Document:

Form of Non-Qualified Stock Option Agreement

 EXHIBIT 4.1 
  
 DSP GROUP, INC. 
  
 NOTICE OF STOCK OPTION AWARD 
  
  

			
	Grantee’s Name and Address:	  	_______________________________
		
	 	  	_______________________________
		
	 	  	_______________________________

  
 You (the
“Grantee”) have been granted an option to purchase shares of Common Stock of DSP Group, Inc. (the “Company”), subject to the terms and conditions of this Notice of Stock Option Award (the “Notice”) and the Stock Option
Award Agreement (the “Option Agreement”) attached hereto, as follows. This Option is granted as an inducement material to the Grantee’s entering into Continuous Service as an Employee. The Grantee has not previously been an Employee,
Director or Consultant of the Company or any Related Entity. Unless otherwise defined herein, the terms defined in the Option Agreement shall have the same defined meanings in this Notice. 
  

			
	 Award Number
	  	_______________________________
		
	 Date of Award
	  	December 1, 2004
		
	 Vesting Commencement Date
	  	December 1, 2004
		
	 Exercise Price per Share
	  	$
		
	Total Number of Shares Subject
to the Option (the “Shares”)	  	 
		
	 Total Exercise Price
	  	$
		
	 Type of Option
	  	Non-Qualified Stock Option
		
	 Expiration Date:
	  	December 1, 2011
		
	 Post-Termination Exercise Period:
	  	Ninety (90) Days

  
 Vesting Schedule: 

 
 Subject to the Grantee’s Continuous Service and other limitations
set forth in this Notice and the Option Agreement, the Option may be exercised, in whole or in part, in accordance with the following schedule: 
  
 25% of the Shares subject to the Option shall vest twelve (12) months after the Vesting Commencement Date, and 6.25% of the Shares subject to the Option
shall vest at the end of each three (3) month period thereafter. 
  
 During any authorized leave of absence, the vesting of the Option as provided in this schedule shall cease after the leave of absence exceeds a period of ninety (90) days. Vesting of the Option shall resume upon the Grantee’s
termination of the leave of absence and return to service to the Company or a Related Entity. 
  
 In the event of the Grantee’s change in status from Employee to Consultant, vesting of the Option shall continue only to the extent determined by the Board as of such change in status. 
  
 IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Option is to be governed by the terms and conditions of this Notice and the Option Agreement. 
  

			
	 DSP Group, Inc.,

	 a Delaware corporation

		
	 By:
	 	  

	 Title:
	 	  

  

 1 

 THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY
DURING THE PERIOD OF GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE ORTHE OPTION AGREEMENT SHALL
CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE GRANTEE’S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE. 
  
 The Grantee acknowledges receipt of a copy of
the Option Agreement, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Notice and the Option
Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice, and fully understands all provisions of this Notice and the Option Agreement. The Grantee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any questions arising under this Notice or the Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this
Notice. 
  

					
	 Dated:
                    
	 	Signed:	 	  

	 	 	 	 	Grantee

  

 2 

 Award Number:
                     
  
 DSP GROUP, INC. 
  
 STOCK OPTION AWARD AGREEMENT 
  
 1. Grant of Option. DSP Group, Inc., a Delaware corporation (the “Company”), hereby grants to the Grantee (the “Grantee”) named
in the Notice of Stock Option Award (the “Notice”), an option (the “Option”) to purchase the Total Number of Shares of Common Stock subject to the Option (the “Shares”) set forth in the Notice, at the Exercise Price per
Share set forth in the Notice (the “Exercise Price”) subject to the terms and provisions of this Stock Option Award Agreement (the “Option Agreement”) and the Notice which are incorporated herein by reference. 
  
 2. Exercise of Option. 
  
 (a) Right to Exercise. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice and with the applicable provisions of this Option Agreement. The Option shall be subject to the provisions of Section 16 of this Option Agreement relating to the exercisability or
termination of the Option in the event of a Corporate Transaction, Change in Control or Related Entity Disposition. No partial exercise of the Option may be for less than the lesser of five percent (5%) of the total number of Shares subject to the
Option or the remaining number of Shares subject to the Option. In no event shall the Company issue fractional Shares. 
  
 (b) Method of Exercise. The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Exhibit A) or by such
other procedure as specified from time to time by the Board which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the
Board. The exercise notice shall be delivered in person, by certified mail, or by such other method (including electronic transmission) as determined from time to time by the Board to the Company accompanied by payment of the Exercise Price. The
Option shall be deemed to be exercised upon receipt by the Company of such notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the
Exercise Price provided in Section 4(c), below. 
  
 No Shares will
be issued pursuant to the exercise of the Option unless such issuance and such exercise shall comply with all Applicable Laws. Assuming such compliance, for income tax purposes, the Shares shall be considered transferred to the Grantee on the date
on which the Option is exercised with respect to such Shares. 
  
 (c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee or other person has made arrangements acceptable to the Board for the satisfaction of non-U.S., federal,
state and local income and employment tax withholding obligations. 
  
 3. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law
and, provided further, that the portion of the Exercise Price equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law: 
  
 (i) check; 
  
 (ii) surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Board may
require (including withholding of Shares otherwise deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being
exercised (but only to the extent that such exercise of the Option would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price); or 
  

 1 

 (iii) through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall
provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.

  
 4. Restrictions on Exercise. The Option may not be
exercised if the issuance of the Shares subject to the Option upon such exercise would constitute a violation of any Applicable Laws. 
  
 5. Termination or Change of Continuous Service. In the event the Grantee’s Continuous Service terminates, the Grantee may, to the extent
otherwise so entitled at the date of such termination (the “Termination Date”), exercise the Option during the Post-Termination Exercise Period. In no event shall the Option be exercised later than the Expiration Date set forth in the
Notice. In the event of the Grantee’s change in status from Employee, Director or Consultant to any other status of Employee, Director or Consultant, the Option shall remain in effect and, except to the extent otherwise determined by the Board,
continue to vest. Except as provided in Sections 6 and 7 below, to the extent that the Grantee is not entitled to exercise the Option on the Termination Date, or if the Grantee does not exercise the Option within the Post-Termination Exercise
Period, the Option shall terminate. 
  
 6. Disability of
Grantee. In the event the Grantee’s Continuous Service terminates as a result of his or her Disability, the Grantee may, but only within twelve (12) months from the Termination Date (and in no event later than the Expiration Date), exercise
the Option to the extent he or she was otherwise entitled to exercise it on the Termination Date. To the extent that the Grantee is not entitled to exercise the Option on the Termination Date, or if the Grantee does not exercise the Option to the
extent so entitled within the time specified herein, the Option shall terminate. 
  
