lost profits, resulting from such
failure to surrender.

13.3 Subordination To Mortgages. This Lease is subject to and subordinate to all
ground leases, mortgages and deeds of trust which affect the Building or the
Property and which are of public record as of the Effective Date of this Lease,
and to all renewals, modifications, consolidations, replacements and extensions
thereof. Landlord covenants to use its best efforts to obtain non-disturbance
agreements from all holders of ground leases, mortgages and deeds of trust in
effect as of the date of this Lease, in form reasonably satisfactory to Tenant,
within sixty (60) days of the date of this Lease. If Landlord shall fail to
obtain such non-disturbance agreements within such sixty (60) day period, Tenant
shall have thirty (30) days within which to terminate this Lease by written
notice to Landlord. Notwithstanding the foregoing, if the lessor under any such
ground lease or any lender holding any such mortgage or deed of trust shall
advise Landlord that it desires or requires this Lease to be made prior and
superior thereto, then, upon written request of Landlord to Tenant, Tenant shall
promptly execute, acknowledge and deliver any and all customary or reasonable
documents or instruments which Landlord and such lessor or lender deems
necessary or desirable to make this Lease prior thereto. Tenant hereby consents
to Landlord’s ground leasing the land underlying the Building or the Property
and/or encumbering the Building or the Property as security for future loans on
such terms as Landlord shall desire, all of which future ground leases,
mortgages or deeds of trust shall be subject to and subordinate to this Lease.
However, if any lessor under any such future ground lease or any lender holding
such future mortgage or deed of trust shall desire or require that this Lease be
made subject to and subordinate to such future ground lease, mortgage or deed of
trust, then Tenant agrees, within ten (10) days after Landlord’s written request
therefor, to execute, acknowledge and deliver to Landlord any and all documents
or instruments reasonably requested by Landlord or by such lessor or lender as
may be necessary or proper to assure the subordination of this Lease to such
future ground lease, mortgage or deed of trust, but only if such lessor or
lender agrees to recognize Tenant’s rights under this Lease and agrees not to
disturb Tenant’s quiet possession of the Leased Premises so long as Tenant is
not in default under this Lease. If Landlord assigns the Lease as security for a
loan, Tenant agrees to execute such documents as are reasonably requested by the
lender and to provide reasonable provisions in the Lease protecting such
lender’s security interest which are customarily required by institutional
lenders making loans secured by a deed of trust provided that such documents do
not materially increase Tenant’s obligations or diminish its rights or remedies
under this Lease.

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13.4 Tenant’s Attornment Upon Foreclosure. Tenant shall, upon request, attorn
(i) to any purchaser of the Building or the Property at any foreclosure sale or
private sale conducted pursuant to any security instruments encumbering the
Building or the Property, (ii) to any grantee or transferee designated in any
deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under an underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant’s rights under this Lease.

13.5 Mortgagee Protection. In the event of any default on the part of Landlord,
Tenant will give notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender or lessor a
reasonable opportunity to cure the default, including time to obtain possession
of the Leased Premises by power of sale or judicial foreclosure or other
appropriate legal proceedings if reasonably necessary to effect a cure.

13.6 Estoppel Certificate. Each party (the “Responding Party”), within five
business days following any request by the other party (the “Requesting Party”),
will execute and deliver to the Requesting Party an estoppel certificate
substantially in form attached as Exhibit E, (i) certifying that this Lease is
unmodified and in full force and effect, or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect, (ii) stating the date to which the rent and other charges are
paid in advance, if any, (iii) acknowledging that there are not, to the
Responding Party’s knowledge, any uncured defaults on the part of the Requesting
Party hereunder, or specifying such defaults if any are claimed, and
(iv) certifying such other information about this Lease as may be reasonably
requested by the Requesting Party, its Lender or prospective lenders, investors
or purchasers. Landlord and Tenant intend that any statement delivered pursuant
to this paragraph may be relied upon by any Lender or purchaser.

13.7 Tenant’s Financial Information. Tenant shall, within ten business days
after Landlord’s request therefor, deliver to Landlord a copy of Tenant’s (and
any guarantor’s) current publicly available financial statements and any such
other publicly available information reasonably requested by Landlord regarding
Tenant’s financial condition. Landlord shall be entitled to disclose such
financial statements or other information to its Lender, to any present or
prospective principal of or investor in Landlord, or to any prospective Lender
or purchaser of the Building, the Property, or any portion thereof or interest
therein. Any such information which is marked “confidential” or “company
secrets” (or is otherwise similarly marked by Tenant) shall be confidential and
shall not be disclosed by Landlord to any third party except as specifically
provided in this paragraph and then only if the person to whom disclosure is
made first agrees to be bound by the requirements of this Section 13.7, unless
the same becomes a part of the public domain without the fault of Landlord.

