Document:

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                                                                   EXHIBIT 10.11

                            DISTRIBUTION AGREEMENT

                            SONIC INNOVATIONS, INC.

                                      and

                          HOYA HEALTHCARE CORPORATION

                    ________________________________________

                             DISTRIBUTION AGREEMENT

                    ________________________________________

[ * ]= CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

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                             DISTRIBUTION AGREEMENT

          This Distribution Agreement is made and entered into as of December
30, 1999, by and between Sonic Innovations, Inc. ("SUPPLIER"), a Delaware
corporation with offices located at 2795 East Cottonwood Parkway, Salt Lake
City, Utah 84121, U.S.A. and Hoya Healthcare Corporation ("DISTRIBUTOR"), a
Japanese Corporation, with offices located at Shinjuku i - Land Tower, 8F. 5-1,
Nishi-Shinjuku 6-chome, Shinjuku-ku, Toyko 163-1308, Japan.

          SUPPLIER and DISTRIBUTOR are hereinafter referred to collectively as
the "Parties" and individually as a "Party".

          In consideration of the mutual promises herein contained, SUPPLIER and
DISTRIBUTOR agree as follow:

          1.    Certain Definitions

                1.1    In this Agreement, the following terms shall have the
following meanings:

                       (a) "Products" shall mean any and all Supplier products
specified in Exhibit 1 attached hereto, and all other products which Supplier
may offer for sale to third parties at any time in the future during the term of
this Agreement, including any renewals, including all spare parts for such
Products. Supplier represents and warrants that all Products listed presently on
Exhibit 1 represent all the products presently offered by it for sale to third
parties. Any Product listed in Exhibit 1 may be deleted from the list by
Supplier by giving Distributor one (1) month prior written notice, provided and
on the condition that Supplier withdraws such Product from sale to all other
third parties at the same time.

                       (b) "Territory" shall mean the geographic territory
described in Exhibit 1.

                       (c) "Effective Date" shall mean the later of January 1,
2000 or the date on which this Agreement and the Quality Management Agreement
attached hereto as Exhibit 2 have both been signed by the Parties.

                       (d) "Termination Date" shall mean the date on which this
Agreement is cancelled or terminated, as provided in Section 14 below.

                       (e) "Distributor's Affiliates" shall mean a company
directly or indirectly controlled by Distributor.

          2.    Appointment as Distributor; Exclusivity

                2.1    Supplier hereby appoints Distributor and Distributor
hereby agrees to act as the exclusive distributor of the Products in the
Territory. subject to the terms and conditions of this Agreement.

                2.2    Supplier will refer all orders and inquiries concerning
the Products from customers situated within the Territory to Distributor.

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                2.3    Supplier expects to have two lines of Products, one which
shall consist of complete hearing aid instruments except for the molded
earpiece, which shall be sold as Supplier's branded Products ("Branded
Products"), and one which shall consist of electronic components for earpieces
but which are sold without the microphone, receiver, fitting software,
connecting cables and mountings, on an OEM basis, to manufacturers which intend
to incorporate them in their own branded hearing aid instruments ("Electronic
Components"). Supplier agrees (i) All new generation Electronic Components which
it offers to sell as such will not contain all the features which are included
in Branded Products, and will be inferior to the Branded Products in terms of
overall functionality, (ii) Supplier will not knowingly offer, license or sell
any Branded Products to any third parties other than Distributor for resale in
the Territory; and (iii) Supplier will not sell new generation Electronic
Components to customers that sell in the Territory until six months after such
new generation Electronic Components are first made available to Distributor.

                2.4    Distributor shall not sell Products outside the Territory
without prior written consent from the Supplier.

                2.5    The relationship of Supplier and Distributor established
by this Agreement is that of independent contractors, and nothing contained in
this Agreement shall be construed to (i) give either Party the power to direct
and control the day-to-day activities of the other, (ii) constitute the Parties
as partners, joint ventures, co-owners or otherwise as participants in a joint
or common undertaking, or (iii) allow Distributor to create or assume any
obligation on behalf of Supplier for any purpose whatsoever. All obligations
including financial obligations associated with Distributor's business are the
sole responsibility of Distributor. All sales and other agreements between
Distributor and its customers are Distributor's exclusive responsibility and
shall have no effect on Supplier's obligations under this Agreement.

          3.    Prices

                3.1    The current prices at which Supplier shall sell the
Products to Distributor are set forth in Exhibit 1. Supplier represents and
warrants to Distributor that (i) the current prices are no higher than the
prices at which the same Products are sold by Supplier to any other third party;
and (ii) at all times during the term of this Agreement, Supplier's prices to
Distributor for each of the Products shall be at least as favorable as the price
at which Supplier then sells such Product to any third party operating in
commercial circumstances which are comparable to those in which Distributor
operates (which would not be the case, by way of example, in countries such as
Brazil, where more aggressive pricing is critical to market acceptance). All
prices shall be in US dollars and call for payment F.O.B. Supplier's U.S.
domestic facilities.

                3.2    Supplier reserves the right at its sole discretion to
change prices for the Products upon its giving reasonable prior notice to
Distributor, which notice in any event will not be less than thirty (30) days
nor more frequently than once each six (6) months.

                3.3    Any changes in prices shall not affect orders placed by
Distributor and accepted by Supplier prior to Distributor's receipt of
Supplier's notice of changes in prices.

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                3.4    Distributor's selling prices shall be set by Distributor
in its sole discretion. Distributor agrees to provide Supplier with information
concerning its selling prices.

          4.    Payment Terms

                4.1    All payments shall be made in US dollars within forty-
five (45) days after invoice date. Supplier shall date its invoices no earlier
than the actual date of shipment. Payments not made when due shall be subject to
an interest charge of one and a half percent (1 1/2 %) per month on the overdue
amount.

          5.    Risk and Title

                5.1    All Products delivered pursuant to the terms of this
Agreement shall be suitably packed for air freight shipment in Supplier's
standard shipping cartons, marked for shipment to Distributor's address set
forth above, and delivered to Distributor or its carrier agent F.O.B. Supplier's
domestic facility, at which time title to such Products and risk of loss shall
pass to Distributor. Unless otherwise instructed in writing by Distributor,
Supplier shall select the carrier. All freight, insurance, and other shipping
expenses, as well as any special packing expense, shall be paid by Distributor.
Distributor shall also bear all applicable taxes, duties, and similar charges
that may be assessed against the Products.

          6.    Minimum Purchase Quantities; Sales Promotion

                6.1    For each calendar year during the initial eight years of
this Agreement, Distributor expects to (but shall not be contractually bound to)
purchase at least the number of Products as set forth in Exhibit 1. For this
purpose, a "purchase" shall mean a committed purchase order is placed with
Supplier during the calendar year, with no requested delay in shipment. If
Distributor does not fulfill this minimum purchase obligation, Supplier shall be
entitled to immediately terminate this Agreement.

                6.2    Distributor shall use its best efforts to develop
increasing customer demand for the Products. Distributor shall maintain adequate
working capital, sufficient stock of Products, facilities and personnel to
accomplish this purpose.

                6.3    Distributor shall obtain all necessary import licenses
and permits, pay any import duties applicable to the Products and comply with
all obligations imposed in connection with import, shell making, assembly and
sale of the Products in the Territory by any governmental authority. Distributor
understands that Supplier is subject to regulation by agencies of the U.S.
government, including the U.S. Department of Commerce, which prohibit export or
diversion of certain technical products to certain countries. Distributor
warrants that it will comply in all respects with the export and re-export
restrictions set forth in the export license for Products shipped to
Distributor.

                6.4    Distributor shall not make any false or misleading
representations to customers or others regarding Supplier or the Products.
Distributor shall not make any representations, warranties or guarantees with
respect to the specifications, features or capabilities of the Products that are
not consistent with Supplier's documentation accompanying

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the Products or Supplier's literature describing the Products, including the
limited warranty and disclaimers.

                6.5    Distributor shall at its own expense (a) place the
Products in Distributor's catalogues as soon as possible and feature the
Products in any applicable trade show that it attends; (b) contact existing and
potential customers within the Territory on a regular basis, consistent with
good business practice; (c) assist Supplier in assessing customer requirements
for the Products, including quality, design, functional capability and other
features; and (d) submit market research information, as reasonably requested by
Supplier, regarding competition and changes in the market within the Territory.

                6.6    Supplier shall, at its expense, provide Distributor with
reasonable quantities of all sales literature, brochures and other publications
relating to the Products or any of them, which documents Supplier generally
makes available to its dealers and distributors.  All such documentation shall
be in the English language.

                6.7    The Products will be offered for sale and are sold by
Supplier subject in every case to the condition that such sale does not convey
any license, expressly or by implication, to manufacture, duplicate or otherwise
copy or reproduce any of the Products. Distributor shall take appropriate steps
with its customers, as Supplier may request, to inform them of and assure
compliance with this condition.

          7.    Noncompetition

                7.1    During the term of this Agreement, Distributor and
Distributor's Affiliates shall not manufacture, sell, distribute or promote in
the Territory instruments, goods or products which compete directly or
indirectly with the Products without prior written consent from Supplier.

                7.2    As of the Effective Date, Supplier consents to
Distributor's manufacture, sale, distribution and promotion of those products
listed in Exhibit 1 to this Agreement.

          8.    Ordering Procedure; Obligation to Supply

                8.1    Distributor's purchase orders for Products shall specify
(a) quantities of Products ordered; (b) preferred delivery date for Products
ordered; (c) delivery address for Products ordered; and (d) other information as
agreed upon from time to time between the Parties.

                8.2    Supplier shall accept all conforming purchase orders,
unless it is unable to ship to any dealers or distributors, or OEM customers,
the Products ordered by Distributor.

                8.3    Supplier shall ship the ordered Products to the address
specified in the purchase order within the delivery date specified in the
purchase order.  Unless otherwise agreed, or unless Supplier is unable to ship
within such timeframe due to the unavailability of outsourced components or
supplies, Supplier shall always be allowed a delivery time of not less than
eight (8) nor more than twelve (12) weeks from the date of the purchase order.

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                8.4    Supplier shall confirm each purchase order within one (1)
week of receipt of the order. No purchase order shall be binding upon Supplier
until accepted by Supplier in writing, and Supplier shall have no liability to
Distributor with respect to purchase orders that are not accepted in conformance
with the terms of this Agreement.

                8.5    Distributor's purchase orders submitted to Supplier from
time to time with respect to Products to be purchased hereunder shall be
governed by the terms of this Agreement, and nothing contained in any purchase
order shall in any way modify the terms of this Agreement.

          9.    Trademarks; Trade Names; Trade Secrets

                9.1    Distributor agrees that Supplier owns all rights, title
and interest in the Products and in all of Supplier's patents, trademarks, trade
names, inventions, copyrights, know-how and trade secrets relating to the
design, manufacture, operation or service of the Products. The use by
Distributor of any of these rights is authorized only for the purposes herein
set forth, and upon termination of this Agreement such authorization shall
immediately cease.

                9.2    The Products shall be manufactured by Supplier and
Supplier's subcontractors under Supplier's trademarks, trade names and/or
symbols ("Supplier's Trademarks").

                9.3    Distributor may utilize, in the promotion, marketing and
sale by it of the Products, its own trademarks, trade names and symbols, but
shall not alter or remove any of Supplier's Trademarks applied to the Products.

                9.4    Distributor shall neither register, nor have registered,
any of Supplier's Trademarks, or any trade names or symbols identical or similar
to Supplier's Trademarks.

                9.5    Distributor shall not, even after the expiration of this
Agreement, use or communicate to third parties any know-how or trade secrets
related to the Products or Supplier.

          10.   Warranty

                10.1   Supplier warrants that to the best of Supplier's
knowledge the Products do not violate any third party intellectual property
rights.

                10.2   Supplier warrants that the Products are in conformity
with Supplier's published specifications and free of defects in workmanship and
materials for a period of ninety (90) days from Distributor's ACTS test, not to
exceed 180 days from date of invoice (the "Warranty Period").

                10.3   Distributor shall promptly notify Supplier of any Product
defects. If Distributor fails to notify Supplier of such defects within thirty
(30) days of inspection, the Products shall be deemed acceptable, except for
defects that are not reasonably discoverable on inspection. Supplier shall be
entitled at its discretion to refuse to accept any warranty claims relating to
Product defects which should have been reasonably discoverable on inspection.

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                10.4   Supplier agrees that if any of the Products sold to
Distributor are defective in workmanship or materials, and such defect (save
where it is reasonably discoverable on inspection in which case the time limit
in Section 10.3. shall apply) is reported to Supplier within the Warranty
Period, the Supplier shall, at its discretion, either repair or replace such
defective Products, in either case at its expense, including the costs of
shipment to and from Supplier.

          11.   Liability

                11.1   Supplier's liability arising out of this Agreement shall
be limited to the amount paid by Distributor for the Products. In no event shall
Supplier be liable for costs of procurement of substitute goods. In no event
shall either Party be liable to the other Party or any other entity for damage
to property, loss of production or any special, consequential, incidental, or
indirect damages, however caused or under any theory of liability.

                11.2   Except for any strict liability imposed by law upon the
manufacturer, Supplier shall only be liable for personal injury caused by the
Products if such injury results from the gross negligence on the part of
Supplier.

                11.3   Distributor shall use limiting liability clauses
corresponding to Section 11.1 and Section 11.2 above with its customers, and
agrees to indemnify Supplier against any liability if such limiting liability
clauses are not used with its customers.

                11.4   Supplier shall use its best effort to supply Products. In
no event shall Supplier be liable for delay or nonperformance of its obligations
under the Agreement due to shortage or unavailability of Products caused other
than by its own negligence or breach.

                11.5   If a third party makes a Product related claim against
one of the Parties, the affected Party shall immediately inform the other Party.

                11.6   Each Party shall defend, indemnify, and hold the other
Party or others for whom the other Party is responsible harmless from any and
all claims, damages or lawsuits (including the other Party's attorneys' fees)
arising out of any acts of the indemnifying Party, its employees or its agents.

          12.   Patent; Copyright; and Trademark Indemnity

                12.1   Distributor agrees that Supplier has at its sole
discretion the right to defend, or at its option to settle, any claim, suit or
proceeding brought against Distributor or its customer regarding infringement of
any patent, copyright or Supplier's Trademarks related to the Products. Supplier
shall have sole control over any defense or settlement activities, and Supplier
agrees to pay any final judgement entered against Distributor or its customer
regarding such infringement issues. Distributor shall cooperate fully with
Supplier regarding such infringement issues.

          13.   Assignment

                13.1   This Agreement and all rights and obligations hereunder
shall not be assigned without the prior written consent of the other Party.