 7. Death of Grantee. In the event of the termination of the Grantee’s Continuous Service as a result of his or her death, or in the event of the Grantee’s death during the Post-Termination Exercise
Period, the Grantee’s estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the Option, but only to the extent the Grantee could exercise the Option at the date of termination, within twelve
(12) months from the date of such termination (but in no event later than the Expiration Date). To the extent that the Grantee is not entitled to exercise the Option on the date of death, or if the Option is not exercised to the extent so entitled
within the time specified herein, the Option shall terminate. 
  
 8. Transferability of Option. The Option may be transferred by the Grantee in a manner and to the extent acceptable to the Board as evidenced by a writing signed by the Company and the Grantee. The terms of the Option shall be
binding upon the executors, administrators, heirs and successors of the Grantee. 
  
 9. Term of Option. The Option may be exercised no later than the Expiration Date set forth in the Notice or such earlier date as otherwise provided herein. 
  
 10. Tax Consequences. Set forth below is a brief summary as of the
date of this Option Agreement of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES. 
  
 (a) Exercise of Non-Qualified Stock Option. On exercise of a Non-Qualified Stock Option, the Grantee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the
Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be required to withhold from the Grantee’s 

  

 2 

 
compensation or collect from the Grantee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at
the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. 
  

(b) Disposition of Shares. If Shares are held for more than one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes. 
  
 11.
Notices. All notices, demands, consents or other communications required or permitted hereunder shall be in writing and shall be deemed to have been received when personally delivered or on the fifth business day (including Saturday)
following mailing if sent by first class airmail, return receipt requested or the next business day if sent by telefax, Express Mail, Federal Express or similar service, addressed, if to the Company, to its principal place of business in Santa
Clara, California, and if to the Grantee, to his address as it appears on the Company’s records. 
  
 12. Entire Agreement: Governing Law. The Notice and this Option Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of
a writing signed by the Company and the Grantee. The Notice and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of California without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. Should any provision of the Notice or this Option Agreement be determined to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. 
  
 13. Headings. The captions used in this Option Agreement are inserted for convenience and shall not be deemed a part
of this Option Agreement for construction or interpretation. 
  
 14. Interpretation. Any question or dispute regarding the administration or interpretation of the Notice or this Option Agreement shall be submitted by the Grantee or by the Company to the Board. The resolution of such question or
dispute by the Board shall be final and binding on all persons. 
  
 15. Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Shares covered by the Option, the exercise price of the Option, as well as any other terms that the
Board determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares,
or similar transaction affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) as the Board may determine in its discretion, any other transaction
with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or
any similar transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board and its
determination shall be final, binding and conclusive. Except as the Board determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject to the Option. 
  

 3 

 16. Corporate Transaction/Change in Control/Related Entity Disposition. 
  
 (a) Termination of Option to Extent Not Assumed in Corporate
Transaction. Effective upon the consummation of a Corporate Transaction, the Option shall terminate. However, the Option shall not terminate to the extent it is assumed in connection with the Corporate Transaction. 
  
 (b) Acceleration of Option Upon Corporate Transaction, Change in Control
or Related Entity Disposition. The Board shall have the authority, exercisable either in advance of any actual or anticipited Corporate Transaction, Change in Control or Related Entity Disposition or at the time of an actual Corporate
Transaction, Change in Control or Related Entity Disposition and exercisable at any time while the Option remains outstanding, to provide for the full or partial automatic vesting and exercisability of the Option and the release from restrictions on
transfer and repurchase or forfeiture rights of the Option in connection with a Corporate Transaction, Change in Control or Related Entity Disposition, on such terms and conditions as the Board may specify. The Board also shall have the authority to
condition the Option vesting and exercisability or release from such limitations upon the subsequent termination of the Continuous Service of the Grantee within a specified period following the effective date of the Corporate Transaction, Change in
Control or Related Entity Disposition. 
  
 17. Definitions.
As used herein, the following definitions shall apply: 
  
 (a)
“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act. 
  
 (b) “Applicable Laws” means the legal requirements applicable to the Option, if any, under applicable
provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to Options granted to residents
therein. 
  
 (c) “Board” means the Board of
Directors of the Company and shall include any committee of the Board or Officer of the Company to which the Board has delegated its authority under this Agreement. 
  
 (d) “Change in Control” means a change in ownership or control of the Company effected through either of
the following transactions: 
  
 (i) the direct or indirect
acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control
with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities pursuant to a
tender or exchange offer made directly to the Company’s stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or 
  
 (ii) a change in the composition of the Board over a period of twenty-four
(24) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors. 

 
 (e) “Code” means the Internal Revenue Code of 1986, as
amended. 
  
 (f) “Common Stock” means the common
stock of the Company. 
  
 (g) “Company” means DSP
Group, Inc., a Delaware corporation. 
  
 (h)
“Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or
advisory services to the Company or such Related Entity. 
  

 4 

 (i) “Continuing Directors” means members of the Board who either (i) have been Board
members continuously for a period of at least twenty-four (24) months or (ii) have been Board members for less than twenty-four (24) months and were elected or nominated for election as Board members by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or nomination was approved by the Board. 
  
 (j) “Continuous Service” means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or
Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of providing
services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an Employee, Director or Consultant can be effective under Applicable Laws. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave. 
  
 (k) “Corporate Transaction” means any of the following
transactions: 
  
 (i) a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; 
  
 (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company’s
subsidiary corporations) in connection with the complete liquidation or dissolution of the Company; 
  
 (iii) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or 
  
 (iv) an acquisition by any person or related group of persons (other than
the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities (whether or not in a transaction also constituting a Change in Control), but excluding any such transaction that the Board determines shall not be a Corporate Transaction. 
  
 (l) “Director” means a member of the Board or the board of
directors of any Related Entity. 
  
 (m)
“Disability” means that the Grantee would qualify for benefit payments under the long-term disability policy of the Company or the Related Entity to which the Grantee provides services regardless of whether the Grantee is covered by
such policy. 
  
 (n) “Employee” means any person,
including an Officer or Director, who is in the employ of the Company or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance. The
payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company. 
  
 (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 (p) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 

 
 (i) If the Common Stock is listed on one or more established stock
exchanges or national market systems, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market 

  

 5 

 
of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted
on the principal exchange or system on which the Common Stock is listed (as determined by the Board) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such
closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Board deems reliable; 
  
 (ii) If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer,
its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a share of Common Stock shall
be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such
other source as the Board deems reliable; or 
  
 (iii) In the
absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Board in good faith. 
  