13.8 Transfer By Landlord. Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer so long as the Security Deposit
(or the remaining amount of such Security Deposit after deductions made in
accordance with Section 3.7 of this Lease) is transferred to the transferee (or
returned to the Tenant) and the transferee has agreed to assume and perform all
such obligations which may accrue after the date of such transfer and (ii) shall
be relieved of all liability for the performance of the obligations of the
Landlord hereunder which have accrued before the date of transfer if its
transferee agrees to assume and perform all such prior obligations of the
Landlord hereunder. Tenant shall attorn to any such transferee. After the date
of any such transfer, the term “Landlord” as used herein shall mean the
transferee of such interest in the Building or the Property.

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13.9 Force Majeure. Subject to express provisions to the contrary set forth in
this Lease, the obligations of each of the parties under this Lease (other than
the obligations to pay money) shall be temporarily excused if such party is
prevented or delayed in performing such obligations by reason of any strikes,
lockouts or labor disputes; government restrictions, regulations, controls,
action or inaction; civil commotion; or extraordinary weather, fire or other
acts of God.

13.10 Notices. Any notice required or permitted to be given under this Lease
shall be in writing and (i) personally delivered, (ii) sent by United States
mail, registered or certified mail, postage prepaid, return receipt requested,
(iii) sent by Federal Express or similar nationally recognized overnight courier
service, or (iv) transmitted by facsimile with a hard copy sent within one (1)
business day by any of the foregoing means, and in all cases addressed as
follows, and such notice shall be deemed to have been given upon the date of
actual receipt or delivery (or refusal to accept delivery) at the address
specified below (or such other addresses as may be specified by notice in the
foregoing manner) as indicated on the return receipt or air bill:

  If to Landlord: Rotunda Partners II
300 Frank H. Ogawa Plaza, 3rd Floor
Oakland, CA 94612
Attention: Len Epstein     If to Tenant: Prior to Commencement Date:

Scientific Learning Corporation
300 Frank H. Ogawa Plaza, Suite 500
Oakland, CA  94612

Attention: General Counsel

After the Commencement Date:

At the Leased Premises.

Attention: General Counsel     with a copy to: Cooley Godward LLP
One Maritime Plaza
20th Floor
San Francisco, California  94111
Attention: Anna Pope

Any notice given in accordance with the foregoing shall be deemed received upon
actual receipt or refusal to accept delivery.

13.11 Attorneys’ Fees. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys’ fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party.

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13.12 Definitions. Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
wherever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:

        (a) Intentionally Deleted.

        (b) Intentionally Deleted.

        (c) Intentionally Deleted.

        (d) Intentionally Deleted.

        (e) Law. The term “Law” shall mean any judicial decisions and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirements of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them, in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).

        (f) Lender. The term “Lender” shall mean the holder of any promissory
note or other evidence of indebtedness secured by the Property or any portion
thereof.

        (g) Private Restrictions. The term “Private Restrictions” shall mean (as
they may exist from time to time) any and all covenants, conditions and
restrictions, private agreements, easements, and any other recorded documents or
instruments affecting the use of the Property, the Building, the Leased
Premises, or the Outside Areas.

        (h) Rent. The term “Rent” shall mean collectively Base Monthly Rent for
the Leased Premises and any space which Tenant rents pursuant to its right of
first refusal under Article 16 , and all Additional Rent.

13.13 General Waivers. One party’s consent to or approval of any act by the
other party requiring the first party’s consent or approval shall not be deemed
to waive or render unnecessary the first party’s consent to or approval of any
subsequent similar act by the other party. No waiver of any provision hereof, or
any waiver of any breach of any provision hereof, shall be effective unless in
writing and signed by the waiving party. The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach. No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same or
any other provisions herein contained.