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                13.2   The sale or other transfer of stock constituting a
majority of the issued and outstanding capital stock of Distributor, or the sale
or transfer of voting control over such stock, by the shareholders of
Distributor to any unrelated third party which is itself a manufacturer or
distributor of hearing aid devices shall be deemed, for the purposes of this
Agreement, to constitute an assignment of this Agreement, and shall only be
permissible with the prior written consent of Supplier, which it shall not
unreasonably delay or refuse.

          14.   Term and Termination

                14.1   The initial term of this Agreement shall be for the
period from the Effective Date through December 31, 2007. Automatic renewal of
the Agreement for additional two (2) year terms will occur unless notice is
given by either Party at least one hundred eighty (180) days prior to the next
renewal date. This Agreement may be terminated earlier under the circumstances
set out in Section 6.1, Section 14.2 or Section 14.3.

                14.2   Supplier may in its sole discretion terminate this
Agreement by notice in writing to Distributor if there is any material breach of
Distributor's obligations as set forth in the Quality Management Agreement.

                14.3   Either Party may terminate this Agreement by notice in
writing to the other Party if any of the following events occur: (i) if a Party
fails to make any payments due under this Agreement or breaches its obligations
under this Agreement and does not remedy the same within thirty (30) days of
written notice of such failure or breach; or (ii) if a Party goes bankrupt or
enters into receivership.

                14.4   The termination of this Agreement for any reason shall be
without prejudice to the rights and obligations of the Parties up to and
including the date of such termination.

                14.5   Neither Party shall make claims for any compensation
whatsoever as a result of termination of this Agreement in accordance with its
terms.

                14.6   All trademarks, trade names, patents, copyrights,
designs, drawings, formulas or other data, photographs, samples, literature, and
sales aids of every kind shall remain the property of Supplier. Within thirty
(30) days after the termination of this Agreement, Distributor shall prepare all
such items in its possession for return to Supplier, as Supplier may direct, at
Supplier's expense.

                14.7   The provisions of the following sections shall survive
the termination of this Agreement for any reason: 2.5, 4, 6.4, 9.1, 9.3, 9.4,
9.5, 10, 11, 12, 18 and 19. All other rights and obligations of the parties
shall cease upon termination of this Agreement.

          15.   Entire Agreement

                15.1   This Agreement constitutes the entire Agreement between
the Parties and supersedes any prior agreement between the Parties. No party has
relied upon any representation save for any representation expressly set out in
this Agreement. To the extent the content of this

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Agreement is in contradiction with any document to which it refers, the language
of this Agreement shall prevail.

          16.   Waiver; Amendment

                16.1   No term, provision or condition of this Agreement shall
be waived unless such waiver is evidenced in writing and signed by the waiving
Party.

                16.2   An omission or delay by any Party to the Agreement in
exercising any right, power or privilege shall not operate as a waiver of this
right, power or privilege.  Any single or partial exercise of any such right,
power or privilege shall not preclude any other or further exercise thereof or
of any other right, power or privilege.  The rights and remedies provided in the
Agreement are cumulative with and not exclusive of any rights or remedies
provided by law.

                16.3   No variation to this Agreement shall be effective unless
made in writing and signed by both Parties.

          17.   Notices

                17.1   Notices, etc. Any notice, demand, offer, request or other
communication required or permitted to be given by either Supplier or
Distributor pursuant to the terms of this Agreement shall be in writing and
shall be deemed effectively given the earlier of (i) when delivered personally,
(ii) one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iii) one (1) business day after being deposited with
an overnight courier service or (iv) four (4) days after being deposited in the
mail, First Class with postage prepaid, and addressed to the other party at the
address provided to the Company or such other address as a party may request by
notifying the other in writing.

          Supplier's Fax. No.:    001-801-365-3002

          Distributor's Fax. No.:  011-81-3-3345-6472

          18.   Governing Law

                18.1   This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Utah,
U.S.A. without reference to rules or choice of laws.

          19.   Arbitration

                19.1   If a dispute arises between the parties relating to the
interpretation or performances of this Agreement or the grounds for the
termination thereof, representatives of the Parties with decision-making
authority shall meet to attempt in good faith to negotiate a resolution of the
dispute prior to pursuing other available remedies.  If within thirty (30) days
after such meeting the parties have not succeeded in negotiating a resolution of
the dispute, such dispute shall be submitted to final and binding arbitration
under the then current Commercial

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Arbitration Rules of the American Arbitration Association ("AAA") by one (1)
arbitrator in Seattle, Washington, USA. Such arbitrator shall be selected by the
mutual agreement of the Parties or, failing such agreement, shall be selected
according to the aforesaid AAA rules. The arbitrator will be instructed to
prepare and deliver a written, reasoned opinion stating his decision within
thirty (30) days of the completion of the arbitration. Such arbitration shall be
concluded within six (6) months following the filing of the initial request for
arbitration. The Parties shall bear the costs of arbitration equally and shall
bear their own expenses, including professional fees. The decision of the
arbitrator shall be final and nonappealable and may be enforced in any court of
competent jurisdiction.

          IN WITNESS whereof this Agreement has been duly executed on behalf of
the Parties hereto as of December 30, 1999, to be effective as of the Effective
Date:

SONIC INNOVATIONS, INC.                         HOYA HEALTHCARE CORPORATION

/s/ Jorgen Heide                                /s/ Matsuo Horie
--------------------------------------          --------------------------------
(Signature)                                     (Signature)
Name:                                           Name Matsuo Horie
Jorgen Heide                                        ----------------------------
Vice President,                                 Title Director and Sales
International and Licensing Division                  Division Director
                                                     ---------------------------

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                                   Exhibit 1

     To Distribution Agreement between Sonic Innovations, Inc. and Hoya
Healthcare Corporation, dated December 30, 1999.

            Present Products (including spare parts and components)
     and Prices

     Natura ITE Faceplate Kit                              [ * ]
     Natura ITC Faceplate Kit                              [ * ]
     Natura CIC Faceplate Kit                              [ * ]
     Natura Express                                        [ * ]
     Natura BTE                                            [ * ]
     Conforma                                              [ * ]
     ExpressFit Folio (Palm Pilot)                         [ * ]
     ExpressFit for NOAH                                   [ * ]

            Territory
     Japan

            Minimum Purchase Requirements by Calendar Year

            Year 2000       [ * ]       Complete hearing aids or faceplate kits
            Year 2001       [ * ]       Complete hearing aids or faceplate kits
            Year 2002       [ * ]       Complete hearing aids or faceplate kits
            Year 2003       [ * ]       Complete hearing aids or faceplate kits
            Year 2004       [ * ]       Complete hearing aids or faceplate kits
            Year 2005       [ * ]       Complete hearing aids or faceplate kits
            Year 2006       [ * ]       Complete hearing aids or faceplate kits
            Year 2007       [ * ]       Complete hearing aids or faceplate kits

            Other Products Distributed by Distributor

     Distributor distributes the following hearing instruments and/or hearing
     instrument like products to which Supplier consents:

     Hearing aid products manufactured by GN Resound.

     Hearing aid products manufactured by Miracle Ear (Dahlberg), not to exceed
     the sale of up to 150 units during the year 2000, and post sales service
     and repair thereafter.

[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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Exhibit 2 to the Distribution Agreement dated December 30, 1999 between Sonic
Innovations, Inc. ("Supplier") and Hoya Healthcare Corporation ("Distributor").

                          QUALITY MANAGEMENT AGREEMENT
                          ----------------------------

Supplier and Distributor agree as follows:
1.   QUALITY SYSTEM; AUDIT

1.1  Distributor has a quality system which Supplier has reviewed Distributor
     shall maintain such quality system to the satisfaction of Supplier
     throughout the term of this Agreement. Supplier shall be entitled to
     conduct audits of Distributor's quality system at its cost at appropriate
     intervals as determined by Supplier.

2.   MANUFACTURING MANUAL; FINAL TEST

2.1  Supplier shall provide Distributor a manufacturing manual (the "Manual"),
     which Supplier shall maintain and update. The Manual shall provide
     procedures for the manufacture of custom hearing devices and will also
     provide details of the type of materials to be used in the manufacture of
     the shell of custom hearing devices.

2.2  Distributor agrees at all times to manufacture custom hearing devices in
     accordance with the procedures and standards set out in the Manual.
     Specifically, the shell shall be manufactured in accordance with the
     procedures and standards set out in Manual, or according to other generally
     accepted industry standards. Distributor shall have access to Supplier's
     essential requirements, risk analysis and technical file for custom hearing
     devices as defined in the Manual if such is required by a competent
     authority.

2.3  Distributor shall perform a final test of all custom hearing devices prior
     to their being released for sale. Such final test shall be carried out in
     accordance with the procedures and standards set out in the Manual and in
     conjunction with the latest revision of final test software that shall be
     furnished to Distributor by Supplier. Supplier shall be responsible for
     maintaining and updating final test software.

3.   COMPLAINT HANDLING

3.1  Distributor shall have a process for maintaining effective post-marketing
     surveillance of Products and agrees to maintain and update such process to
     handle complaints and to take such corrective or preventative actions as
     may be necessary to the satisfaction of Supplier. Distributor agrees to
     establish a system for recording product or service complaints as a basis
     for analysis, response and corrective action. Complaints shall be recorded,
     reviewed, evaluated, investigated, responded to and resolved by
     Distributor.

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3.2  A "complaint" is any written, electronic or oral communication that alleges
     deficiencies related to the identity, quality, durability, reliability,
     safety, effectiveness or performance of a sold Product. Any complaints
     involving the possible failure of a Product, including device defects,
     improper labeling or packaging, failure to meet specifications or any
     failure of a Product to meet customer or user expectations for quality, or
     a Product related injury are subject to U.S. Food and Drug Administration
     ("FDA") Regulations. Sources of complaints may include telephone calls,
     facsimile transmissions, written correspondence, credit memos, returned
     goods forms, service or repair requests, internal analyses or industry
     journal articles. Complaints may be submitted by health care professionals,
     audiologists, consumers, hearing aid facilities, distributors, sales
     representatives or service personnel.

3.3  A Product defect which is expected to occur with a given degree of
     frequency because of the nature of the Product may not be considered a
     complaint. However, even these types of complaints may be reportable if
     they meet the FDA's Medical Device Report (MDR) reporting criteria. The
     same would be true of complaints resulting from user error if the event
     which led to the complaint meets the MDR reporting criteria. Service and
     repair requests resulting from misapplication, normal wear or handling
     damage generally are not considered as complaints, although instances of
     misapplication may indicate the need for additional instructions for use.
     Furthermore, when requests for maintenance, adjustment, or repair reflect a
     trend, or when a request involves Product failure from an "unanticipated"
     cause, such requests must be evaluated to determine if they are complaints
     under the MDR reporting criteria.

3.4  Complaint records shall include the following: sequential number of the
     complaint; date complaint was received; origin of the complaint (name,
     address, phone number of the complaintant) end-user information; product
     information/device identification; nature and details of the complain;
     assignment of responsibility for resolution of the complaint; dates and
     results of any investigation; resolution of the complaint; any
     corrective/preventive action(s) or other action(s) taken; any reply to the
     complainant or others and indication that complaint is closed.

Complaints and records of investigation shall be maintained in a complaint file
and retained by Distributor for no less than five (5) years. Records shall be
accessible for audits by Supplier and duly authorized agents of the FDA and any
competent authority.

4.   POST-MARKETING SURVEILLANCE; MEDICAL DEVICE REPORT; RECALL

4.1  It is the responsibility of Distributor to (i) maintain a program for
     marketing surveillance of the Products in the field; (ii) evaluate reports
     of device failure or malfunction that have caused or may cause patient
     injury; (iii) forward complaint reports to Supplier; (iv) trace defective
     or potentially defective Products to the end user; (v) maintain a process
     for issuing advisory notice; and (vi) implement effective corrective and
     prevention action(s) or recall of Product, if necessary.

4.2  Definitions of terms used above are as follows:

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     .  "Malfunction" means the failure of a device to meet any of its
        performance specifications or otherwise to perform as intended.

     .  "Patient injury" mains a condition necessitating medical or surgical
        intervention to prevent permanent impairment of a body function or
        permanent damage to a body structure.

     .  "Corrective action" includes, but may not be confined to, device recall,
        issue of advisory notice, additional surveillance, modification of
        devices in use, repair or adjustment of devices in use, inspection of
        devices, modification to future device design, components or
        manufacturing process and modification to labeling or instructions for
        use. Corrective action is any action other than routine maintenance or
        servicing of a device where such action is necessary to prevent
        recurrence of a reportable event (complaint).

     .  "Recall" includes the return of a medical device to the Supplier, its
        modification by the supplier at the site of installation or its exchange
        or destruction in instances where there is risk of serious patient
        injury. A recall may be undertaken voluntarily or at the request of the
        FDA or competent authority.

4.3  If any Product is believed to have caused or contributed to a death,
     serious injury or any other potential adverse event resulting in a
     condition necessitating medical or surgical intervention to prevent
     permanent impairment of a body function or permanent damage to a body
     structure, Distributor shall immediately report the information to
     Supplier's regulatory department.

4.4  Supplier shall file all reports of adverse events with the relevant
     governmental agencies. Distributor will provide access by Supplier to all
     relevant records and information relating to adverse events. Supplier shall
     make all decisions relating to any recall, field correction or purchaser
     notification, after discussion with Distributor and evaluation of all
     relevant information.

                                      -4-
<PAGE>

Identification of incidents to be reported by Distributor and Supplier under the
MDR system can be made as follows:

                             [GRAPH APPEARS HERE]

                                      -5-
<PAGE>

5.    SONIC INNOVATIONS COMPANY NAME AND BRANDING

5.1   Distributor may, provided that it complies in all respects with the terms
      of this Agreement, place on the Products the Sonic Innovations company
      name and appropriate trade name (e.g. NATURA, EXPRESS FIT, etc.).

6.    LIABILITY

6.1   Supplier shall not under any circumstances be liable for Products which do
      not carry the Sonic Innovations company name and trade name, or for
      Products that do not fully comply with Supplier's Manual, particularly
      regarding shell manufacturing. Distributor shall indemnify and hold
      Supplier harmless from and against any loss, damage or expense resulting
      under this Section 6.1

7.    SERIALIZATION

7.1   Distributor shall comply with Supplier's serial number format, unless
      there is written agreement between Supplier and Distributor that supports
      another format. Distributor shall forward to Supplier for review and
      acceptance a sample of its serial number format.

8.    TRACEABILITY

8.1   Distributor shall maintain Product records of traceability from faceplate
      to finished product to end-user. Traceability records shall be maintained
      for a period of not less than five years and Supplier shall have access to
      these records.