 (q) “Non-Qualified Stock Option” means an Option not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code. 
  
 (r)
“Officer” means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
  
 (s) “Parent” means a “parent corporation,” whether
now or hereafter existing, as defined in Section 424(e) of the Code. 
  
 (t) “Related Entity” means any Parent or Subsidiary of the Company and any business, corporation, partnership, limited liability company or other entity in which the Company or a Parent or a Subsidiary of the Company holds
a substantial ownership interest, directly or indirectly. 
  
 (u)
“Related Entity Disposition” means the sale, distribution or other disposition by the Company or a Parent or a Subsidiary of the Company of all or substantially all of the interests of the Company or a Parent or a Subsidiary of the
Company in any Related Entity effected by a sale, merger or consolidation or other transaction involving that Related Entity or the sale of all or substantially all of the assets of that Related Entity, other than any Related Entity Disposition to
the Company or a Parent or a Subsidiary of the Company. 
  
 (v)
“Share” means a share of the Common Stock. 
  
 (w) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 END OF AGREEMENT 
  

 6 

 EXHIBIT A 
  
 EXERCISE NOTICE 
  
 DSP Group, Inc. 
 3120 Scott Boulevard 
 Santa Clara, CA 95054 
 Attention: Secretary 
  
 1. Effective as of today,
                    ,          the undersigned (the “Grantee”) hereby elects to
exercise the Grantee’s option to purchase                      shares of the Common Stock (the “Shares”) of DSP Group, Inc.
(the “Company”) under and pursuant to the Stock Option Award Agreement (the “Option Agreement”) and Notice of Stock Option Award (the “Notice”) dated
                    ,         . Unless otherwise defined herein, the terms defined in the
Option Agreement shall have the same defined meanings in this Exercise Notice. 
  
 2. Representations of the Grantee. The Grantee acknowledges that the Grantee has received, read and understood the Notice and the Option Agreement and agrees to abide by and be bound by their terms and
conditions. 
  
 3. Rights as Stockholder. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued, except as provided in Section 15 of the Option Agreement. 
  
 4. Delivery of Payment. The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the extent selected, shall
be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 4(c) of the Option Agreement. 
  

5. Tax Consultation. The Grantee understands that the Grantee may suffer adverse tax consequences as a result of the Grantee’s purchase or
disposition of the Shares. The Grantee represents that the Grantee has consulted with any tax consultants the Grantee deems advisable in connection with the purchase or disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice. 
  
 6. Taxes. The Grantee agrees to satisfy
all applicable non-U.S., federal, state and local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such
obligations. 
  
 7. Successors and Assigns. The Company may
assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise
Notice shall be binding upon the Grantee and his or her heirs, executors, administrators, successors and assigns. 
  
 8. Headings. The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for
construction or interpretation. 
  
 9. Interpretation. Any
dispute regarding the interpretation of this Exercise Notice shall be submitted by the Grantee or by the Company forthwith to the Board, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board shall
be final and binding on all persons. 
  

 1 

 10. Governing Law; Severability. This Exercise Notice is to be construed in accordance with and
governed by the internal laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and
duties of the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable. 
  
 11.
Notices. All notices, demands, consents or other communications required or permitted hereunder shall be in writing and shall be deemed to have been received when personally delivered or on the fifth business day (including Saturday)
following mailing if sent by first class airmail, return receipt requested or the next business day if sent by telefax, Express Mail, Federal Express or similar service, addressed, if to the Company, to its principal place of business in Santa
Clara, California, and if to the Grantee, to his address as it appears on the Company’s records. 
  
 12. Further Instruments. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement. 
  
 13.
Entire Agreement. The Notice and the Option Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the
Grantee. Nothing in the Notice the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. 
  

							
	 Submitted by:
	 	 	 	 Accepted by:

			
	 GRANTEE:
	 	 	 	 DSP GROUP, INC.

				
	 	 	 	 	 By:
	 	  

	  

	 	 	 	 Title:
	 	  

	(Signature)	 	 	 	 	 	 
	 Address:
	 	 	 	 Address:

			
	  

	 	 	 	 3120 Scott Boulevard

	  

	 	 	 	 Santa Clara, CA 95054

  

 2Sublease, dated as of June 23, 2005

 Exhibit 10.1 
  

			
	 STATE OF CALIFORNIA
	 	DEPARTMENT OF GENERAL SERVICES
	 	 	REAL ESTATE SERVICES DIVISION

  
 BUILDING SPACE SUBLEASE

  
 OF STATE-LEASED PROPERTY 
  

			
	 SUBLEASE COVERING PREMISES LOCATED AT:
	 	Sublease No.: 4680-001
	 3347 Michelson Drive
	 
	     Irvine, CA 92612-1682
	 
		
	 AGENCY
	 	Project No.: 115756
	 Department of Transportation/
	 
	 New Century Financial Corporation
	 

  
 THIS SUBLEASE
(“Sublease”), dated June 23, 2005 for reference purposes only, by and between the State of California, acting by and through its Director of General Services as Lessor, hereinafter called DGS or STATE (“DGS” or
“STATE”), and New Century Financial Corporation, a Maryland corporation, as Sublessee. This Sublease, as stated above, is actually a sublease that is subordinate and subject to the Standard Lease Form, dated July 10, 1998, as amended by
that certain Amendment to Lease Amendment No. One dated March 1, 1999, that certain Amendment to Lease Amendment No. Two dated August 24, 1999, and that certain Amendment to Lease Amendment No. Three dated December 15, 1999 (the “Master
Lease”), by and between DGS, as lessee, and Maguire Properties – Park Place, LLC, as successor-in-interest to Jamboree LLC, and hereinafter called the “Master Lessor.” 
  
 W I T N E S S E T H: 
  
 WHEREAS, under the Master Lease, the STATE hires from Master Lessor certain premises located at 3347 and 3355 Michelson Drive, in the city of Irvine,
County of Orange, State of California, as more particularly described in the Master Lease (the “Premises”); and 
  
 WHEREAS, a copy of the Master Lease is attached hereto, and incorporated herein as EXHIBIT “1” and made a part of this Sublease
by this reference; and 
  
 WHEREAS, the Master Lease provides
that the STATE shall have the right to sublet any portion of the Premises with the prior written consent of Master Lessor; and 
  
 WHEREAS, the STATE wishes to sublease a portion of the Premises to Sublessee. 
  