13.14 Miscellaneous. Should any provisions of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term “party”
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The captions in this Lease are for convenience only and shall not be construed
in the construction or interpretation of any provision hereof. When the context
of this Lease requires, the neuter gender includes the masculine, the feminine,
a partnership, corporation, limited liability company, joint venture, or other
form of business entity, and the singular includes the plural. The terms “must,”
“shall,” “will,” and “agree” are mandatory. The term “may” is permissive. When a
party is required to do something by this Lease, it shall do so at its sole cost
and expense without right of reimbursement from the other party unless specific
provision is made therefor. Where Landlord’s consent is required hereunder, the
consent of any Lender is also required. Landlord and Tenant shall both be deemed
to have drafted this Lease, and the rule of construction that a document is to
be construed against the drafting party shall not be employed in the
construction or interpretation of this Lease. Where Tenant is obligated not to
perform any act or is not permitted to perform any act, Tenant is also obligated
to restrain any others reasonably within its control, including agents,
invitees, contractors, subcontractors and employees, from performing such act.
Landlord shall not become or be deemed a partner or a joint venturer with Tenant
by reason of any of the provisions of this Lease.

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ARTICLE 14

CORPORATE AUTHORITY
BROKERS AND ENTIRE AGREEMENT

14.1 Corporate Authority. Each individual executing this Lease on behalf of
either party represents and warrants that such party is validly formed and duly
authorized and existing, that it is qualified to do business in the State in
which the Leased Premises are located, that it has the full right and legal
authority to enter into this Lease, and that he or she is duly authorized to
execute and deliver this Lease on its behalf in accordance with its terms.

14.2 Brokerage Commissions. Each party represents, warrants and agrees that it
has not had any dealings with any real estate broker(s), leasing agent(s),
finder(s) or salesmen, other than the Brokers (as named in Article 1) with
respect to the lease by it of the Leased Premises pursuant to this Lease, agrees
to indemnify, defend with competent counsel, and hold the other party harmless
from any liability for the payment of any real estate brokerage commissions,
leasing commissions or finder’s fees claimed by any other real estate broker(s),
leasing agent(s), finder(s), or salesmen to be earned or due and payable by
reason of its agreement or promise (implied or otherwise) to pay such a
commission or finder’s fee by reason of this Lease. Landlord shall pay the
commission due to Brokers pursuant to a separate agreement between Brokers and
Landlord

14.3 Entire Agreement. This Lease and the Exhibits (as described in Article 1),
which Exhibits are by this reference incorporated herein, constitute the entire
agreement between the parties, and there are no other agreements, understandings
or representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.

14.4 Landlord’s Representations. Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the
Property, the Building or the Leased Premises, upon which Tenant relied in
entering into the Lease, which are not expressly set forth in this Lease. Tenant
further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant’s
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant’s business and that Tenant relies solely upon its own
investigations with respect to such matters. Tenant expressly waives any and all
claims for damage by reason of any statement, representation, warranty, promise
or other agreement of Landlord or Landlord’s agent(s), if any, not contained in
this Lease or in any Exhibit attached hereto.

ARTICLE 15

OPTIONS TO EXTEND

15.1 Options. So long as Scientific Learning Corporation (or a Permitted
Transferee) is entitled to occupy the Leased Premises, and subject to the
condition set forth in clause (b) below, Tenant shall have two options to extend
the term of this Lease with respect to the entirety of the Leased Premises, the
first for a period of five (5) years from the expiration of the last year of the
Lease Term (the “First Extension Period”), and the second (the “Second Extension
Period”) for a period of five (5) years from the expiration of the First
Extension Period, subject to the following conditions:

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        (a) Each option to extend shall be exercised, if at all, by written
notice of exercise given to Landlord by Tenant not more than eighteen (18)
months nor less than six (6) months prior to the expiration of the last year of
the Lease Term or the expiration of the First Extension Period, as applicable;

        (b) Anything herein to the contrary notwithstanding, if Tenant is in
default under any of the material terms, covenants or conditions of this Lease
beyond any applicable notice and cure period, either at the time Tenant
exercises either extension option or on the commencement date of the First
Extension Period or the Second Extension Period, as applicable, Landlord shall
have, in addition to all of Landlord’s other rights and remedies provided in
this Lease, the right to terminate such option(s) to extend upon written notice
to Tenant.

15.2 Fair Market Rent. In the event the applicable option is exercised in a
timely fashion, the Lease shall be extended for the term of the applicable
extension period upon all of the terms and conditions of this Lease, provided
that the Base Monthly Rent for each extension period shall be 95% of the “Fair
Market Rent” for the Leased Premises, determined as set forth below.