9.    LABELING; MANUALS

9.1   Distributor shall comply with all governmental and Supplier labeling
      requirement, including these included in the Manual.

10.   PRODUCTION RECORDS

10.1  All records pertaining to the production of Products shall be retained by
      Distributor for a period of no less than five years from the date of sale
      of the Products. These records shall include test results, statement of
      conformity, rework, production data and any other information required to
      insure traceability.

11.   TERMINATION

11.1  Upon termination of the Agreement for any reason whatsoever, Distributor
      shall (i) continue to retain all records for at least 5 years from the
      date of manufacture or sale of the Products and provide. Supplier with
      copies of records upon Supplier's reasonable request, and (ii) continue to
      maintain its post-marketing surveillance program referenced in Section 4.1
      for a period of at least 5 years.

                                      -6-
<PAGE>

11.2  Supplier shall not be liable in any way for any Product sold by the
      Distributor following the termination of the Agreement

12.   ARBITRATION

12.1  If a dispute arises between the parties relating to the interpretation or
      performances of this Agreement or the grounds for the termination thereof,
      representatives of the parties with decision-making authority shall meet
      to attempt in good faith to negotiate a resolution of the dispute prior to
      pursuing other available remedies. IF within thirty (30) days after such
      meeting the parties have not succeeded in negotiating a resolution of the
      dispute, such dispute shall be submitted to final and binding arbitration
      under the then current Commercial Arbitration Rules of the American
      Arbitration Association ("AAA") by one (1) arbitrator in Seattle,
      Washington. Such arbitrator shall be selected by the mutual agreement of
      the parties or, failing such agreement, shall be selected according to the
      aforesaid AAA rules. The arbitrator will be instructed to prepare and
      deliver a written, reasoned opinion stating his decision within thirty
      (30) days of the completion of the arbitration. Such arbitration shall be
      concluded within nine (9) months following the filing of the initial
      request for arbitration. The parties hall bear the costs of arbitration
      equally and shall bear their own expenses, including professional fees.
      The decision of the arbitrator shall be final and non-appealable and may
      be enforced in any court of competent jurisdiction.

SIGNED FOR AND ON BEHALF OF                 SIGNED FOR AND ON BEHALF OF
Sonic Innovations, Inc.                     Hoya Healthcare Corporation
(SUPPLIER)                                  (DISTRIBUTOR)

By: /s/ Jorgen Heide                        By: /s/ Matsuo Horie
    ------------------------                    ----------------------------
Jorgen Heide, Vice President                Matsuo Horie
International and Licensing Division        Director and Sales Division Director

                                      -7-<PAGE>

                                                                   EXHIBIT 10.12

                                                              April 28, 1999

                            LEASE AGREEMENT BETWEEN

                     2795 E. COTTONWOOD PARKWAY, L.C., as

                                   Landlord

                                      and

                           SONIC INNOVATIONS, INC.,
                          a Delaware corporation, as

                                    Tenant

                             DATED April 28, 1999

<PAGE>

                               TABLE OF CONTENTS
                               -----------------
<TABLE>
<CAPTION>                                                                                                       Page
                                                                                                                ----
<S>                                                                                                             <C>
PART I
      SUMMARY OF BASIC LEASE INFORMATION.....................................................................    1
                  A.       PREMISES (Lease Provisions, Paragraph 2)...........................................   1
                  B.       LEASE TERM (Lease Provisions, Paragraph 3).........................................   1
                  C.       BASE RENT (Lease Provisions, Paragraph 5) .........................................   1
                  D.       ADDITIONAL RENT (Lease Provisions, Paragraph 5.3)..................................   2
                  E.       LETTER OF CREDIT / SECURITY DEPOSIT (Lease Provisions, Paragraph 5.8)..............   2
                  F.       PARKING CHARGE (Lease Provisions, Paragraph 5.5)...................................   2
                  G.       ADDRESSES FOR NOTICES (Lease Provisions, Paragraph 27.7)...........................   2
                  H.       TENANT IMPROVEMENT ALLOWANCE AND SPACE PLAN (Work Letter Agreement)................   2
PART II
      LEASE PROVISIONS........................................................................................   3
                  1.       DEFINITIONS........................................................................   3
                  2.       PREMISES...........................................................................   3
                  3.       TERM...............................................................................   3
                           3.1      Tenant's Right to Terminate Lease.........................................   3
                  4.       USE................................................................................   3
                  5.       RENT...............................................................................   4
                           5.1      Base Rent.................................................................   4
                           5.2      No Other Adjustment of Base Rent..........................................   4
                           5.3      Additional Rent...........................................................   4
                           5.4      Operating Expenses........................................................   5
                           5.5      Parking Charge............................................................   8
                           5.6      Payment of Rent...........................................................   9
                           5.7      Delinquent Payments and Handling Charge...................................   9
                           5.8      Letter of Credit / Security Deposit.......................................   9
                           5.9      Holding Over..............................................................  11
                  6.       CONSTRUCTION OF IMPROVEMENTS.......................................................  11
                           6.1      General...................................................................  11
                           6.2      Access by Tenant Prior to Commencement of Term............................  11
                           6.3      Commencement Date; Adjustments to Commencement Date.......................  11
                           6.4      Removal of Certain Tenant Improvements and Restoration of the Premises
                  to Its Original Condition...................................................................  12
                  7.       SERVICES TO BE FURNISHED BY LANDLORD...............................................  12
                           7.1      General...................................................................  12
                           7.2      Keys and/or Access Cards..................................................  13
                           7.3      Tenant Identity, Signs and Other Matters..................................  13
                           7.4      Charges...................................................................  14
                           7.5      Operating Hours...........................................................  14
                  8.       REPAIR AND MAINTENANCE.............................................................  14
                           8.1      By Landlord...............................................................  14
                           8.2      By Tenant.................................................................  14
                  9.       TAXES ON TENANT'S PROPERTY.........................................................  15
                  10.      TRANSFER BY TENANT.................................................................  15
                           10.1     General...................................................................  15
                           10.2     Conditions................................................................  15
                           10.3     Liens.....................................................................  16
                           10.4     Assignments in Bankruptcy.................................................  16
                  11.      ALTERATIONS........................................................................  16
                  12.      PROHIBITED USES....................................................................  17
                           12.1     General...................................................................  17
                           12.2     Hazardous Materials.......................................................  17
                           12.3     Overstandard Tenant Use...................................................  18
                  13.      ACCESS BY LANDLORD.................................................................  18
                  14.      CONDEMNATION.......................................................................  18
                  15.      CASUALTY...........................................................................  19
                           15.1     General...................................................................  19
                           15.2     Intentionally Left Blank..................................................  19
</TABLE>

                                       i
<PAGE>

<TABLE>
                  <S>                                                                                           <C>
                  16.      SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT......................................  19
                           16.1     General...................................................................  19
                           16.2     Attornment................................................................  20
                  17.      INSURANCE..........................................................................  20
                           17.1     General...................................................................  20
                           17.2     Waiver of Subrogation.....................................................  21
                           17.3     Landlord's Insurance......................................................  21
                  18.      INDEMNITY..........................................................................  21
                  19.      THIRD PARTIES; ACTS OF FORCE MAJEURE; EXCULPATION..................................  21
                  20.      INTENTIONALLY LEFT BLANK...........................................................  22
                  21.      CONTROL OF COMMON AREAS............................................................  22
                  22.      INTENTIONALLY LEFT BLANK...........................................................  22
                  23.      QUIET ENJOYMENT....................................................................  22
                  24.      DEFAULT BY TENANT..................................................................  22
                           24.1     Events of Default.........................................................  22
                           24.2     Remedies of Landlord......................................................  23
                           24.3     Payment by Tenant.........................................................  23
                           24.4     Reletting.................................................................  24
                           24.5     Landlord's Right to Pay or Perform........................................  24
                           24.6     No Waiver; No Implied Surrender...........................................  24
                  25.      DEFAULTS BY LANDLORD...............................................................  24
                  26.      RIGHT OF REENTRY...................................................................  24
                  27.      MISCELLANEOUS......................................................................  25
                           27.1     Independent Obligations; No Offset........................................  25
                           27.2     Time of Essence...........................................................  25
                           27.3     Applicable Law............................................................  25
                           27.4     Assignment by Landlord....................................................  25
                           27.5     Estoppel Certificates; Financial Statements...............................  25
                           27.6     Signs, Building Name and Building Address.................................  26
                           27.7     Notices...................................................................  26
                           27.8     Entire Agreement, Amendment and Binding Effect............................  26
                           27.9     Severability..............................................................  26
                           27.10    Number and Gender, Captions and References................................  26
                           27.11    Attorneys' Fees...........................................................  26
                           27.12    Brokers...................................................................  27
                           27.13    Interest on Tenant's Obligations..........................................  27
                           27.14    Authority.................................................................  27
                           27.15    Recording.................................................................  27
                           27.16    Exhibits..................................................................  27
                           27.17    Multiple Counterparts.....................................................  27
                           27.18    Survival of Indemnities...................................................  27
                           27.19    Miscellaneous.............................................................  27
                           27.20    Smoking Shelter...........................................................  27
                           27.21    Security Guard............................................................  28
                  28.      GENERATOR..........................................................................  28
                           28.1     Grant of License..........................................................  28
                           28.2     Relocation of System......................................................  28
                           28.3     Tenant Responsibilities...................................................  28
                           28.4     Compliance with Laws......................................................  28
                           28.5     Tenant Representations and Warranties.....................................  28
                  29.      SATELLITE SPACE....................................................................  29
                           29.1     Satellite Space...........................................................  29
                           29.2     Restrictions..............................................................  29
                           29.3     Expenses..................................................................  30
                           29.4     Use of Satellite Dish.....................................................  30
</TABLE>

                                      ii
<PAGE>

EXHIBITS
--------

Exhibit A:      Glossary of Defined Terms
Exhibit B:      Description of Premises
Exhibit B-1:    Smoking Shelter Location
Exhibit C:      Building Rules and Regulations
Exhibit D:      Work Letter Agreement
Exhibit D1:     Pricing Agreement Letter
Exhibit D2:     Building Standard Tenant Improvements
Exhibit E:      Legal Description of Land
Exhibit F:      Lease Extension Addendum
Exhibit G:      Acknowledgment of Lease Commencement Date
Exhibit H:      Estoppel Certificate, Subordination, Non-Disturbance and
                Attornment Agreement

Monument Sign Addendum
Building Sign Addendum

                                      iii
<PAGE>

                                LEASE AGREEMENT
                                ---------------

     THIS LEASE AGREEMENT (the "Agreement") is entered into as of the ______ day
of April, 1999, between 2795 E. COTTONWOOD PARKWAY, L.C. as Landlord, and SONIC
                                                            --------
INNOVATIONS, INC., a Delaware corporation, as Tenant.
                                              ------

                                    PART I
                                    ------
                      SUMMARY OF BASIC LEASE INFORMATION
                      ----------------------------------

     Each reference in this Summary of Basic Lease Information to the Lease
Provisions contained in PART II shall be construed to incorporate all the terms
provided in said Lease Provisions, and reference in the Lease Provisions to the
Summary contained in this PART I shall be construed to incorporate the
provisions of this Summary. In the event of any conflict between the provisions
of this Summary and the provisions in the balance of the Lease, the latter shall
control. The basic terms of this Lease are as follows:

A.   PREMISES (Lease Provisions, Paragraph 2):
     ----------------------------------------

     1.   Premises Location: Suites 100, 500 and 660, consisting of
approximately 18,892 square feet of Rentable Area (16,428 usable square feet),
located on the first floor of the Building; approximately 22,157 square feet of
Rentable Area (20,611 usable square feet) located on the fifth floor of the
Building; and approximately 14,218 square feet of Rentable Area (12,363 usable
square feet) located on the sixth floor of the Building; with a total of
approximately 55,267 square feet of Rentable Area (49,402 usable square feet)
(as outlined on the floor plans attached to this Lease as Exhibit B), the street
address of which is 2795 E. Cottonwood Parkway, as constructed on the Land which
is further described on Exhibit E hereto. Tenant reserves the right to confirm
the measurement of the premises prior to the Lease Commencement Date.

     2.   Number of Approximate Square Feet of Rentable Area in the Building
measured consistently throughout the Building:  Approximately One Hundred Thirty
Thousand Seven Hundred Eighty (130,780) square feet.

B.   LEASE TERM (Lease Provisions, Paragraph 3):
     ------------------------------------------

     1.   Duration: Five (5) years, Two (2) months.

     2.   Lease Commencement Date (Lease Provisions, Paragraph 6.3): The
earliest to occur of the following events: (a) the date of Substantial
Completion (as defined in the Work Letter Agreement) of the Landlord's Work on
the Phase One Space, or (b) the date on which Landlord would have substantially
completed the Landlord's Work on the Phase One Space and tendered possession of
the Phase One Space to Tenant but for certain delays attributable to Tenant as
provided in Paragraph 6.3, or (c) the date on which Tenant takes possession of
the Premises or any portion thereof (including the Phase One Space).  Subject to
the Lease being executed and delivered by Tenant to Landlord on or before April
28, 1999, the Lease Commencement Date is scheduled to be July 1, 1999.
Following the Commencement Date, the Phase II Move-In Date is defined and set
forth in Section 6.3(b) below.

     3.   Lease Expiration Date (Lease Provisions, Paragraph 3): The Lease
Expiration Date shall be August 31, 2004, unless further extended or earlier
terminated as provided in this Lease.

C.   BASE RENT (Lease Provisions, Paragraph 5):
     ------------------------------------------

<TABLE>
<CAPTION>
             Lease Year                         Monthly Base Rent              Annual Base Rent
             ----------                         -----------------              ----------------
<S>                                             <C>                            <C>
July 1, 1999 - to, but not including, the             $ 72,994.17                    N/A
        Phase II Move-In Date

    From, and including, the Phase II                 $101,322.83                 $1,215.874.00
    Move-In Date - August 31, 2000

 September 1, 2000 - August 31, 2001                  $104,316.46                 $1,251,797.55

 September 1, 2001 - August 31, 2002                  $107,310.09                 $1,287,721.10

 September 1, 2002 - August 31, 2003                  $110,303.72                 $1,323,644.65

 September 1, 2003 - August 31, 2004                  $113,297.35                 $1,359,568.20
</TABLE>
<PAGE>

D.   ADDITIONAL RENT (Lease Provisions, Paragraph 5.3):
     -------------------------------------------------

     1.   Base Year (Lease Provisions, Paragraph 5.3.1): The Fiscal Year
commencing January 1 through December 31,1999 (with Operating Expenses for 1999
being annualized); provided, however, that real property taxes levied on the
Building and Parking Facility included in the Operating Expenses applicable to
the Base Year shall be determined as provided in paragraph 5.3.2(a) hereof.