 NOW THEREFORE, it is mutually agreed between the parties hereto as follows: 
  

			
	DESCRIPTION	  	 1. STATE does hereby sublease to the Sublessee, and Sublessee hereby hires from STATE, the fourth (4th) floor of the building located at 3347 Michelsen
Drive, Irvine, California (the “Building”), as more particularly described and outlined in blue on the attached EXHIBIT “2” Plan, Project No. 115756 dated June 23, 2005, consisting of one (1) page, hereby incorporated
herein by this reference and made a part hereof (the “Subleased Premises”).

		
	USE	  	 2. Sublessee shall use the Subleased Premises during the term hereof for the purpose of general office use as appropriately conducted in an office
setting and for the general business purposes.

  

 1 

					
	 	  	 The Subleased Premises shall be used by Sublessee during the term hereof for the purpose of general office uses as appropriately conducted in an
office setting, and for no other purpose whatsoever. STATE will have no obligation to provide any program needs, including any supplies services and equipment, except as otherwise specified herein.

		
	TERM	  	 3. The term (“Term”) of this Sublease shall be for a period of approximately sixty-seven (67) months, commencing on the date that
the Subleased Premises are delivered to Sublessee (the “Commencement Date”) and ending on February 28, 2011, with such rights of termination as are hereinafter expressly set forth. STATE (i) shall use commercially reasonable efforts to
deliver the Subleased Premises to Sublessee on August 1, 2005, and (ii) shall give Sublessee at least two weeks’ prior written notice of the date upon which STATE will deliver the Subleased Premises to Sublessee.

		
	TERMINATION	  	 4. This Sublease Term shall be coterminous with the Master Lease if the Master Lease is terminated prior to the end of the Sublease Term. If
the Master Lease is terminated then this Sublease shall terminate at the same exact time. STATE shall not voluntarily terminate or agree to terminate the Master Lease under any circumstances, except, however, that notwithstanding the foregoing,
STATE shall be entitled to exercise the termination right described in Section 3 of the Master Lease, so long as STATE delivers to Sublessee written notice of such termination of the Master Lease and the corresponding termination of this Sublease at
least sixty (60) days prior to the date on which such termination shall become effective.

		
	RENT	  	 5. SUBLESSEE shall make rental payments for the Subleased Premises monthly in advance, as follows:

  

				
	 MONTH

	  	MONTHLY RENTAL PAYMENT

	 Month 1
	  	$	89,080.32
	 Months 2-16
	  	$	0
	 Months 17-19
	  	$	92,792.00
	 Months 20-31
	  	$	96,503.68
	 Months 32-43
	  	$	100,745.60
	 Months 44-End of Term
	  	$	110,800.01

  

					
			
	 	  	 Payments shall be made to:
  
 Department of Transportation
 Attn: Shu Yeh
 Accounting Office Cashiering
 P.O. Box 168719
 Sacramento, CA 95816-8019
  
	  	 
	 	  	 Rental payable hereunder for any period of time less than one month shall be determined by prorating the monthly
rental herein specified based on the actual number of days in the month.

		
	HOLDING OVER	  	 6. In the event the Sublessee remains in possession of the Subleased Premises after the expiration of the Sublease Term, or any extension
thereof with the express written consent of State, this Sublease shall be extended on a month to month basis subject to and coterminous with the Master Lease, subject to thirty (30) days’ termination by either party, and otherwise on the terms
and conditions herein specified, except that the rent payable shall be 125% of the rent payable immediately preceding the termination date of this Sublease and any extensions thereof.

  

 2 

			
	 	  	 STATE offers and Sublessee accepts no assurance that the Subleased Premises or any other comparable space or facilities at the site described herein will be
made available to Sublessee beyond the term stated above or as said term is reduced as provided herein.

		
	SERVICES	  	 7. STATE at STATE’s sole cost and expense, during the Term of this Sublease shall furnish the following services,
utilities, and supplies to the Subleased Premises in accordance with the Sublease:
  
 Electric, gas, sewer, trash disposal from a central receptacle, and water service, as described in Paragraph 13 of the Master Lease. Without limiting the foregoing, throughout the Term of this Sublease, STATE shall
use all commercially reasonable efforts to cause Master Lessor to comply with all of its obligations under Paragraph 13 of the Master Lease.
  
 All services to be provided by STATE shall be consistent with those that Master Lessor is required to provide to the Premises pursuant to the Master
Lease.
  
 Sublessee shall promptly reimburse STATE for any
charges imposed by Master Lessor under the terms of the Master Lease for after-hours HVAC or other additional services or utilities provided to the Subleased Premises at the request of Sublesee.
  
 During any period that rent due under the Master Lease for the portion
of the Premises consisting of the Subleased Premises is abated due to an interruption in services or utilities to the Subleased Premises, monthly rent due under this Sublease shall also be abated.

		
	 JANITORIAL
 SERVICES
	  	 8. STATE at STATE’s sole cost and expense shall have or hire janitorial services sufficient to maintain the interior in a clean and well-maintained
condition, including without limitation the janitorial service described in Paragraph 13.D. of the Master Lease.

		
	 REPAIR AND
 MAINTENANCE
	  	 9. During the Sublease Term, STATE shall maintain the Subleased Premises in good repair and tenantable condition, so as
to minimize breakdowns and loss of the Sublessee’s use of the premises caused by deferred or inadequate maintenance, including:
  
 (a.) Generally maintaining the Subleased Premises in good, vermin-free, operating condition and appearance.
  
 (b.) Furnishing prompt, good quality repair of the building, equipment
and appurtenances.
  
 (c.) Furnishing preventative
maintenance, including, but not limited to, manufacturer’s recommended servicing of equipment such as elevator (if any), heating, air conditioning and ventilating equipment and fixtures.
  
 (d) All other requirements set forth in Paragraph 14 of the Master
Lease.
  
 STATE shall provide prompt repair or correction on
any damage to the leased premises except damage arising from a willful or negligent act of the Sublessee’s agents, employees or invitees.
  
 Sublessee is responsible for maintaining all personal property, including voice and data equipment, and support equipment within the Subleased
Premises. Sublessee is solely responsible for all damage arising from willful or negligent acts of Sublessee’s agents, employees and invitees.

		
	REMEDY	  	 10. It is understood and agreed that all services, repairs, and utilities in paragraphs 7, 8, and 9 are subject to the
service terms in the Master Lease and any amendments to Master Lease thereafter.
  