15.3 Determination. Within 30 days after receipt of Tenant’s notice of exercise,
Landlord shall notify Tenant in writing of Landlord’s estimate of the Base
Monthly Rent for the first year of the applicable extension period. For purposes
hereof, “Fair Market Rent” shall mean the rent a willing tenant would be willing
to pay for similar space in similar buildings in similar locations upon
substantially the terms set forth in this Lease. Within 30 days after receipt of
such notice from Landlord, Tenant shall have the right either to (i) accept
Landlord’s estimate of Fair Market Rent or (ii) elect to arbitrate Landlord’s
estimate of Fair Market Rent, such arbitration to be conducted pursuant to the
provisions hereof. Failure on the part of Tenant to give written notice of its
election to require arbitration of Fair Market Rent within such 30-day period
shall constitute acceptance of the Fair Market Rent for the applicable extension
period as calculated by Landlord. If Tenant elects arbitration, the arbitration
shall be concluded within 90 days after the date of Tenant’s election, subject
to extension for an additional 30-day period if a third arbitrator is required
and does not act in a timely manner. To the extent that arbitration has not been
completed prior to the expiration of any preceding period for which Base Monthly
Rent has been determined, Tenant shall pay Base Monthly Rent at the rate
calculated by Landlord, with the potential for an adjustment to be made once
Fair Market Rent is ultimately determined by arbitration.

15.4 Arbitration. In the event of arbitration, the judgment or the award
rendered in any such arbitration may be entered in any court having jurisdiction
and shall be final and binding between the parties. The arbitration shall be
conducted and determined in the City of Oakland in accordance with the then
prevailing rules of the American Arbitration Association or its successor for
arbitration of commercial disputes except to the extent that the procedures
mandated by such rules shall be modified as follows:

        (a) Tenant shall make demand for arbitration in writing within 30 days
after service of Landlord’s determination of Fair Market Rent given under
Paragraph 15.3 above, specifying therein the name and address of the person to
act as the arbitrator on its behalf. The arbitrator shall be qualified as a real
estate appraiser familiar with the Fair Market Rent of similar office space in
the San Francisco/Oakland area who would qualify as an expert witness over
objection to give opinion testimony addressed to the issue in a court of
competent jurisdiction. Failure on the part of Tenant to make a proper demand in
a timely manner for such arbitration shall constitute a waiver of the right
thereto. Within 15 days after the service of the demand for arbitration,
Landlord shall give notice to Tenant, specifying the name and address of the
person designated by Landlord to act as arbitrator on its behalf who shall be
similarly qualified. If Landlord fails to notify Tenant of the appointment of
its arbitrator, within or by the time above specified, then the arbitrator
appointed by Tenant shall be the arbitrator to determine the issue.

        (b) In the event that two arbitrators are chosen pursuant to
Paragraph 15.4(a) above, the arbitrators so chosen shall, within 15 days after
the second arbitrator is appointed determine the Fair Market Rent. If the two
arbitrators shall be unable to agree upon a determination of Fair Market Rent
within such 15-day period, they, themselves, shall appoint a third arbitrator,
who shall be a competent and impartial person with qualifications similar to
those required of the first two arbitrators pursuant to Paragraph 15.4(a). In
the event they are unable to agree upon such appointment within seven days after
expiration of such 15-day period, the third arbitrator shall be selected by the
parties themselves, if they can agree thereon, within a further period of
15 days. If the parties do not so agree, then either party, on behalf of both,
may request appointment of such a qualified person by the then Presiding Judge
of the Superior Court of the County of Alameda. The three arbitrators shall
decide the dispute if it has not previously been resolved by following the
procedure set forth below.

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        (c) Where an issue cannot be resolved by agreement between the two
arbitrators selected by Landlord and Tenant or settlement between the parties
during the course of arbitration, the issue shall be resolved by the three
arbitrators within 15 days of the appointment of the third arbitrator in
accordance with the following procedure. The arbitrator selected by each of the
parties shall state in writing his determination of the Fair Market Rent
supported by the reasons therefor with counterpart copies to each party. The
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two proposed resolutions most closely approximates his determination of Fair
Market Rent. The third arbitrator shall have no right to propose a middle ground
or any modification of either of the two proposed resolutions. The resolution he
chooses as most closely approximating his determination shall constitute the
decision of the arbitrators and be final and binding upon the parties.

        (d) In the event of a failure, refusal or inability of any arbitrator to
act, his successor shall be appointed by him, but in the case of the third
arbitrator, his successor shall be appointed in the same manner as provided for
appointment of the third arbitrator. The arbitrators shall decide the issue
within 15 days after the appointment of the third arbitrator. Any decision in
which the arbitrator appointed by Landlord and the arbitrator appointed by
Tenant concur shall be binding and conclusive upon the parties. Each party shall
pay the fee and expenses of its respective arbitrator and both shall share the
fee and expenses of the third arbitrator, if any, and the attorneys’ fees and
expenses of counsel for the respective parties and of witnesses shall be paid by
the respective party engaging such counsel or calling such witnesses.