     2.   Tenant's Share (Lease Provisions, Paragraph 5.3.1): Tenant's Share for
Tenant's payment of Operating Expenses means Forty-two and 26/100 percent
(42.26%).

E.   LETTER OF CREDIT / SECURITY DEPOSIT (Lease Provisions, Paragraph 5.8):
     ---------------------------------------------------------------------

     Means a Five Hundred Sixty Thousand and 00/100 Dollars ($560,000.00),
Letter of Credit, subject to reduction and replacement by a cash Security
Deposit, as provided in Paragraph 5.8.

F.   PARKING CHARGE (Lease Provisions, Paragraph 5.5):
     ------------------------------------------------

     Tenant shall throughout the Term, lease from Landlord up to a total of Two
Hundred Forty-Seven (247) automobile parking spaces, of which total Tenant may
elect to lease up to twenty (20) assigned and covered automobile parking spaces
at an initial cost of Zero Dollars ($0.00) per month per space for the initial
Lease Term. The remainder of the automobile parking spaces leased by Tenant
which Tenant does not elect to have assigned and covered shall be unassigned
parking spaces at a cost of Zero Dollars ($0.00) per month per space for the
initial Term of the Lease. The above notwithstanding, Landlord shall, with 3-day
advance notice from Tenant, make arrangements to accommodate Tenant's
requirement for 30 additional stalls (in the covered parking area, if possible)
once every 45-60 days for Tenant's board meetings.

G.   ADDRESSES FOR NOTICES (Lease Provisions, Paragraph 27.7):
     --------------------------------------------------------

     1.   Tenant's Address:

          (a)  Before Lease Commencement Date:

               5330 South 900 East, Suite 240
               Salt Lake City, UT 84117

          (b)  After Lease Commencement Date:

               2795 E. Cottonwood Parkway
               Salt Lake City, UT 84121

     2.   Landlord's Address:

               2795 E. Cottonwood Parkway,  L.C.
               c/o John L. West
               2855 E. Cottonwood Parkway, Suite 560
               Salt Lake City, Utah 84121

     3.   Address of Landlord's Lender or Mortgagee:

               U. S. Bank National Association
               15 West South Temple, Suite 600
               Salt Lake City, UT 84101

H.   TENANT IMPROVEMENT ALLOWANCE AND SPACE PLAN (Work Letter Agreement):
     -------------------------------------------------------------------

     1.   Space Plan Delivery Date:  The initial Space Plan of Tenant's Premises
was delivered to Landlord on or before March 18, 1999.

     2.   Tenant Improvement Allowance:  A Tenant Improvement Allowance shall be
in the amount of ONE MILLION THREE HUNDRED FORTY-FOUR THOUSAND SIX HUNDRED
THIRTY-FOUR AND 35/100 DOLLARS ($1,344,634.35) for the design, modification and
construction of the Tenant Improvements.

                                       2
<PAGE>

                                    PART II
                                    -------
                               LEASE PROVISIONS
                               ----------------

     1.   DEFINITIONS.  The definitions of certain of the capitalized terms used
          -----------
in this Lease are set forth in the Glossary of Defined Terms attached as Exhibit
A.

     2.   PREMISES.  Subject to the provisions of this Lease, Landlord hereby
          --------
leases to Tenant, and Tenant hereby leases from Landlord, the premises described
in the Summary of Basic Lease Information, Section "A", as outlined on the floor
plan attached hereto as Exhibit B (the "Premises").  In connection with such
                                        --------
demise and subject to paragraph 21 herein, Landlord hereby grants to Tenant the
nonexclusive right to use during the Term, all Common Areas designed for the use
of all tenants in the Building, in common with all tenants in the Building and
their invitees, for the purposes for which the Common Areas are designed and in
accordance with all Legal Requirements.  Landlord, however, has the sole
discretion, subject to the requirements of Paragraph 21 hereof, to determine the
manner in which the Common Areas are maintained and operated, and the use of the
Common Areas shall be subject to the Building Rules and Regulations.  Tenant
acknowledges that Landlord has made no representation or warranty regarding the
Building or Premises except as specifically stated in this Lease.  By occupying
the Premises, Tenant accepts the Premises as being suitable for Tenant's
intended use of the Premises.  Landlord represents that, to the best of its
knowledge, upon occupancy, the Building will be in compliance with the Americans
with Disabilities Act of 1990.  Landlord further represents that, to the best of
its knowledge, the Building is in compliance with all Legal Requirements.
Landlord further represents and warrants that, to the best of its knowledge, the
Complex and this Lease are in full compliance with all requirements under any
Landlord's Mortgage as well as under all other documents, instruments, or
agreements relating to the Complex or to which the Complex may be bound or
encumbered.

     3.   TERM.  The provisions of this Lease shall be effective only as of the
          ----
date this Lease is executed by both Landlord and Tenant.  The duration of the
term of this Lease shall be for the period stated in the Summary of Basic Lease
Information, Section "B," commencing on the Commencement Date set forth in
paragraph 6.3 below, and expiring at 5:00 p.m. on the day stated in Section "B"
of the Summary of Basic Lease Information, unless earlier terminated as provided
herein (the "Term").  Tenant shall have the right to extend the Term of the
             ----
Lease as provided in the Lease Extension Addendum attached as Exhibit F.

        3.1    Tenant's Right to Terminate Lease.  Tenant shall have the right
               ---------------------------------
     to terminate this Lease if, and only if, Tenant fulfills all of the
     following conditions:

          (a)  Tenant sends or delivers to Landlord a written notice signed by
     Tenant exercising this right to terminate, and Landlord receives the notice
     no earlier than 30 months after the Lease Commencement Date and no later
     than 31 months after the Lease Commencement Date.

          (b)  No earlier than 42 months after the Lease Commencement Date and
     no later than 42 months and five calendar days after the Lease Commencement
     Date, (i) Tenant pays to Landlord, and Landlord receives from Tenant, the
     sum of $200,000, in the form of a cashier's check and (ii) Tenant vacates
     at least one-half of the Premises.

          (c)  Tenant vacates the remainder of the Premises no earlier than 48
     months after the Lease Commencement Date and no later than 48 months and
     five calendar days after the Lease Commencement Date.

          (d)  When it vacates the Premises, Tenant is not in default of any
     provision of this Lease, including the payment of Rent.

          Upon the occurrence of the Commencement Date, the parties will execute
     and deliver a certificate in the form of Exhibit G attached hereto stating
     and acknowledging the specific dates described in the Section 3.1 above.
     Time is of the essence in the fulfillment of the foregoing conditions.  If
     Tenant fails to fulfill any of the foregoing conditions, Tenant's right to
     terminate shall automatically and irrevocably cease.  Except as set forth
     in this Section or as otherwise expressly provided in this Lease, Tenant
     shall have no right to terminate the Lease before the Lease Expiration
     Date.

     4.   USE.  Tenant shall occupy and use the Premises solely for lawful,
          ---
general business office purposes, for light manufacturing and assembling, and
for purposes incidental to such uses, all in strict compliance with the Building
Rules and Regulations from time to time in effect.  Tenant shall, and Tenant
agrees to cause its agents, servants, employees, invitees and licensees to
observe and comply fully and faithfully with the Building Rules and Regulations
attached hereto as Exhibit C, and incorporated herein by this reference, or such
reasonable modifications, rules and regulations which may be hereafter adopted
by Landlord for the care, protection, cleanliness and operation of the Premises
and Complex.  Any modifications to the Building Rules and

                                       3
<PAGE>

Regulations will only be effective against Tenant to the extent they do not
materially adversely affect Tenant's use of the Premises, to the extent that
they are applied to all tenants in the Building in a non-discriminatory manner,
and to the extent that Tenant is given reasonable advance notice thereof. Tenant
shall also comply with all Legal Requirements and other restrictions on use of
the Premises as provided in this Lease, including, without limitation, paragraph
12 hereof. The Landlord represents that the Premises are properly zoned for the
permitted uses set forth herein.

     5.   RENT.
          ----

          5.1  Base Rent.  In consideration of Landlord's leasing the Premises
               ---------
     to Tenant, Tenant shall pay to Landlord the base rent ("Base Rent") at the
     time(s) and in the manner stated in paragraph 5.6 below, as stated in
     Section "C" of the Summary of Basic Lease Information.

          5.2  No Other Adjustment of Base Rent.  The stipulation of Rentable
               --------------------------------
     Area set forth in paragraph 2 above and in the Summary of Basic Lease
     Information, shall be conclusive and binding on the parties.
     Notwithstanding the foregoing, the Base Rent set forth in paragraph 5.1
     above and in the Summary of Basic Lease Information is a negotiated amount
     and there shall be no adjustment to the Base Rent or Additional Rent
     without the prior written consent of Landlord and Tenant.  Tenant shall
     have no right to withhold, deduct or offset any amount of the monthly Base
     Rent, Additional Rent or any other sum due hereunder even if the actual
     rentable square footage or Rentable Area of the Premises is less than set
     forth in paragraph 2 hereof.  The measurement of space shall be consistent
     throughout the Building.

          5.3  Additional Rent.  In addition to paying the Base Rent specified
               ---------------
     in paragraph 5.1 above, Tenant shall pay as additional rent the Tenant's
     Share (as defined in subparagraph 5.3.1(b) below) of the Operating Expenses
     (as defined in subparagraph 5.4 below) for each Fiscal Year, or portion
     thereof, that are in excess of the amount of Operating Expenses applicable
     to the Base Year (as defined in subparagraph 5.3.1(a) below).  Said
     additional rent, together with other amounts of any kind (other than Base
     Rent) payable by Tenant to Landlord under the terms of this Lease, shall be
     collectively referred to in this Lease as "Additional Rent."  Operating
     Expenses which are normally and reasonably allocable to more than one
     Fiscal Year shall be prorated and allocated over such period(s).  All
     amounts due under this paragraph 5.3 as Additional Rent are payable for the
     same periods and in the same manner, time and place as the Base Rent as
     provided in paragraph 5.6 below.  Without limitation on any other
     obligation of Tenant that may survive the expiration of the Lease Term,
     Tenant's obligations to pay the Additional Rent provided for in this
     paragraph 5.3 shall survive the expiration of the Lease Term.

          5.3.1  Additional Rent Definitions.  The following definitions apply
                 ---------------------------
     to this paragraph 5:

                 (a)   Base Year.  "Base Year" means the Fiscal Year commencing
                       ---------
          January 1 through December 31 of the year stated in Section "D" of the
          Summary of Basic Lease Information.

                 (b)   Tenant's Share.  "Tenant's Share" for Tenant's payment of
                       --------------
          Operating Expenses means the percentage stated in Section "D" of the
          Summary of Basic Lease Information.

          5.3.2  Calculation and Payment of Additional Rent.  Tenant's Share of
                 ------------------------------------------
     Operating Expenses for any Fiscal Year, or portion thereof, shall be
     calculated and paid as follows:

               (a)     Calculation of Excess.  If Tenant's Share of Operating
                       ---------------------
          Expenses for any Fiscal Year, commencing with the Fiscal Year
          immediately following the Base Year, exceeds Tenant's Share of the
          amount of Operating Expenses applicable to the Base Year (with
          Operating Expenses for the Base Year 1999 being annualized), Tenant
          shall pay as Additional Rent to Landlord an amount equal to that
          excess (the "Excess") in the manner stated in subparagraphs 5.3.2(b)
          and (c) below.  Notwithstanding the foregoing, the Landlord
          acknowledges that the Building and Parking Facility may not be fully
          assessed for property taxes levied during the Base Year because of
          incomplete construction.  Therefore, for purposes of calculating the
          Additional Rent, the Landlord will make an adjustment to the property
          taxes applicable to the Base Year at the time the Building and Parking
          Facility are fully assessed.

               (b)     Statement of Estimated Operating Expenses and Payment by
                       --------------------------------------------------------
          Tenant.  On or before the last day of the Fiscal Year in which the
          ------
          Lease Commencement Date occurs and for each Fiscal Year thereafter,
          Landlord shall endeavor to deliver to Tenant an estimate statement
          (the "Estimate Statement") of Additional Rent to be due by Tenant for
          the forthcoming Fiscal Year.  The Estimate Statement will be based on
          good faith estimates, reasonably determined,

                                       4
<PAGE>

          and will set forth in reasonable detail the calculation of estimated
          expenses and Additional Rent. Thereafter, unless Landlord delivers to
          Tenant a revision of the Estimate Statement, Tenant shall pay to
          Landlord monthly, coincident with Tenant's payment of Base Rent, an
          amount equal to the estimated Additional Rent set forth on the
          Estimate Statement for such Fiscal Year divided by twelve (12) months.
          On no more than two occasions during any Fiscal Year, Landlord may
          estimate and re-estimate the Additional Rent to be due by Tenant for
          that Fiscal Year and deliver a copy of the revised Estimate Statement
          to Tenant. Thereafter, the monthly installments of Additional Rent
          payable by Tenant shall be appropriately adjusted in accordance with
          the revised Estimate Statement so that, by the end of any Fiscal Year,
          Tenant shall have paid all of the Additional Rent as estimated by
          Landlord on the revised Estimate Statement. Landlord's failure to
          furnish the Estimate Statement for any Fiscal Year in a timely manner
          shall not preclude Landlord from enforcing its rights to collect any
          Additional Rent.

               (c)     Statement of Actual Operating Expenses and Payment by
                       -----------------------------------------------------
          Tenant. Landlord shall provide to Tenant a budget of anticipated
          ------
          Operating Expenses for the current year by March 31 each year.
          Landlord shall endeavor to give to Tenant as soon as available
          following the end of each Fiscal Year, but in no event later than June
          30, a statement (the "Statement of Actual Operating Expenses") stating
          the Operating Expenses incurred or accrued for that preceding Fiscal
          Year and indicating the amount, if any, of any Excess due to Landlord
          or overpayment by Tenant. Landlord's Statement of Actual Operating
          Expenses will show in reasonable detail the amount and computation of
          Operating Expenses for the applicable Fiscal Year, a statement as to
          any Operating Expense which is not final and the amount of Tenant's
          obligations hereunder and application of Tenant's estimated payments.
          Except for Operating Expense items identified by Landlord as not being
          final or adjustments to Operating Expense items not reasonably
          foreseeable by Landlord, no adjustment will be made by Landlord to the
          Statement of Actual Operating Expenses for any Fiscal Year subsequent
          to June 30 following the end of the Fiscal Year to which the Statement
          of Actual Operating Expenses relates. On receipt of the Statement of
          Actual Operating Expenses for each Fiscal Year for which an Excess
          exists, Tenant shall pay, with its next installment of Base Rent due,
          the full amount of the Excess, less the estimated amounts (if any)
          paid during the Fiscal Year pursuant to an Estimate Statement (as
          defined in subparagraph 5.3.2(b) above). In the event there is an
          overpayment of Additional Rent set forth on a Statement of Actual
          Operating Expenses for any Fiscal Year, the amount of overpayment
          shall be credited against payments of Additional Rent as they become
          due. If it is determined that there is an overpayment of Additional
          Rent by Tenant for the Fiscal year in which the Lease Term expires,
          such overpayment shall be promptly refunded to Tenant within 60 days
          following expiration of the Term. Landlord's failure to furnish the
          Statement of Actual Operating Expenses for any Fiscal Year in a timely
          manner shall not prejudice Landlord from enforcing its rights
          hereunder. Even if the Lease Term is expired and Tenant has vacated
          the Premises, if an Excess exists when final determination is made of
          Tenant's Share of the Operating Expenses for the Fiscal Year in which
          the Lease terminates, Tenant shall immediately pay to Landlord the
          amount calculated under this subparagraph (c) within 15 days of
          receipt of the Statement of Actual Operating Expenses for such Fiscal
          Year. Provisions of this subparagraph (c) shall survive the expiration
          or earlier termination of the Lease Term.