 Sublessee’s sole remedy for any services, repairs, and utilities problems are per the Master Lease and amendments, or as otherwise expressly set forth in this Sublease. If this Sublease is terminated, Sublessee
shall have no further remedy against the STATE for events occurring after such termination.

  

 3 

			
	RECOVERY OF LEGAL FEES	  	 11. If action is brought by either party for the recovery of any amounts due under the provisions hereof or for any breach hereof, or to restrain the
breach of any agreement contained herein, or for the recovery of possession of said Subleased Premises, or to protect any rights given to such party against the other party, the losing party shall pay to the prevailing party such amount in
attorney’s fees in said action as the court shall determine to be reasonable, which shall be fixed by the court as part of the costs of said action.

		
	 	  	 12. Intentionally omitted.

		
	 HOLD
 HARMLESS
	  	 13. The State of California is to be free from all liability and claims for damages by reason of any injury to any person or persons, including
Sublessee, or property of any kind whatsoever and to whomsoever belonging, including Sublessee, from any cause or causes whatsoever while in or upon the Subleased Premises, or in any way connected to the Subleased Premises but not to the remainder
of the Premises occupied by the STATE, during the Term of this Sublease or any occupancy hereunder, except to the extent arising out of the sole negligence of the STATE, or the STATE’s employees. Sublessee agrees to defend, indemnify and hold
harmless the State of California from all liability, loss, cost or obligation on account of or arising out of any such injury or loss as described in the immediately preceding sentence, however occurring. Sublessee agrees to provide necessary
workers’ compensation insurance for all employees of Sublessee upon said premises at the Sublessee’s own cost and expense.

		
	INSURANCE	  	 14. SUBLESSEE shall furnish a certificate of insurance with the STATE’s sublease number, as set forth on the first
page of this Sublease, indicated on the face of said certificate, issued to STATE with amounts of commercial general liability of at least $1,000,000 per occurrence and fire legal liability of at least $500,000 naming the State of California, its
officers, agents and employees as additional insureds. Said certificate of insurance shall be issued by an insurance company with a rating, which is reasonably acceptable to DGS, Office of Insurance and Risk Management. STATE reserves the right to
review insurance requirements and adjust coverage limits, as required, over the term of the Sublease, so long as they are not greater than those typically required by other comparable Class A office building landlords in the Irvine, California
area.
  
 It is agreed that STATE shall not be liable for the
payment of any premiums or assessments on the insurance coverage required by this paragraph. The certificate of insurance shall provide that the insurer will not cancel the insured’s coverage without ten (10) business days’ prior written
notice to STATE. Sublessee agrees that the insurance herein provided for shall be in effect at all times during the term of the Sublease. In the event said insurance coverage expires at any time or times during the Term of this Sublease, Sublessee
agrees to provide STATE at least ten (10) days’ prior notice to said expiration date, a new certificate of insurance evidencing insurance coverage as provided for herein for not less than one (1) year. In the event Sublessee fails to keep in
effect at all times insurance coverage as herein provided, STATE may, in addition to any other remedies it may have, following written notice from STATE to Sublessee, and Sublessee’s failure to obtain such insurance within ten (10) business
days following receipt of such notice, terminate this Sublease upon the occurrence of such event.

		
	LOSSES	  	 15. STATE will not be responsible for losses or damage to personal property, equipment or materials of Sublessee, except to the extent resulting from the
sole negligence of STATE or STATE’s employees.

		
	TAXES AND ASSESSMENTS	  	 16. Sublessee agrees to pay all lawful taxes, assessments, or charges, which at any time may be levied upon any interest in this agreement. It is
understood that this Sublease may create a possessory interest subject to property taxation and Sublessee may be subject to the payment of property taxes levied on such leasehold interest.

		
	 NON
 DISCRIMINATION
	  	 17. In the performance of this Sublease, the Sublessee shall not discriminate, harass, or allow harassment against any employee or applicant for
employment because of race, religious creed, color, national origin, ancestry, physical disability (including HIV and AIDS), mental disability, medical condition, age (over 40), marital status, sex, sexual orientation, or use of family care leave.
Sublessee shall insure that the evaluation and treatment of its employees and applicants for employment are free from such discrimination and harassment.

  

 4 

			
	 	  	 Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or
recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.
  
 Sublessee shall comply with the provisions of the Fair Employment and Housing Act (Government Code Section 12990 (a-f) et seq.). The applicable
regulations of the Fair Employment and Housing Commission implementing Government Code Section 12990 (a-f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations, are incorporated into this Sublease by reference and
made a part hereof as if set forth in full. Sublessee shall give written notice of its obligations under this clause to any labor organizations with which they have a collective bargaining or other agreement. Further, Sublessee shall post, in
conspicuous places available to employees and applicants for employment, notices to be provided by the STATE setting forth the provisions of this Fair Employment Practices Section (Government Code, Section 12920-12994).
  
 REMEDIES FOR WILLFUL VIOLATIONS:
  
 a). The STATE may determine a willful violation of the Fair
Employment Practices provision to have occurred upon the receipt of a final judgment having that effect from a court in an action to which Sublessee was a party, or upon receipt of a written notice from the Fair Employment Practices Commission that
it has investigated and determined that the Sublessee has violated the Fair Employment Practices Act and has issued an order pursuant to the appropriate provisions of the Government Code.
  
 b) In the event that the STATE determines, following due process, that such a willful violation by Sublessee has
occurred, the STATE shall have the right to terminate this lease agreement and any loss or damage sustained by the STATE by reason thereof shall be borne and paid for by the Sublessee.

		
	 DEBT LIABILITY
 DISCLAIMER
	  	 18. The STATE will not be liable for any debts or claims that arise from operation of this Sublease by Sublessee.

		
	 PARTNERSHIP
 DISCLAIMER
	  	 19. Sublessee and any and all agents of Sublessee shall act in an independent capacity and not as officers or employees of the STATE. Nothing herein
contained shall be construed as constructing the parties herein as partners.

  

			
	SUBLETTING	  	 20. Sublessee shall not assign this Sublease and shall not sublet the Subleased Premises or any part thereof and will not permit the use of the Subleased
Premises by anyone other than the Sublessee. Notwithstanding any provision in this Sublease to the contrary, Sublessee shall have the right to assign this Sublease or sublet all or a portion of the Subleased Premises without the STATE’s consent
to any corporation or business entity which controls, is controlled by, or is under common control with Sublessee, or to a corporation or other business entity resulting from a merger or consolidation with Sublessee, or to any person or entity which
acquires substantially all of Sublessee’s business assets in the state where the Subleased Premises are located as a going concern (each, an “Affiliate”); provided, however, that such Affiliate has sufficient wherewithal, in the
reasonable estimation of the STATE, to fulfill the remaining obligations under this Sublease, if an assignment, or under the applicable sublease, if a sublease. In the event of an assignment or sublease to an Affiliate, Sublessee shall provide prior
written notice to the STATE, and along with such notice, Sublessee shall also provide the STATE with financial information regarding the Affiliate that is reasonably sufficient to show that such Affiliate possesses the wherewithal described in the
immediately preceding sentence.