        (e) The arbitrators shall have the right to consult experts and
competent authorities to obtain factual information or evidence pertaining to a
determination of Fair Market Rent. The arbitrators shall render their decision
and award in writing with counterpart copies to each party. The arbitrators
shall have no power to modify the provisions of this Lease.

15.5 Improvement Allowance. Upon the commencement of any Extension Period,
Landlord shall pay to Tenant an amount up to $10.00 per rentable square feet,
which Tenant shall use pay or offset the costs to repaint and re-carpet the
Leased Premises, which shall otherwise be undertaken at Tenant’s cost and
expense.

ARTICLE 16

RIGHT OF FIRST REFUSAL

16.1 Right of First Refusal. So long as Scientific Learning Corporation (or a
Permitted Transferee) is entitled to occupy the Leased Premises as of its
exercise of the Right of First Refusal granted herein, and subject to the
conditions set forth below, Tenant shall have an ongoing right of first refusal
to lease from Landlord (the “Right of First Refusal”), all or portions of the
12,947 rentable square foot delineated on Exhibit B-1 as the 6th Floor Remainder
Space (the “6th Floor Remainder Space”) and all the rentable square feet on the
5th Floor of the Building (the “Fifth Floor Space”):

        (a) At any time at which Landlord has a prospective tenant for the 6th
Floor Remainder Space and/or the Fifth Floor Space, Landlord shall notify Tenant
in writing (“Landlord’s Preliminary Notice”) and request that Tenant respond
within three (3) business days and inform Landlord whether Tenant can say
definitely that Tenant is not interested in such space. Landlord’s Preliminary
Notice shall state the location(s) of the space, square footage(s) and rent(s)
then being proposed by Landlord to the prospective tenant. If Tenant notifies
Landlord that Tenant is definitely not interested in such space, Landlord may
proceed to market the space and may enter into a lease of such space to any
third party within the following one hundred and twenty (120) days without again
offering such space to Tenant. If Tenant responds within the three (3) business
day period and informs Landlord that Tenant may be interested in such space,
then Landlord may proceed to market the space but shall be bound to offer the
space to Tenant in accordance with the balance of this Section 16.1, including,
without limitation, the obligation to provide Landlord’s Notice to Tenant prior
to leasing the space to any third party.

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        (b) The Right of First Refusal may be exercised, if at all, by one or a
series of written notices of exercise given to Landlord by Tenant within five
(5) business days following Tenant’s receipt of Landlord’s notice of its intent
to lease either the 6th Floor Remainder Space or the Fifth Floor Space (the
“Available Space”). This notice (the “Landlord’s Notice”) shall consist of a
statement that the Landlord intends to lease the Available Space to a third
party in the event Tenant does not exercise its Right of First Refusal and a
statement of the principal terms of the intended lease, including all material
financial terms. In the event Tenant shall have failed to notify Landlord within
such period of its election to lease the Available Space, Tenant shall be deemed
to have elected not to lease such Available Space, and Landlord shall be
entitled to lease the space upon the same terms set forth in such offer to any
third party;

        (c) Notwithstanding anything to the contrary contained herein, if Tenant
is in default under any of the material terms, covenants or conditions of this
Lease beyond any applicable notice and cure period at the time Tenant exercises
the Right of First Refusal, Landlord shall have, in addition to all of
Landlord’s other rights and remedies provided in this Lease, the right to
terminate such Right of First Refusal upon notice to Tenant;

        (d) If both the Fifth Floor Space and the 6th Floor Remainder Space are
offered to Tenant at the same time, Tenant may elect to lease both spaces or
neither space.

16.2 Intentionally Deleted.

16.3 Intentionally Deleted.

16.4 Intentionally Deleted.

ARTICLE 17

INTENTIONALLY DELETED

17.1 Intentionally Deleted.

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        IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the respective dates below set forth with the intent to be legally bound thereby
as of the Effective Date of this Lease first above set forth.

Dated: October 7, 2003 LANDLORD:

ROTUNDA PARTNERS II, a LLC in California

By: /s/ Mark A. Moss
——————————————
Mark A. Moss
Managing Member

Dated: October 7, 2003 TENANT:

SCIENTIFIC LEARNING CORPORATION, a Delaware corporation

By: /s/ Robert C. Bowen
——————————————
Robert C. Bowen
CEO