          5.4  Operating Expenses shall mean all costs and expenses which
               ------------------
     Landlord pays or accrues by virtue of the management, maintenance, service
     or operation of the Land and all improvements thereon, including, without
     limitation, the Building and Parking Facility, during a particular Fiscal
     Year or portion thereof as determined by Landlord or its accountant in
     accordance with generally accepted accounting principles (which shall be
     consistently applied), subject to the exclusions contained in Section
     5.4.2(a) below. The parties acknowledge and intend that the Lease of the
     Premises to the Tenant be a full-service Lease. The present Estimate
     Statement of Operating Expenses for the 1999 Fiscal Year has been delivered
     to Tenant. The Operating Expenses shall be net and for that purpose shall
     be deemed reduced by the amount of any insurance reimbursement, other
     reimbursement, recoupment, payment, discount, credit, reduction, allowance,
     or the like received or receivable by Landlord in connection with such
     Operating Expenses.

          5.4.1  Examples.  "Operating Expenses" shall include, but shall not be
                 --------
     limited to, the following to the extent they relate to the Complex or are
     chargeable to the Complex in connection with the operation and maintenance
     of the Cottonwood Corporate Center generally:

                 (a)  all Impositions;

                 (b)  all insurance premiums charged for policies obtained by
          Landlord for the Land, Building and Parking Facility, which may
          include without limitation, at Landlord's election, (i)

                                       5
<PAGE>

          fire and extended coverage insurance, including earthquake, windstorm,
          hail, explosion, riot, strike, civil commotion, aircraft, vehicle and
          smoke insurance, (ii) public liability and property damage insurance,
          (iii) elevator insurance, (iv) workers' compensation insurance for the
          employees covered by clause (h), (v) boiler, machinery, sprinkler,
          water damage, and legal liability insurance, (vi) rental loss
          insurance, and (vii) such other insurance as Landlord may elect to
          obtain;

               (c)  all deductible amounts incurred in any Fiscal Year relating
          to an insurable loss;

               (d)  all maintenance, repair, replacement, restoration and
          painting costs, including, without limitation, the cost of operating,
          managing, maintaining and repairing the following systems: utility,
          mechanical, sanitary, drainage, escalator and elevator;

               (e)  environmental compliance costs up to $2,500 per year, and
          all janitorial, snow removal, custodial, cleaning, washing,
          landscaping, landscape maintenance, access systems, trash removal, and
          pest control costs;

               (f)  all security costs;

               (g)  all electrical, energy monitoring, water, water treatment,
          gas, sewer, telephone and other utility and utility-related charges;

               (h)  all wages, salaries, employee benefits, payroll taxes,
          Social Security and insurance and other, similar salary charges
          payable to all employees of Landlord or its affiliates, up to and
          including the regional manager for performing services rendered in
          connection with the repair, maintenance and operation of the Complex
          (or an equitable pro rata portion of such expenses, if such employees
          are engaged in the management, maintenance or operations of other
          buildings) in connection with the Complex;

               (i)  all costs of leasing or purchasing supplies, tools,
          equipment and materials in connection with the normal operation and
          maintenance of the Complex;

               (j)  all fees and assessments of the Cottonwood Corporate Center
          park applicable to the Complex;

               (k)  the cost of licenses, certificates, permits and inspections;

               (l)  the cost of contesting the validity or applicability of any
          governmental enactments that may affect the Operating Expenses;

               (m)  the cost of Parking Facility maintenance and repair,
          including, without limitation, resurfacing, repainting, restriping and
          cleaning;

               (n)  all fees and other charges paid under all maintenance and
          service agreements, including but not limited to window cleaning,
          elevator and HVAC maintenance;

               (o)  All reasonable and customary fees, charges, management fees
          (or amounts in lieu of such fees) up to a maximum of three percent
          (3%) of gross rentals at the Complex, consulting fees, legal fees (but
          excluding legal fees associated with dealings with individual tenants)
          and accounting fees of all persons engaged by Landlord, together with
          all other associated costs or other charges reasonably incurred by
          Landlord in connection with the management office and the operation,
          management, maintenance and repair of the Complex;

               (p)  all costs of monitoring services, including, without
          limitation, any monitoring or control devices used by Landlord in
          regulating the Parking Facility;

               (q)  amortization of the cost of acquiring, financing and
          installing capital items which are intended to reduce (or avoid
          increases in) operating expenses.  Such costs shall be amortized over
          the reasonable life of the items in accordance with generally accepted
          accounting principles, but not beyond the reasonable life of the
          Building; and

               (r)  such other expenses and costs reasonably necessary to be
          incurred for the purpose of operating and maintaining the Complex in a
          condition substantially similar to its condition as on the
          Commencement Date of this Lease, reasonable wear and tear excepted;
          and

                                       6
<PAGE>

                 (s)    any such reasonable expenses and reasonable costs
          resulting from a substitution of work, labor, material or services in
          lieu of any of the above itemizations, or for any such additional
          work, labor services or material resulting from compliance with any
          governmental laws, rules, regulations or orders applicable to the
          Complex or any parts thereof which shall, at the time of any such
          substitution and/or addition, be considered operating expenses in
          accordance with generally accepted accounting principles as applied to
          real estate.

          5.4.2  Adjustments.  Operating Expenses shall be adjusted as follows:
                 -----------

                 (a)    Exclusions.  "Operating Expenses" shall not include (i)
                        ----------
          expenditures classified as capital expenditures for federal income tax
          purposes except as set forth in clause 5.4.1(q), (ii) costs for which
          Landlord is entitled to specific reimbursement by Tenant, by any other
          tenant of the Building or by any other third party, (iii) allowances
          specified in the Work Letter for expenses incurred by Landlord for
          improvements to the Premises, (iv) leasing commissions and all noncash
          expenses (including amortization and depreciation), except for the
          amortized costs specified in clause 5.4.1(q), (v) land or ground rent,
          if applicable, and (vi) the excess cost of any work or service
          performed for or facilities furnished to any tenant of the Building to
          a substantially greater extent or in a manner materially more
          favorable to such tenant than that performed for or furnished to
          Tenant hereunder; (vii) sums which constitute insured repairs or other
          work necessitated by fire or other casualty; (viii) sums incurred for
          the alteration or renovation of vacant or vacated space in the
          Building; (ix) expenditures paid to a related corporation, entity or
          persons which are in excess of the amount which would be paid in the
          absence of such relationship; (x) expenditures resulting from the
          relocation or moving of tenants in the Building to another location
          within the Building; (xi) any income, franchise or corporate tax, any
          leasehold taxes on other tenants' personal property, sales, capital
          levy, capital stock, excess profits, transfer, revenue, or any other
          tax, assessment or charge upon or measured by rent payable to
          Landlord; (xii) overhead and administrative costs of Landlord not
          directly incurred in the operation and maintenance of the Complex;
          provided, however, that expenses which benefit the Complex and which
          are allocated on part to the Complex (such as the cost of blanket
          insurance, and expenses of a regional manager) are not excludable
          under this paragraph 5.4.2(a); (xiii) interest, amortization or other
          costs, including legal fees, associated with any loan or refinancing;
          (xiv) expenses incurred for any necessary replacement of any item to
          the extent that it is paid under warranty; (xv) the cost of any item
          or service which Tenant separately reimburses Landlord or pays to
          third parties; (xvi) the cost of correcting defects in the
          construction of the Tenant Improvements; provided however, that
          repairs resulting from ordinary wear and tear shall not be deemed to
          be defects; (xvii) all expenses directly resulting from the negligence
          or willful misconduct of the Landlord, its agents, servants or other
          employees; (xviii) all costs associated with ensuring that the Complex
          operating and management systems and computer controlled facility
          components have been designed or upgraded to accurately process
          data/time data from, into and between the twentieth (20/th/) and
          twenty-first (21/st/) centuries and the years 1999, 200, and all leap
          years; (xix) any item specified in this Lease to be at Landlord's
          expense, unless also specifically stated to be reimbursable as a
          component of Operating Expenses; (xx) advertising and promotional
          expenses; (xxi) all bad debt loss, rent loss, or reserve for bad debt
          or rent loss; (xxii) rentals, if any, incurred in leasing items to the
          extent that the leasing of such items is commercially unreasonable and
          the cost of the purchase of that item would not be included as a
          permitted capital expenditure hereunder; (xxiii) the cost of
          correcting any applicable building or fire code violation(s) (other
          than violations resulting from acts of Tenant; and (xxiv) any item
          excluded from Operating Expenses pursuant to paragraph 5.4.1.
          Operating Expenses shall not exceed the reasonable, customary and
          ordinary cost for such items.

                 (b)    Gross-Up Adjustments.  If the occupancy of the Building
                        --------------------
          during any part of any Fiscal Year (including the Base Year) is less
          than ninety-five percent (95%), Landlord shall make an appropriate
          adjustment of the Operating Expenses that vary according to occupancy
          for that Fiscal Year, as reasonably determined by Landlord using sound
          accounting and management principles, to determine the amount of
          Operating Expenses that would have been incurred had the Building been
          ninety-five percent (95%) occupied.  This amount shall be considered
          to have been the amount of Operating Expenses for that Fiscal Year.

          5.4.3  Landlord's Books and Records.  If Tenant disputes the amount of
                 ----------------------------
     the Additional Rent due hereunder, Tenant may designate, within one hundred
     twenty (120) days after receipt of the Statement of Actual Operating
     Expenses, an independent certified public accountant or qualified third-
     party management company to inspect Landlord's records.  Tenant is not
     entitled to request that

                                       7
<PAGE>

     inspection, however, if Tenant is then in default under this Lease. The
     accountant must be a member of a nationally recognized accounting firm and
     must not charge a fee based on the amount of Additional Rent that the
     accountant is able to save Tenant by the inspection. Any inspection must be
     conducted in Landlord's offices at a reasonable time or times. If, after
     such an inspection, Tenant still disputes the Additional Rent, Landlord and
     Tenant shall each designate an independent certified public accountant,
     which shall in turn jointly select a third independent certified public
     accountant (the "Third CPA"). A certification of the proper amount shall be
     made, at Tenant's sole expense, by the Third CPA. That certification shall
     be final and conclusive. If as a result of such audit and certification, it
     is determined that Tenant was overcharged by more than five percent (5%)
     during any period covered by such audit and certification, then Landlord
     will pay the costs and expenses of such audit. Any deficiency or
     overpayment disclosed by such audit shall be promptly paid or refunded, as
     the case may be.

          5.5  Parking Charge.  Tenant shall throughout the Term, lease from
               --------------
     Landlord the number of unassigned and assigned automobile parking spaces,
     at such prices per month, as stated in Section "F" of the Summary of Basic
     Lease Information.  Such monthly parking charges shall be considered
     Additional Rent and shall be due and payable without notice or demand, on
     or before the first day of each calendar month.  Landlord shall have the
     right from time to time during the Extension Renewal Term (if applicable),
     to increase the monthly parking charges for assigned parking spaces to the
     then prevailing market rate.  From time to time during the Extension
     Renewal Term, the Landlord shall also have the right to increase the
     monthly parking charges for unassigned parking spaces to the prevailing
     market rate.  Landlord shall also have the right to establish such
     reasonable rules and regulations as may be deemed desirable, at Landlord's
     reasonable discretion, for the proper and efficient operation and
     maintenance of said Parking Facility; provided, however, that such rules
     and regulations will only be effective against Tenant to the extent they do
     not materially adversely affect this Lease, to the extent that they are
     applied to all tenants in the Building in a non-discriminatory manner, and
     to the extent that Tenant is given reasonable advance notice thereof.  Such
     rules and regulations may include, without limitation, (i) subject to the
     provisions of this paragraph, the establishment of charges for parking
     therein, and (ii) the use of parking gates, cards, permits and other
     control devices to regulate the use of the parking areas.  The rights of
     Tenant and its employees, customers, service suppliers and invitees to use
     the Parking Facility shall, to the extent such rules and regulations are
     not inconsistent with the other terms of this Lease, at all times be
     subject to (a) Landlord's right to establish reasonable rules and
     regulations applicable to such use and to exclude any person therefrom who
     is not authorized to use the same or who violates such rules and
     regulations; (b) the rights of Landlord and other tenants in the Building
     to use the same in common with Tenant; (c) other than with respect to
     Tenant's assigned parking spaces, the availability of parking spaces in
     said Parking Facility; and (d) Landlord's right to change the configuration
     of the parking areas and any unassigned parking spaces as shall be
     determined at Landlord's reasonable discretion.  Tenant agrees to limit its
     use of the Parking Facility to the number and type of parking spaces
     specified in this paragraph above.  Notwithstanding the foregoing, nothing
     contained herein shall be deemed to impose liability upon Landlord for
     personal injury or theft, for damage to any motor vehicle, or for loss of
     property from within any motor vehicle, which is suffered by Tenant or any
     of its employees, customers, service suppliers or other invitees in
     connection with their use of the Parking Facility.  Tenant understands and
     agrees that, while the Parking Facility will be open to Tenant on a 24-hour
     basis, other than spaces that are assigned for Tenant and other tenants,
     all parking spaces in the parking area may be leased to members of the
     general public between the hours of 6:30 p.m. through 7:00 a.m. Monday
     through Saturday morning, after 1:30 p.m. on Saturday, and all day on
     Sunday.