		
	 CONDITION OF
 PREMISES
	  	 21. Sublessee accepts the Subleased Premises as being in good repair and tenantable condition, unless otherwise specified herein, and agrees that on the
last day of the term, or the earlier termination of this sublease, to surrender to STATE the Subleased Premises, with any appurtenances or improvements therein, in as good order and condition as when received, except for reasonable use and wear
thereof and damage by earthquake, fire, public calamity, the elements, acts of God, or circumstances over which Sublessee has no control or for which STATE is responsible pursuant to this Sublessee or Master Lessor is responsible pursuant to the
Master Lease. Sublessee shall have no duty to remove any improvements or fixtures placed by it on the Subleased Premises or to restore any portion of the Subleased Premises altered by it, save and except in the event Sublessee elects to remove any
such improvements or fixtures and such removal causes damages or injury to the Subleased Premises, and then only to the extent of any such damage or injury.

		
	 COMPLIANCE
 WITH LAWS
	  	 22. Sublessee shall at its sole cost and expense comply with all the requirements of all Municipal, County, State, and Federal authorities now in force
or which may hereafter be in force pertaining to the Subleased Premises and use of the Subleased Premises as provided by this Sublease, except that Sublessee shall have no obligation to make or perform any capital improvements that are not also
required to be performed by the STATE under the terms of the Master Lease.

  

 5 

			
	 	  	 Sublessee shall not make any physical change to the improvements at the Subleased Premises which violates the California Environmental Quality Act
(CEQA).

		
	 CONSTRUCTION, ALTERATIONS
 AND
REPAIRS
	  	 23. No alterations to the premises or construction of improvements thereon shall be permitted to begin until STATE has
approved the completed plans and specifications for said project. Said plans are to be prepared by an architect registered by the State of California. The State may retain qualified consultants to assist it in the review of such plans and
specifications, and Sublessee shall promptly reimburse the STATE for the reasonable cost of such consultants. Once Sublessee has provided STATE said plans and specifications, STATE shall have a thirty (30) day minimum review period before granting
Sublessee approval or disapproval of the project in writing. Sublessee shall comply with all applicable governmental laws or regulations in the construction of any alterations or improvements to the Subleased Premises. To the extent, if any, that it
is required by the terms of the Master Lease, Sublessee shall be responsible for any required removal of its alterations and improvements and any related restoration of the Subleased Premises.
  

	 	  	 Request for alterations, additions or improvements shall not be unreasonably denied. Sublessee shall, at the time of the
request, specify if it desires to retain ownership and/or possession of the alteration, addition, or improvement.
  
 Notwithstanding the foregoing, without securing the STATE’s prior written consent, Sublessee shall be permitted to hang pictures and shelving and
perform other similar minor decorating activities and to perform non-structural alterations not exceeding an aggregate of $50,000 during any calendar year, provided that Sublessee complies with all pertinent building code, fire, safety and other
such governmental regulations and that Sublessee does not take any action which could interfere with the structural, mechanical, electrical, maintenance, HVAC or plumbing systems of the Building.

		
	 DISPOSITION OF
 IMPROVEMENTS
	  	 24. Upon termination of this Sublease for any cause, Sublessee shall remove any and all equipment of Sublessee, and shall also remove any improvements of
Sublessee for which the STATE provided written notice to Sublessee, concurrently with STATE’s approval of such improvements, stating that removal of such improvements shall be required upon termination of this Sublease, and Sublessee shall
repair the Subleased Premises as may be needed as a result of such removal. However, the STATE may approve, in writing, any deviation from this requirement.

		
	 MUTUAL
 CONSENT
	  	 25. Notwithstanding any provision contained herein to the contrary, this Sublease may be altered, changed, or amended by mutual consent of the parties
hereto in writing.

		
	DEFAULT	  	 26. Sublessee shall pay said rent to the STATE without deduction, default or delay as per Paragraph 4 of said Sublease. In the event of the failure of
Sublessee to do so, or in the event of a breach of any of the other terms, covenants or conditions herein contained on the part of Sublessee to be kept and performed, and if such failure or default continues for a period of thirty (30) days after
receipt of written notice from STATE to Sublessee of such failure or default, this Sublease may be terminated. In the event of termination of this Sublease, it shall be lawful for STATE to reenter into and upon the Subleased Premises and every part
thereof and to remove and store at Sublessee’s expense all property therefrom and to repossess and occupy the Subleased Premises. In the event the STATE terminates this Sublease pursuant to this paragraph, the STATE shall not be required to pay
Sublessee any monetary sum or sums whatsoever, and STATE shall be entitled to recover from Sublessee an amount equal to the value of the monthly rental under this Sublease that was abated pursuant to the terms of Section 5
above.

		
	 FIRE AND
 CASUALTY DAMAGES
	  	 27. STATE will not keep improvements which are constructed or installed by Sublessee under the provisions of this Sublease insured against fire or
casualty, except that this is not intended to change Master Lessor’s obligations under the Master Lease. Sublessee will make no claim of any nature against STATE by reason of any damage to the business or property of Sublessee in the event of
damage or destruction by fire or other cause, arising other than from or out of negligence or willful misconduct of agents or employees of the State of California in the course of their employment.

		
	CANCELLATION	  	 28. Notwithstanding any other provisions contained herein, any breach of the terms or conditions of this Sublease by Sublessee that continues for a
period of thirty (30) days after written notice of such breach is given by the STATE to Sublessee shall be grounds for immediate cancellation of the Sublease and removal of the Sublessee.

		
	NOTICES	  	 29. All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered (including by means of
professional messenger

  

 6 

					
	 	  	service) or sent by overnight courier, or sent by registered or certified mail, postage prepaid, return receipt requested to the addresses set forth below, or sent by electronic
facsimile to the telefacsimile numbers set forth below. All such notices or other communications shall be deemed received upon the earlier of (i) if personally delivered or sent by overnight courier, the date of delivery to the address of the person
to receive such notice, (ii) if mailed as provided above, on the date of receipt or rejection, or (iii) if given by electronic facsimile, when received by the other party if received Monday through Friday between 6:00 a.m. and 5:00 p.m. Pacific
Standard Time. so long as such day is not a state or federal holiday and otherwise on the next day provided that if the next day is Saturday, Sunday, or a state or federal holiday, such notice shall be effective on the following business
day.
			