          5.6  Payment of Rent.  Except as otherwise expressly provided in this
               ---------------
     Lease, all Base Rent and Additional Rent shall be due in advance monthly
     installments on the first day of each calendar month during the Term.  Rent
     shall be paid to Landlord at its address recited in Section 27.7, or to
     such other person or at such other address in the United States as Landlord
     may from time to time designate in writing.  Rent shall be paid without
     notice, demand, abatement, deduction or offset in legal tender of the
     United States of America. The Base Rent for the first full calendar month
     of the Lease Term shall be paid on the Commencement Date of the Lease.  In
     addition, if the Term commences or ends on other than the first or the last
     day of a calendar month, the Base Rent for the partial month shall be
     prorated on the basis of the number of days during the applicable month.
     If the Lease Term commences or ends on other than the first or the last day
     of a Fiscal Year, the Additional Rent for the partial Fiscal Year
     calculated as provided in paragraph 5.3 above shall be prorated on the
     basis of the number of days during the applicable Fiscal Year.  All
     payments received by Landlord from Tenant shall be applied to the oldest
     payment obligation owed by Tenant to Landlord.  No designation by Tenant,
     either in a separate or on a check or money order, shall modify this clause
     or have any force or effect.  The Rent to be paid by Tenant or any
     Transferee hereunder shall not be based, in whole or in part, on the income
     or profits derived from the lease, use or occupancy of the Premises.  In
     the event Landlord's Mortgagee succeeds to the Landlord's interests under
     this Lease and determines that all or any portion of the Rent payable
     hereunder is or may be deemed to be unrelated business income within the
     meaning of the United States

                                       8
<PAGE>

     Internal Revenue Code or regulations issued thereunder, Landlord's
     Mortgagee may elect unilaterally to amend the calculation of Rent such that
     none of the Rent payable under this Lease will constitute unrelated
     business income; provided, however, that any such amendment shall not
     increase Tenant's payment obligations or other liabilities, or reduce the
     obligations of Landlord, under this Lease.

          5.7  Delinquent Payments and Handling Charge.  All Rent and other
               ---------------------------------------
     payments required of Tenant hereunder shall bear interest from the date due
     until the date paid at the rate of interest specified in Section 27.13.
     Any amount payable by Landlord to Tenant shall bear interest from the date
     due until paid at the rate of interest specified in Section 27.13.  In
     addition, Tenant shall pay to Landlord a late charge of two and one-half
     percent (2.5%) of the delinquent payment if (a) any Base Rent, Additional
     Rent or other payments required of Tenant hereunder are not received by
     Landlord within 5 days of when due; or (b) any Base Rent, Additional rent
     or other payments required of Tenant hereunder are not received by Landlord
     when due on more than three (3) occasions in any Lease Year to reimburse
     Landlord for its costs and inconvenience incurred as a consequence of
     Tenant's delinquency (other than interest, attorneys' fees and costs).  The
     parties agree that this late charge represents a reasonable estimate of the
     expenses that Landlord will incur because of any late payment (other than
     interest, attorneys' fees and costs).  Landlord's acceptance of any late
     charge shall not constitute a waiver of Tenant's default with respect to
     the overdue amount or prevent Landlord from exercising any of the rights
     and remedies available to Landlord under this Lease.  Tenant shall pay the
     late charge as Additional Rent with the next installment of Additional
     Rent.  In no event, however, shall the charges permitted under this Section
     5.7 or elsewhere in this Lease, to the extent the same are considered to be
     interest under applicable law, exceed the maximum rate of interest
     allowable under applicable law.  If any two noncash payments made by Tenant
     are not paid by the bank or other institution on which they are drawn,
     Landlord shall have the right, exercised by notice to Tenant, to require
     that Tenant make all future payments by certified funds or cashier's check.

          5.8  Letter of Credit / Security Deposit.  In addition to the
               -----------------------------------
     foregoing, on or before the execution date of this Lease, Tenant shall
     provide Landlord an irrevocable letter of credit in the aggregate amount of
     $560,000 ("Letter of Credit") in a form and from a financial institution
     (the "Issuing Bank") satisfactory to Landlord, in its sole discretion,
     unconditionally payable to Landlord upon presentation as security for the
     faithful performance by Tenant under this Lease.

          The Letter of Credit shall be reduced to $420,000 upon receipt of the
     following financial information that has been certified by the Chief
     Financial Officer of Sonic Innovations:

               Cash Balance:            $1,000,000 minimum
               Current Ratio:           1.1 to 1 minimum
               Stockholders' Equity:    $3,000,000 minimum
               Net Income Before Taxes: $1,500,000 for the trailing three months

               ("Current Ratio", for purposes of this Section 5.8,
               shall mean current assets divided by current
               liabilities)

          The required amount of the Letter of Credit shall be further reduced
     to $280,000 upon receipt of the following financial information that has
     been certified by the Chief Financial Officer of Sonic Innovations:

               Cash Balance:            $2,000,000 minimum
               Current Ratio:           1.2 to 1 minimum
               Stockholders' Equity:    $5,000,000 minimum
               Net Income Before Taxes: $3,000,000 for the trailing three months

          The Letter of Credit requirement shall be replaced with a cash
     Security Deposit equal to one months rent upon receipt of the cash deposit
     and the following financial information that has been certified by the
     Chief Financial Officer of Sonic Innovations:

               Cash Balance:            $3,000,000 minimum
               Current Ratio:           1.25 to 1 minimum
               Stockholders' Equity:    $6,000,000 minimum
               Net Income Before Taxes: $12,000,000 for the trailing twelve
                                        months

                    OR

             Evidence of an initial public offering that raised a minimum of
             $20,000,000 in new stockholder's equity.

                                       9
<PAGE>

          At a minimum and without limiting the provisions of this Section 5.8
     above, the Letter of Credit shall be valid for successive one year periods,
     automatically renewed on each anniversary date of the Letter of Credit
     during the Term of this Lease unless, thirty(30) days prior to any
     expiration date, Tenant and the Issuing Bank provide Landlord with written
     notice, in the manner provided in Section 27.7 of this Agreement, that the
     Letter of Credit will not be renewed for any reason. Notwithstanding the
     foregoing, in the event that (i) Landlord determines, in its sole
     discretion, that either (a) Tenant has failed to timely make any payment or
     perform any obligation under this Lease, or (b) there has occurred, or with
     the passage time there would be, a default by Tenant under the Lease
     Agreement; or (ii) the Landlord has not received satisfactory evidence that
     the Letter of Credit has been renewed at least thirty (30) days prior to
     any annual or other expiration date during the Term of this Lease, Landlord
     may, prior to, concurrently with, in addition to or subsequent to
     exercising any other right or remedy, draw upon the Letter of Credit for
     the payment of any obligation due under this Lease, or to compensate
     Landlord for any other expense, loss or damage which Landlord may incur by
     reason of Tenant's failure to fully perform its obligations hereunder. The
     Letter of Credit is not a limitation on Landlord's damages or other rights
     under this Lease, and shall not be applied by Tenant to the Rent for the
     last (or any) month of the Term. If this Lease is terminated due to any
     default of Tenant or if Landlord determines to draw upon the Letter of
     Credit as provided herein, the Landlord shall be authorized and entitled to
     draw and apply the proceeds of the Letter of Credit as partial or whole
     compensation, as the case may be, for the costs and expenses incurred by
     Landlord in connection with this Lease, and such action shall be in
     addition to any other damages or remedy to which Landlord is otherwise
     entitled. Without in any way limiting the foregoing, Landlord may draw on
     the Letter of Credit up to and including any expiration date, whether or
     not notice has been provided to Landlord that the Letter of Credit will not
     be renewed.

          5.9  Holding Over.  Any holding over by Tenant in the possession of
               ------------
     the Premises, or any portion thereof, after the expiration of the Term,
     with or without the consent of Landlord, shall require Tenant to pay one
     hundred fifty percent (150%) of the Base Rent and Additional Rent herein
     specified for the last month of the Term (prorated on a monthly basis),
     unless Landlord shall specify a lesser amount for Rent in its sole
     discretion.  If Tenant holds over with Landlord's consent, such occupancy
     shall be deemed a month-to-month tenancy and such tenancy shall otherwise
     be on the terms and conditions herein specified in this Lease as far as
     applicable.  Notwithstanding the foregoing provisions or the acceptance by
     Landlord of any payment by Tenant, any holding over without Landlord's
     consent shall constitute a default by Tenant and shall entitle Landlord to
     pursue all remedies provided in this Lease, or otherwise, and Tenant shall
     be liable for any and all direct or consequential damages or losses of
     Landlord resulting from Tenant's holding over without Landlord's consent.

     6.   CONSTRUCTION OF IMPROVEMENTS.
          ----------------------------

          6.1  General.  Subject to events of Force Majeure, Landlord and Tenant
               -------
     agree that Landlord shall construct, install, furnish, perform and supply
     the Tenant Improvements in accordance with the parties' respective payment
     and other obligations as specified in the Work Letter Agreement ("Work
     Letter Agreement") attached hereto as Exhibit D and incorporated herein by
     this reference.  The Tenant Improvements shall meet or exceed the Building
     Standard Tenant Improvements as specified in the Work Letter Agreement

          6.2  Access by Tenant Prior to Commencement of Term.  Provided that
               ----------------------------------------------
     Tenant obtains and delivers to Landlord the certificates or policies of
     insurance called for in Section 17.1, Landlord, in its sole discretion, may
     permit Tenant and its employees, agents, contractors and suppliers to enter
     the Phase One Space before the Lease Commencement Date or to enter the
     Phase Two Space before the Phase Two Move-In Date (and such entry alone
     shall not constitute Tenant's taking possession of the Phase One or Phase
     Two Space for the purpose of Section 6.3(c) below), to perform certain work
     on such Phase One or Phase Two Space on behalf of Tenant not contrary to
     the provisions of the Work

                                      10
<PAGE>

Letter Agreement. Tenant and each other person or firm who or which enters the
Premises before the Commencement Date shall conduct itself so as to not
interfere with Landlord or other occupants of the Building. Landlord may
withdraw any permission granted under this Section 6.2 upon twenty-four (24)
hours' notice to Tenant if Landlord, in its reasonable discretion, determines
that any such interference has been or may be caused. Any prior entry shall be
under all of the terms of this Lease (other than the obligation to pay Base Rent
and Additional Rent) and at Tenant's sole risk. Tenant hereby releases and
agrees to indemnify Landlord and Landlord's contractors, agents, employees and
representatives from and against any and all personal injury, death or property
damage (including damage to any personal property which Tenant may bring into,
or any work which Tenant may perform in, the Premises) which may occur in or
about the Complex in connection with or as the result of said entry by Tenant or
its employees, agents, contractors and suppliers unless caused by or resulting
from the gross negligence or wilful misconduct of Landlord, its contractors,
agents, employees, suppliers, or representatives or from a breach of this Lease
by Landlord. Landlord and Tenant acknowledge that coordination and cooperation
between Landlord and Tenant and their respective architects, engineers,
contractors and consultants will be required in order to complete the Landlord's
Work and the installation of Tenant's furniture, fixtures, and equipment.
Landlord and Tenant agree to use good faith efforts to coordinate and cooperate
to accomplish the completion of the Landlord's Work and the installation of
Tenant's furniture, fixtures and equipment and otherwise ready the Premises for
occupancy by Tenant on schedule.

     6.3  Commencement Date; Adjustments to Commencement Date.
          ---------------------------------------------------

          (a)  For purposes of this Lease, the "Commencement Date" shall mean
                                                -----------------
     the earliest to occur of the following events (the "Lease Commencement
     Events"): (a) the date of Substantial Completion of the Landlord's Work on
     the Phase One Space, or (b) the date on which Landlord would have
     substantially completed the Landlord's Work on the Phase One Space and
     tendered possession of the Phase One Space to Tenant but for Net Tenant
     Delay, as provided in the Work Letter Agreement, or (c) the date on which
     Tenant takes possession of the Premises or any portion thereof, including
     the Phase One Space. Subject to events of Force Majeure and the provisions
     of this paragraph 6.3, the Lease Commencement Date is scheduled to be as
     stated in Section "B" of the Summary of Basic Lease Information. Upon the
     occurrence of the Commencement Date, the parties will execute and deliver a
     certificate in the form of Exhibit G attached hereto stating and
     acknowledging the Commencement Date.

          (b)  For purposes of this Lease, the "Phase II Move-In Date" shall
     mean the earliest to occur of the following events (the "Phase II Move-In
     Date Events"): (a) the date of Substantial Completion of the Landlord's
     Work on the Phase Two Space, or (b) the date on which the Landlord would
     have substantially completed the Landlord's Work on the Phase Two Space and
     tendered possession of that space to Tenant but for Net Tenant Delay, as
     provided in the Work Letter Agreement, or (c) the date on which Tenant
     takes possession of the Phase Two Space. Subject to events of Force Majeure
     and the provisions of this paragraph 6.3, the Phase II Move-In Date is
     scheduled to be September 1, 1999.

          (c)  If by the scheduled Commencement Date or, as applicable, the
     Phase II Move-In Date there is not Substantial Completion of the applicable
     Tenant Improvements for any reason, and such failure to substantially
     complete renders the Phase One Space or Phase Two Space, as applicable,
     untenantable for their intended purpose, all as reasonably determined by
     Landlord, or Landlord is unable to tender possession of the applicable
     space to Tenant, then the Landlord may elect (in addition to all other
     remedies available to Landlord) to postpone the Commencement Date or the
     Phase II Move-In Date, as applicable, until the earliest to occur of the
     Lease Commencement Events or the Phase II Move-In Events, as applicable.
     Such postponement shall extend the scheduled expiration of the Term for a
     number of days equal to the postponement. Whether or not Landlord makes
     such an election and notwithstanding any provision in this Lease or any
     exhibit to the contrary, the potential postponement of the payment of Base
     Rent and Additional Rent shall be Tenant's sole and exclusive remedy for
     Landlord's delay in completing the Landlord's Work, the Tenant Improvements
     or tendering possession of the Premises to Tenant. The Landlord shall not
     be subject to any liability, including, without limitation, lost profits or
     incidental or consequential damages for any delay or inability to deliver
     possession of the Premises to the Tenant. Such a delay or failure shall not
     affect the validity of this Lease or the obligations of the Tenant
     hereunder, other than the postponement of the Lease Term.

     6.4  Removal of Certain Tenant Improvements and Restoration of the
          -------------------------------------------------------------
Premises to Its Original Condition. Within 30 days after the termination of this
----------------------------------
Lease, Tenant shall remove such portions of the Tenant Improvements as the Work
Letter

                                       11
<PAGE>

Agreement specifies must be removed upon Lease termination, shall repair all
damage caused by such removal, and shall restore to its original condition,
reasonable wear and tear and insured casualty loss excepted, (A) the portions of
the Premises affected by the removal and (B) such other portions of the Premises
as the Work Letter Agreement specifies. All such removal, repair, and
restoration shall be at Tenant's expense and shall be in accordance with the
Work Letter Agreement.

7.   SERVICES TO BE FURNISHED BY LANDLORD.
     ------------------------------------

     7.1  General.  Subject to applicable Legal Requirements, governmental
          -------
standards for energy conservation, and Tenant's performance of its obligations
hereunder, Landlord shall use all reasonable efforts to furnish the following
services:

          (a)  Subject to the charges provided in Section 7.4 below, HVAC to
     the Premises during Building Operating Hours, at such temperatures and in
     such amounts as are reasonably suitable and standard [thus excluding air
     conditioning or heating for electronic data processing or other specialized
     equipment or specialized (nonstandard) Tenant requirements];

          (b)  hot and cold water at those points of supply common to all floors
     for lavatory and drinking purposes only;

          (c)  janitorial service five (5) days per week; however Tenant shall
     provide any specialized janitorial service needed in the following areas:
     production/assembly, shell lab and shipping/receiving;

          (d)  periodic window washing in and about the Building and the
     Premises, anticipated to be accomplished approximately every 3 or 4
     months for outside windows and every 2 or 3 months for inside windows;

          (e)  elevator service, if necessary, to provide access to and egress
     from the Premises twenty-four hours per day, seven days per week;

          (f)  electric current twenty-four hours per day, seven days per week
     for normal office machines and other machines of low electrical consumption
     of not less than six (6) watts per square foot of Rentable Area of the
     Premises available for Tenant's use; and

          (g)  replacement of fluorescent lamps in Building Standard light
     fixtures installed by Landlord and of incandescent bulbs or fluorescent
     lamps in all public rest rooms, stairwells and other Common Areas in the
     Building.

     If any of the services described above or elsewhere in this Lease are
interrupted, Landlord shall use reasonable diligence to promptly restore the
same; provided, however, if as a result of any interruption of services the
Premises will be uninhabitable or unusable by Tenant for five (5) consecutive
business days, then Base Rent and Additional Rent shall be abated to the extent
to which such condition interferes with Tenant's use of the Premises commencing
on the first day of such condition and continuing until such condition is
corrected. However, unless resulting from Landlord's gross negligence or wilful
misconduct, neither the interruption nor cessation of such services, nor the
failure of Landlord to restore same, shall render Landlord liable for damages to
person or property, or be construed as an eviction of Tenant, or work an
abatement of Rent or relieve Tenant from fulfilling any of its other obligations
hereunder. Other than in the case of a casualty, if such services are
interrupted for more than sixty (60) consecutive days, Tenant may terminate this
Lease upon written notice to Landlord.

     If not previously installed, Landlord may cause an electric and/or water
meter(s) to be installed in the Premises of the Tenant in order to measure the
amount of electricity and/or water consumed for any such use, and the cost of
such meter(s) shall be paid promptly by Tenant.

     Certain security measures (both by electronic equipment and personnel)
may be provided by Landlord in connection with the Building. However, Tenant
hereby acknowledges that any such security is intended to be solely for the
benefit of the Landlord and protecting its property, and while certain
incidental benefits may accrue to the Tenant therefrom, any such security is not
for the purpose of protecting either the property of Tenant or the safety of its
employees, agents or invitees. By providing any such security, Landlord assumes
no obligation to Tenant and shall have no liability arising therefrom.

                                       12
<PAGE>

     7.2  Keys and/or Access Cards. Landlord shall furnish Tenant, at Landlord's
          ------------------------
expense, with up to Two Hundred Fifty (250) keys and access cards, and at
Tenant's expense with such additional keys and access cards as Tenant may
request, to unlock or allow access to the Building and each corridor door
entering the Premises. Tenant shall not install, or permit to be installed, any
additional lock on any corridor door into or in the Premises or make, or permit
to be made, any duplicates of keys or access cards to the Premises without
Landlord's prior consent. Landlord shall be entitled at all times to possession
of a duplicate of all keys and access cards to all doors to or inside of the
Premises. Tenant shall designate in writing any rooms within the Premises to
which Tenant will not allow Landlord access and Landlord shall only have access
to such rooms (except in emergency situations) with the advance permission of
Tenant. All keys and access cards referred to in this Section 7.2 shall remain
the property of the Landlord. Upon the expiration or termination of the Term,
Tenant shall surrender all such keys and access cards to Landlord and shall
deliver to Landlord the combination to all locks on all safes, cabinets and
vaults which will remain in the Premises. Landlord shall be entitled to install,
operate and maintain a card reader and after-hours access card system, security
systems and other control devices in or about the Premises and the Complex which
regulate entry into the Building (or portions thereof) and monitor, by closed
circuit television or otherwise, all persons leaving or entering the Complex,
the Building and the Premises.

     7.3  Tenant Identity, Signs and Other Matters. Landlord shall disburse a
          ----------------------------------------
portion of the Tenant Improvement Allowance, as defined in the Work Letter
Agreement attached as Exhibit D, to provide and install, in Building Standard
graphics, letters or numerals identifying Tenant's name and suite number
adjacent to Tenant's entry door at one location per floor of the Building
occupied by Tenant. Tenant's name, as set forth on the first page of this Lease,
or as otherwise provided by Tenant in writing upon execution of this Lease,
shall also be placed in the Building Directory located on the main level of the
Building. Any subsequent modification to the listing of Tenant's name in the
Building Directory shall be at Tenant's cost. Without Landlord's prior written
consent, no other signs, numerals, letters, graphics, symbols or marks
identifying Tenant shall be placed on the exterior, or in the interior if they
are visible from the exterior, of the Premises.

     Tenant shall not place or suffer to be placed on any exterior door, wall or
window of the Premises, on any part of the inside of the Premises which is
visible from outside of the Premises, or elsewhere on the Complex, any sign,
decoration, notice, logo, picture, lettering, attachment, advertising matter or
other thing of any kind, without first obtaining Landlord's prior written
approval, which Landlord may, in its discretion, grant or withhold. Landlord
may, at Tenant's cost, and without notice or liability to Tenant, enter the
Premises and remove any item erected in violation of this Section. Landlord, as
part of Building Rules and Regulations, may establish rules and regulations
governing the size, type and design of all such items and Tenant shall abide by
such rules and regulations subject to the provisions of this Lease applicable to
Building Rules and Regulations.

     7.4  Charges. Tenant shall pay to Landlord monthly as billed, as Additional
          -------
Rent, such charges as may be separately metered or as Landlord may compute for
(a) any utility services utilized by Tenant for computers, data processing
equipment or other electrical equipment in excess of that agreed to be furnished
by Landlord pursuant to Section 7.1, (b) lighting installed in the Premises in
excess of Building Standard lighting, (c) HVAC and other services in excess of
that stated in Section 7.1(a) or provided at times other than Building Operating
Hours, and (d) janitorial services required with respect to Above Standard
Tenant Improvements within the Premises. If Tenant wishes to use HVAC or
electrical services to the Premises during hours other than Building Operating
Hours, Landlord shall supply such HVAC, electrical and utility services at an
hourly cost to Tenant of $17.50 per Service Area (defined below), as adjusted
from time to time by Landlord consistent with prevailing market charges for such
use. A "Service Area", as used in this Lease, shall be defined as the separate
portions of the Premises as outlined on Exhibit B hereto (Two Service Areas on
Floor 1, Three Service Areas on Floor 5, and Two Service Areas on Floor 6).
Tenant will not be required to pay the hourly cost for services set forth above
for any Service Area unless said services are separately utilized by Tenant in
the Service Area. Landlord may utilize a lighting and utility occupancy sensor
in order to automatically determine and control use of HVAC, electrical and
other utility services. Landlord may elect to estimate the charges to be paid by
Tenant under this Section 7.4 and bill such charges to Tenant monthly in
advance, in which event Tenant shall promptly pay the estimated charges. When
the actual charges are determined by Landlord, an appropriate cash adjustment
shall be made between Landlord and Tenant to account for any underpayment or
overpayment by Tenant.

     7.5  Operating Hours. Subject to Building Rules and Regulations and such
          ---------------
security standards as Landlord may from time to time adopt, the Building shall
be open to the public during the Building Operating Hours and the Premises shall
be open to Tenant during hours other than Building Operating Hours.

                                       13
<PAGE>

     8.   REPAIR AND MAINTENANCE.
          ----------------------

          8.1  By Landlord. Landlord shall provide the services to the Premises
               -----------
     set forth in paragraph 7.1 above and shall maintain the Complex (excepting
     the Premises, but not Building systems therein (which Building systems
     Landlord shall maintain), and portions of the Building leased by persons
     not affiliated with Landlord) at all times in accordance with the standards
     of similar office buildings and developments in the Salt Lake suburban
     area, making such repairs and replacements as may be required to maintain
     the Building in such condition. This Section 8.1 shall not apply to damage
     resulting from a Taking (as to which Section 14 shall apply), or damage
     resulting from a casualty (as to which Section 15.1 shall apply), or to
     damage for which Tenant is otherwise responsible under this Lease. Tenant
     hereby waives and releases any right it may have to make repairs to the
     Premises or Building at Landlord's expense under any law, statute,
     ordinance, rules and regulations now or hereafter in effect in any
     jurisdiction in which the Building is located.

          8.2  By Tenant.  Tenant, at Tenant's sole cost, shall maintain the
               ---------
     nonstructural components of the Premises and every part of the Premises
     (including, without limitation, all floor, wall and ceiling coverings,
     doors and locks, furnishings, trade fixtures, signage, leasehold
     improvements, equipment and other personal property from time to time
     situated in or on the Premises but excluding Building systems therein) in
     good order, condition and repair, and in a clean, safe, operable,
     attractive and sanitary condition.  Tenant will not commit or allow to
     remain any waste or damage to any portion of the Premises.  Tenant shall
     repair or replace, subject to Landlord's direction and supervision, any
     damage to the Complex caused by Tenant or Tenant's agents, contractors or
     invitees.  If Tenant fails to make such repairs or replacements, Landlord
     may, upon at least 5 days advance notice to Tenant, make the same at
     Tenant's cost.  Such cost shall be payable to Landlord by Tenant on demand
     as Additional Rent.  All contractors, workmen, artisans and other persons
     which or whom Tenant proposes to retain to perform work in the Premises (or
     the Complex, pursuant to the second sentence of this Section 8.2) pursuant
     to this Section 8.2 or Section 11 shall be approved by Landlord, in
     Landlord's reasonable discretion, prior to the commencement of any such
     work.

     9.   TAXES ON TENANT'S PROPERTY.  Tenant shall be liable for and shall pay,
          --------------------------
before they become delinquent, all taxes and assessments levied against any
personal property placed by Tenant in the Premises (even if same becomes a
fixture by operation of law or the property of Landlord by operation of this
Lease), including any additional Impositions which may be assessed, levied,
charged or imposed against Landlord or the Building by reason of non-Building
Standard Items in the Premises.  Tenant may withhold payments of any taxes and
assessments described in this Section 9 so long as Tenant contests its
obligation to pay in accordance with applicable law and the nonpayment thereof
does not pose a threat of loss or seizure of the Building or any interest of
Landlord therein.

     10.  TRANSFER BY TENANT.
          ------------------

          10.1  General.  Except as specifically provided in this Section 10.1
                -------
     below, Tenant shall not directly or indirectly, voluntarily or by operation
     of law, sell, assign, encumber, pledge or otherwise Transfer or hypothecate
     all or any part of the Premises or Tenant's leasehold estate hereunder, or
     permit the Premises to be occupied by anyone other than Tenant or sublet
     the Premises or any portion thereof without Landlord's prior written
     consent in Landlord's discretion (such consent not to be unreasonably
     withheld, conditioned or delayed), being obtained in each instance, subject
     to the terms and conditions contained in this paragraph.  Notwithstanding
     the foregoing, but without waiving any other requirement for a Transfer as
     contained in this Section 10, Tenant shall have the right, without the
     prior consent of Landlord, to assign the Lease or sublet the whole or any
     part of the Premises to a corporation or entity (a "Related Entity") which:
     (i) is Tenant's parent organization, or (ii) is a wholly-owned subsidiary
     of Tenant or Tenant's parent organization, or (iii) is an organization of
     which Tenant or Tenant's parent owns in excess of fifty percent (50%) of
     the outstanding capital stock or has in excess of fifty percent (50%)
     ownership or control interest, or (iv) is the result of a consolidation,
     merger or reorganization with Tenant and/or Tenant's parent organization,
     or (v) is the Transferee of substantially all of Tenant's assets.  Except
     as provided above, any attempted Transfer without Landlord's consent shall
     be void.  If Tenant desires to effect a Transfer, it shall deliver to
     Landlord written notice thereof in advance of the date on which Tenant
     proposes to make the Transfer, together with all of the terms of the
     proposed Transfer and the identity of the proposed Transferee.  Upon
     request by Landlord, such notice shall contain financial information
     concerning the proposed Transferee and other reasonable information
     regarding the transaction which Landlord may specify.  Landlord shall have
     fifteen (15) days following receipt of the notice and information within
     which to notify Tenant in writing whether Landlord elects (a) to refuse to
     consent to the Transfer and to continue this Lease in full force, or (b) to
     consent to the proposed Transfer.  If Landlord fails to notify Tenant of
     its election within said fifteen (15) day period,

                                       14
<PAGE>

     Landlord shall be deemed to have elected option (a). The consent by
     Landlord to a particular Transfer shall not be deemed a consent to any
     other Transfer. If a Transfer occurs without the prior written consent of
     Landlord as provided herein, Landlord may nevertheless collect rent from
     the Transferee and apply the net amount collected to the Rent payable
     hereunder, but such collection and application shall not constitute a
     waiver of the provisions hereof or a release of Tenant from the further
     performance of its obligations hereunder.