	 	  	 To the Sublessee:
	  	 
			
	 	  	 New Century Financial Corporation
 18400 Von Karman Avenue, Suite 1000
 Irvine, California 92612
 Attention: Corporate Services
  
 with a copy to:
  
 New Century Financial Corporation
 18400 Von Karman Avenue, Suite 1000
 Irvine, California 92612
 Attention: Legal Department
	  	 
			
	 	  	 To the STATE:
  
 If Using U.S.Postal Service;
  
 Department of General Services
 Real Estate Services Division
 Real Estate Leasing & Management
 707 Third Street, Fifth Floor
 West Sacramento, CA 95605
 Telephone:     (916) 375-4172
 Telefacsimile: (916)
375-4173
  
 and to
  
 Diane Mariana, Chief
 Office of Statewide Facilities Planning and Operations
 Department of Transportation
 700 N. 10th Street, Suite 102D
 Sacramento, CA 95814
 Telephone:     (916) 324-9601
 Telefacsimile: (916)
324-9628
	  	  
  
 If Using Express Mail Service;
  
 Department of General
Services
 Real Estate Services Division
 Real Estate Leasing
& Management
 707 Third Street, Fifth Floor
 West Sacramento,
CA 95605
 Telephone:     (916) 375-4172
 Telefacsimile: (916) 375-4173
  
 and to
  
 Diane Mariana, Chief
 Office of Statewide Facilities Planning and Operations
 Department of Transportation
 700 N. 10th Street, Suite 102D
 Sacramento, CA 95814
 Telephone:     (916) 324-9601
 Telefacsimile: (916)
324-9628

		
	 	  	 Notice of change of address or telefacsimile number shall be given by written notice in the manner described in this section. Sublessee is obligated to
notice all State offices listed above and the failure to provide notice to all State offices will be deemed to constitute a lack of notice.

  

 7 

			
	 	  	 The address to which notices shall be mailed as aforesaid to either party may be changed by written notice given by subject party to the others, as hereinbefore
provided; but nothing herein contained shall preclude the giving of any such notice by personal service.

		
	 STATE’S
 RIGHT
 OF ENTRY
	  	 30. During continuance in force of this Sublease, there shall be and is hereby expressly reserved to STATE and to any of its agencies, contractors,
agents, employees, representatives, or licensees, the right at any and all reasonable times, and any and all places to temporarily enter upon said Subleased Premises for inspection or other lawful STATE purposes, provided Sublessee is given prior
notice of entry and STATE uses its best efforts to avoid any interference with the operation of Sublessee’s business in the Subleased Premises. In the event of an emergency, prior notice is not required.

		
	 NO
 SMOKING
	  	 31. Smoking is not allowed in or upon the Subleased Premises. Sublessee will enforce the smoking prohibition inside the building and within twenty (20)
feet of any entrance regarding Sublessee’s employees and invitees.

		
	 PROPERTY
 INSPECTION
	  	 32. Sublessee has visited and inspected the Subleased Premises and it is agreed that the area described herein is only approximate and the STATE does not
hereby warrant or guarantee the actual area included hereunder.

		
	 BINDING
 CLAUSE
	  	 33. The terms and provisions of this Sublease shall extend to and be binding upon and inure to the benefit of the heirs, executors, administrators,
successors, and assigns of the respective parties hereon.

		
	 SECTION
 HEADINGS
	  	 34. All section headings contained herein are for convenience of reference only, and are not intended to define or limit the scope of any provisions of
this sublease.

		
	RELOCATION	  	 35. In the event STATE terminates this Sublease pursuant to the terms of this Sublease, Sublessee acknowledges and agrees that it has no claim against
STATE for relocation payments, relocation advisory assistance, or costs pursuant to government code sections 7260 et seq. or any regulations implementing or interpreting such sections. Sublessee further agrees that it has no claim in either law or
equity against STATE for damages or other relief should the Sublease be terminated pursuant to the terms of this Sublease, and waives any such claims it may have.

		
	HAZARDOUS SUBSTANCES	  	 36. Sublessee agrees that it will comply with all laws, either federal, state, or local, existing during the term of this sublease pertaining to the use,
storage, transportation, and disposal of any hazardous substance as that term is defined in such applicable law. In the event STATE or any of its affiliates, successors, principals, employees, or agents should incur any liability, cost, or expense,
including attorneys’ fees and costs, as a result of Sublessee’s illegal use, storage, transportation, or disposal of any hazardous substance, including any petroleum derivative, Sublessee shall indemnify, defend, and hold harmless any of
these individuals against such liability. Where Sublessee is found to be in breach of this provision due to the issuance of a government order directing Sublessee to cease and desist any illegal action in connection with a hazardous substance, or to
remediate a contaminated condition caused by Sublessee or any person acting under Sublessee’s direct control and authority, Sublessee shall be responsible for all costs and expenses of complying with such order, including any and all expenses
imposed on or incurred by STATE in connection with or in response to such government order. In the event a government order is issued naming Sublessee or Sublessee incurs any liability, during or after the term of the sublease, in connection with
contamination which pre-existed this Sublease, Sublessee’s obligations and occupancy under this sublease or which were not caused by the Sublessee, STATE shall hold harmless, indemnify, and defend Sublessee in connection therewith and shall be
solely responsible as between Sublessee and STATE for all efforts and expenses therefor.

  

 8 

			
	LIENS	  	 37. Sublessee shall keep the Subleased Premises free from all liens and claims of mechanics, material suppliers, and others from work done and material
furnished at the request of Sublessee. Should any lien or claim of lien be filed or notice be given, Sublessee shall cause the same to be immediately canceled and removed, and if so removed, Sublessee shall not be in default under the terms of this
Sublease.

		
	AUTHORITY	  	 38. Each individual executing this Sublease on behalf of Sublessee represents and warrants that he/she is duly authorized to execute and deliver this
Sublease on behalf of said corporation in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the Bylaws of said corporation, and that this Sublease is binding upon said corporation in
accordance with its terms.

		
	NO ORAL AGREEMENTS	  	 39. It is mutually understood and agreed that no alterations or variations of the terms of this sublease shall be valid unless made in writing and signed by
the parties hereto, and that no oral understanding or agreement not incorporated herein, shall be binding on any of the parties hereto.

		
	 TIME IS OF THE
 ESSENCE
	  	 40. Time is of the essence of each and all of the provisions, covenants and conditions of this agreement.

		
	PROVISIONS REGARDING SUBLEASE	  	 41. The Sublease and all the rights of parties hereunder are subject and subordinate to the Master Lease. Each party
agrees that it will not, by its act or omission to act, cause a default under the Master Lease. In furtherance of the foregoing, the parties hereby confirm and agree, each to the other, that it is not practical in this Sublease to enumerate all of
the rights and obligations of the various parties under the Master Lease and specifically to allocate those rights and obligations in this Sublease, during the Sublease Term. Accordingly, in order to afford to Sublessee the benefits of this Sublease
and of those provisions of the Master Lease which by their nature are intended to benefit the party in possession of the Subleased Premises, and in order to protect STATE against a default by Sublessee which might cause a default or event of default
by STATE under the Master Lease, during the Sublease Term:
  
 A. Provided Sublessee shall timely pay all rent when and as due under this Sublease, STATE shall pay, when and as due, all base rent, additional rent and other charges payable by STATE to Master Lessor under the Master Lease, unless STATE
is prevented from doing so under California law, regulation or binding and mandatory policy. In the event STATE is prevented by California law from paying the rent and other amounts due under the Master Lease, Sublessee shall be entitled to pay the
monthly rent due under this Sublease directly to Master Lessor in full satisfaction of its obligation to pay such amounts hereunder.
  
 B. Except as otherwise expressly provided herein, Sublessee shall perform all affirmative covenants and shall refrain from performing any act which is
prohibited by the negative covenants of the Master Lease, where the obligation to perform or refrain from performing is by its nature imposed upon the party in possession of the Subleased Premises. Notwithstanding the foregoing, Sublessee shall not
be responsible for any affirmative covenants not reasonably anticipated to be performed by Sublessee because they relate to the period prior to the commencement of the Term of this Sublease, nor shall Sublessee be responsible for affirmative
covenants not reasonably anticipated to be performed by Sublessee because they relate to other than the Subleased Premises.

  

 9 

			
	 	  	 C. STATE shall not agree to an amendment to the Master Lease which might have an adverse effect on Sublessee’s occupancy
of the Subleased Premises, increase Sublessee’s costs under the Sublease or have an adverse effect on the use of the Subleased Premises for their intended purpose.
  
 D. STATE hereby grants to Sublessee the right to receive all of the services and benefits with respect to the Subleased
Premises which are to be provided by Master Lessor under the Master Lease. In addition, if STATE is entitled under the Master Lease to a rent abatement as a result of a failure to furnish or delay in furnishing any service or for diminution in the
quality or quantity of any service, then Sublessee shall be entitled to a share of such rental abatement based upon how the portion of the Subleased Premises to which the failure, delay or diminution applies compares with the entire premises leased
by STATE under the Master Lease to which the failure, delay or diminution applies. Notwithstanding the foregoing, in the event of any default or failure of performance by Master Lessor, STATE agrees that it will, upon notice from Sublessee, make
demand upon Master Lessor to perform its obligations under the Master Lease.

		
	ADDITIONAL SERVICES	  	 42. STATE shall cooperate with Sublessee to cause Master Lessor to provide services required by Sublessee in addition to those otherwise required to be
provided by Master Lessor under the Master Lease. Sublessee shall pay Master Lessor’s charge for such services promptly after having been billed therefor by Master Lessor or by STATE. If at any time a charge for such additional services is
attributable to the use of such services both by STATE and by Sublessee, the cost thereof shall be equitably divided between STATE and Sublessee.

		
	ESTOPPEL CERTIFICATE	  	 43. Concurrently with the execution of this Sublease, STATE shall deliver to Sublessee a completed and executed estoppel certificate concerning the
Subleased Premises, in STATE’s standard form.

		
	PARKING	  	 44. STATE acknowledges that availability of parking for the Building is necessary in order for Sublessee to operate its business on the Subleased
Premises. Accordingly, STATE shall make available to Sublessee on a non-exclusive basis with the other tenants of the Building, at a monthly cost equal to the amount being paid by STATE for such spaces pursuant to the terms of the Master Lease, for
the Term of this Sublease and all extensions thereof, up to 155 parking spaces.

		
	CONSENT BY MASTER LESSOR	  	 45. THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT UNLESS CONSENTED TO BY MASTER LESSOR WITHIN THIRTY (30) DAYS AFTER EXECUTION
HEREOF.

		
	PUBLICITY	  	 46. STATE and Sublessee shall use commercially reasonable efforts not to publicize this Sublease or the terms thereof.

  

 10 

			
	BROKERS	  	 47. CB Richard Ellis represents both the STATE and Sublessee in this transaction. The STATE and Sublessee hereby confirm that they were timely advised of
such dual representation, that they consent to same, and that they do not expect said broker to disclose to either of them confidential information of the other party. STATE agrees to pay CB Richard Ellis, Inc. a real estate brokerage commission in
the amount of $249,393.08, which shall be the only commission or fee due CB Richard Ellis in connection with this Sublease. Said commission is to be paid by STATE one-half upon Sublease execution and one-half upon occupancy. Should STATE fail to pay
said commission when due and owing, STATE agrees that Sublessee shall have the right, but not the obligation, to pay said commission and deduct said moneys from any rental sums due STATE.

  
 IN WITNESS
WHEREOF, this Sublease has been executed by the parties hereto as of the date indicated below: 
  

							
	 STATE OF CALIFORNIA
	 	SUBLESSEE:
		
	 APPROVAL RECOMMENDED:
	 	NEW CENTURY FINANCIAL CORPORATION,
	DEPARTMENT OF GENERAL SERVICES	 	a Maryland corporation
	REAL ESTATE SERVICES DIVISION	 	 	 	 
				
	By:	 	 /s/ Danielle Hand

	 	By:	 	 /s/ Rodney Colombi

	 	 	DANIELLE HAND	 	Title:	 	Senior Vice President – Corporate Development
	 	 	Real Estate Officer	 	Date:	 	July 19, 2005
			
	Date: July 19, 2005	 	 	 	 
			
	 APPROVED:
	 	 	 	 
			
	DIRECTOR OF DEPARTMENT OF GENERAL SERVICES	 	 	 	 
				
	By:	 	 /s/ Sheral Gates

	 	 	 	 
	 	 	SHERAL GATES, Assistant Chief	 	 	 	 
			
	Executed Date: July 19, 2005	 	 	 	 

  

 11

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