          10.2  Conditions.  The following conditions shall automatically apply
                ----------
     to each Transfer, without the necessity of same being stated or referred to
     in Landlord's written consent:

                (a)   Tenant shall execute, have acknowledged and deliver to
          Landlord, and cause the Transferee to execute, have acknowledged and
          deliver to Landlord, an instrument in form and substance acceptable to
          Landlord in which (i) the Transferee adopts this Lease and agrees to
          perform, jointly and severally with Tenant, all of the obligations of
          Tenant hereunder, as to the space Transferred to it, including,
          without limitation, the prohibition against rent based on the income
          or profits derived from the Premises (any purported lease to the
          contrary being null and void), (ii) Tenant subordinates to Landlord's
          statutory lien and security interest any liens, security interests or
          other rights which Tenant may claim with respect to any property of
          the Transferee, (iii) Tenant agrees with Landlord that, if the rent or
          other consideration due by the Transferee exceeds the Rent for the
          transferred space, then Tenant shall pay Landlord as Additional Rent
          hereunder 75% of such excess Rent and other consideration, net of
          reasonable leasing commissions and tenant improvement costs directly
          required in connection with such Transfer actually paid by Tenant,
          immediately upon Tenant's receipt thereof, (iv) if the transferred
          space is less than the entire portion of the premises on a particular
          floor and unless direct access to the transferred space from a public
          corridor is already available, Tenant and the Transferee agree to
          provide to Landlord, at their expense, direct access from a public
          corridor in the Building to the transferred space, (v) the Transferee
          agrees to use and occupy the Transferred space solely for the purpose
          specified in Section 4 and otherwise in strict accordance with this
          Lease, and (vi) Tenant acknowledges that, notwithstanding the
          Transfer, Tenant remains directly and primarily liable for the
          performance of all the obligations of Tenant hereunder (including,
          without limitation, the obligation to pay all Rent), and Landlord
          shall be permitted to enforce this Lease against Tenant or the
          Transferee, or all of them, without prior demand upon or proceeding in
          any way against any other persons; and

                (b)  Tenant shall deliver to Landlord a counterpart of all
          instruments relative to the Transfer executed by all parties to such
          transaction (except Landlord).

                (c)  If Tenant requests Landlord to consent to a proposed
          Transfer, Tenant shall pay to Landlord, whether or not consent is
          given, Landlord's reasonable costs, including, without limitation,
          reasonable attorneys' fees, incurred in connection with such request.

          10.3  Liens.  Without in any way limiting the generality of the
                -----
     foregoing, Tenant shall not grant, place or suffer, or permit to be
     granted, placed or suffered, against the Complex or any portion thereof,
     any lien, security interest, pledge, conditional sale contract, claim,
     charge or encumbrance (whether constitutional, statutory, contractual or
     otherwise) and, if any of the aforesaid does arise or is asserted, Tenant
     will, promptly upon demand by Landlord and at Tenant's expense, cause the
     same to be released.

          10.4  Assignments in Bankruptcy.  If this Lease is assigned to any
                -------------------------
     person or entity pursuant to the provisions of the Bankruptcy Code, 11
     U.S.C. (S) 101 et seq. (the "Bankruptcy Code"), any and all monies or other
                    -- ---
     consideration payable or otherwise to be delivered in connection with such
     assignment shall be paid or delivered to Landlord, shall be and remain the
     exclusive property of Landlord and shall not constitute property of Tenant
     or of the Estate of Tenant within the meaning of the Bankruptcy Code.

     11.  ALTERATIONS.  Tenant shall not make (or permit to be made) any change,
          -----------
addition or improvement to the Premises (including, without limitation, the
attachment of any fixture or equipment) unless such change, addition or
improvement (a) equals or exceeds the Building Standard and utilizes only new
and first-grade materials, (b) is in conformity with all Legal Requirements, and
is made after obtaining any required permits and licenses, (c) is made with the
prior written consent of Landlord not to be unreasonably withheld, conditioned
or delayed, (d) is made pursuant to plans and specifications approved in writing
in advance by Landlord, (e) is made after Tenant has provided to Landlord such
reasonable indemnification and/or bonds requested by Landlord, including,
without limitation, a performance and completion bond in such form and amount as
may be satisfactory to Landlord to protect against claims and liens for labor
performed and materials furnished, and to insure the completion of any change,
addition or improvement, (f) is carried out by persons

                                       15
<PAGE>

approved in writing by Landlord who, if required by Landlord, deliver to
Landlord before commencement of their work proof of such insurance coverage as
Landlord may require, with Landlord named as an additional insured, and (g) is
done only at such time and in such manner as Landlord may reasonably specify.
Notwithstanding the foregoing, changes, additions, and improvements which cost
less than $10,000 and do not alter the exterior or any structural elements of
the Complex shall not be subject to the requirements of subsections (c), (d),
(e), or (f) above; provided, however, that any such alterations shall not be
made without Landlord's prior written consent to the Contractor selected to do
the work. All such alterations, improvements and additions (including all
articles attached to the floor, wall or ceiling of the Premises) shall become
the property of Landlord and shall, at Landlord's election, be (i) surrendered
with the Premises as part thereof at the termination or expiration of the Term,
without any payment, reimbursement or compensation therefor, or (ii) removed by
Tenant, at Tenant's expense, with all damage caused by such removal repaired by
Tenant. Tenant may remove Tenant's trade fixtures, office supplies, movable
office furniture and equipment not attached to the Building, provided such
removal is made prior to the expiration of the Term, no uncured Event of Default
has occurred and Tenant promptly repairs all damage caused by such removal.
Tenant shall indemnify, defend and hold harmless Landlord from and against all
liens, claims, damages, losses, liabilities and expenses, including attorneys'
fees, which may arise out of, or be connected in any way with, any such change,
addition or improvement. Within twenty (20) days following the imposition of any
lien resulting from any such change, addition or improvement, Tenant shall cause
such lien to be released of record by payment of money or posting of a proper
bond.

     12.  PROHIBITED USES.
          ---------------

          12.1  General.  Tenant will not (a) use, occupy or permit the use or
                -------
     occupancy of the Complex or Premises for any purpose or in any manner which
     is or may be, directly or indirectly, violative of any Legal Requirement,
     or contrary to Building Rules and Regulations, or dangerous to life or
     property, or a public or private nuisance, or disrupt, obstruct or
     unreasonably annoy the owners or any other tenant of the Building or
     adjacent buildings, (b) keep or permit to be kept any substance in, or
     conduct or permit to be conducted any operation from, the Premises which
     might emit offensive odors or conditions into other portions of the
     Building, or make undue noise or create undue vibrations, (c) commit or
     permit to remain any waste to the Complex or Premises, (d) install or
     permit to remain any improvements to the Complex or Premises, window
     coverings or other items (other than window coverings which have first been
     approved by Landlord) which are visible from the outside of the Premises,
     or exceed the structural loads of floors or walls of the Building, or
     adversely affect the mechanical, plumbing or electrical systems of the
     Building, or affect the structural integrity of the Building in any way,
     (e) permit the occupancy of the Premises at any time during the Lease Term
     to exceed one person (including visitors) per two hundred (200) square feet
     Rentable Area of space in the Premises, or (f) commit or permit to be
     committed any action or circumstance in or about the Complex or Building
     which, directly or indirectly, would or might justify any insurance carrier
     in cancelling or increasing the premium on the fire and extended coverage
     insurance policy maintained by Landlord on the Complex or Building or
     contents, and if any increase results from any act of Tenant, then Tenant
     shall pay such increase promptly upon demand therefor by Landlord.

          12.2  Hazardous Materials.
                -------------------

               (a)  Without limiting the foregoing, Tenant shall not cause or
          permit any Hazardous Material (defined below) to be brought upon, kept
          or used in or about the Premises or Complex by Tenant, its agents,
          employees, contractors or invitees, without the prior written consent
          of Landlord.  Notwithstanding the foregoing, Tenant may use and store
          types and quantities of materials and substances which may be or
          contain Hazardous Materials, provided that the same are of the type
          and in the quantities customarily found or used in offices for use of
          similar businesses, including packaging materials, commercial cleaning
          fluids and photocopier fluids.  If Tenant breaches the obligations
          stated in the preceding sentence, or if the presence of Hazardous
          Materials on the Premises or Complex caused or permitted by Tenant
          results in contamination of the Premises or Complex, or if
          contamination of the Premises or Complex by Hazardous Material
          otherwise occurs for which Tenant is legally liable to Landlord for
          damage resulting therefrom, then Tenant shall indemnify, defend and
          hold Landlord harmless from any and all claims, judgments, damages,
          penalties, fines, costs, liabilities or losses (including, without
          limitation, diminution in value of the Premises or Complex, damages
          for the loss or restriction on use of rentable or usable space or any
          amenity of the Premises or Complex, damages arising from any adverse
          impact on marketing of space in the Building, and sums paid in
          settlement of claims, attorneys' fees, consultant fees and expert
          fees) which arise during or after the Lease Term as a result of such
          contamination.  This indemnification of Landlord includes, without
          limitation, the obligation to reimburse Landlord for costs incurred in
          connection with any cleanup, remedial, removal or restoration work
          required by any federal, state or local governmental agency or
          political subdivision.  Without limiting the foregoing, if

                                       16
<PAGE>

          the presence of any Hazardous Material in, on or about the Premises or
          Complex caused by or permitted by Tenant results in any contamination
          of the Premises or Complex, Tenant shall promptly take all actions at
          its sole expense as are necessary to return the Premises or Complex to
          the condition existing prior to the introduction of any Hazardous
          Material; provided, however, that Landlord's approval of such action
          shall first be obtained. "Hazardous Material" shall mean, in the
          broadest sense, any petroleum-based products, pesticides, paints,
          insolvents, polychlorinated, biphenyl, lead, cyanide, DDT, acids,
          ammonium compounds and other chemical products and any substance or
          material defined or designated as a hazardous or toxic, or other
          similar term, by any federal, state or local environmental statute,
          regulation or ordinance affecting the Premises or Complex presently in
          effect or that may be promulgated in the future, as such statutes,
          regulations and ordinances may be amended from time to time. In
          addition, Tenant shall execute affidavits, representations and the
          like from time to time at Landlord's request concerning Tenant's best
          knowledge and belief regarding the presence of hazardous substances or
          materials on the Premises. In all events, Tenant shall indemnify
          Landlord in the manner elsewhere provided in this Lease from any
          release of hazardous materials on the Premises to the extent caused
          by, or resulting from the acts of, Tenant or Tenant's employees,
          directors, partners, shareholders, contractors, agents, invitees or
          representatives occurring while Tenant is in possession, or elsewhere
          if caused by Tenant or persons acting under Tenant.

                (b)  Landlord represents and warrants that, to the best of its
          knowledge: (i) no part of the Premises or the Complex has ever been
          used as a sanitary landfill, waste dump site or for the treatment,
          storage or disposal of Hazardous Materials; and (ii) Landlord has not
          received any notice of any action or proceeding relating to any
          Hazardous Material or Release thereof on, under or at the Complex.

                (c)  The within covenants shall survive the expiration or
          earlier termination of the lease term.

          12.3  Overstandard Tenant Use.  Tenant shall not, without Landlord's
                -----------------------
     prior written consent, use heat-generating machines, other than standard
     equipment or lighting, or machines other than normal fractional horsepower
     office or light manufacturing machines, in the Premises that may affect the
     temperature otherwise maintained by the air conditioning system or increase
     the water normally furnished to the Premises by Landlord.

     13.  ACCESS BY LANDLORD.  Upon reasonable prior notice (except in case of
          ------------------
emergency or to perform janitorial services), Landlord, its employees,
contractors, agents and representatives, shall have the right (and Landlord, for
itself and such persons and firms, hereby reserves the right) to enter the
Premises at all hours (a) to inspect, clean, maintain, repair, replace or alter
the Premises or the Building (as otherwise permitted by this Lease), (b) to show
the Premises to prospective purchasers (or, during the last twelve (12) months
of the Term, to prospective tenants), (c) to determine whether Tenant is
performing its obligations hereunder and, if it is not, upon 5 days prior
written notice to Tenant, to perform same at Landlord's option and Tenant's
expense, or (d) for any other reasonable purpose. In an emergency, Landlord (and
such persons and firms) may use any means to open any door into or in the
Premises without any liability therefor. Landlord shall use reasonable efforts
to minimize interference with Tenant's use of the Premises. Entry into the
Premises by Landlord or any other person or firm named in the first sentence of
this Section 13 for any purpose permitted herein shall not constitute a trespass
or an eviction (constructive or otherwise), or entitle Tenant to any abatement
or reduction of Rent, or constitute grounds for any claim (and Tenant hereby
waives any claim) for damages for any injury to or interference with Tenant's
business, for loss of occupancy or quiet enjoyment, or for consequential
damages.

     14.  CONDEMNATION.  If all of the Complex is Taken, or if so much of the
          ------------
Complex is Taken that, in Landlord's opinion, the remainder cannot be restored
to an economically viable, quality office building, or if the awards payable to
Landlord as a result of any Taking are, in Landlord's opinion, inadequate to
restore the remainder to an economically viable, quality office building,
Landlord may, at its election, exercisable by the giving of written notice to
Tenant within sixty (60) days after the date of the Taking, terminate this Lease
as of the date of the Taking or the date Tenant is deprived of possession of the
Premises (whichever is later).  Tenant may, at its election, exercisable by
giving sixty (60) days' written notice to Landlord, terminate this Lease in the
event a substantial (greater than 50%) portion of the Premises is taken
rendering the Premises inadequate for its continued use and occupancy by Tenant.
If this Lease is not terminated as a result of a Taking, Landlord shall restore
the Premises remaining after the Taking to the condition prior to the Taking.
During the period of restoration, Base Rent shall be abated to the extent the
Premises are rendered untenantable and, after the period of restoration, Base
Rent and Tenant's Share shall be reduced in the proportion that the area of the
Premises Taken or otherwise rendered untenantable bears to the area of the
Premises just prior to the Taking.  If any portion of Base Rent is abated under
this Section 14, either Tenant or Landlord may elect to extend the expiration
date of the Term for the period of the abatement.  All awards, proceeds,
compensation or other payments from

                                       17
<PAGE>

or with respect to any Taking of the Complex or any portion thereof shall belong
to Landlord, and Tenant hereby assigns to Landlord all of its right, title,
interest and claim to same. Whether or not this Lease is terminated as a
consequence of a Taking, all damages or compensation awarded for a partial or
total Taking, including any award for severance damage, shall be the sole and
exclusive property of Landlord. Tenant may assert a claim for and recover from
the condemning authority, but not from Landlord, such compensation as may be
awarded on account of Tenant's moving and relocation expenses, and depreciation
to and loss of Tenant's moveable personal property, trade fixtures, and
diminution in the value of or deprivation of the leasehold estate under this
Lease. Tenant shall have no claim against Landlord for the occurrence of any
Taking, or for the termination of this Lease or a reduction in the Premises as a
result of any Taking.

     15.  CASUALTY.
          --------

          15.1  General.  Tenant shall give prompt written notice to Landlord of
                -------
     any casualty to the Complex of which Tenant is aware and any casualty to
     the Premises.  If (a) the Complex or the Premises are totally destroyed, or
     (b) if the Complex or the Premises are partially destroyed but in
     Landlord's opinion they cannot be restored to an economically viable,
     quality office building, or (c) if the insurance proceeds payable to
     Landlord as a result of any casualty are, in Landlord's opinion, inadequate
     to restore the portion remaining to an economically viable, quality office
     building, or (d) if the damage or destruction occurs within twelve (12)
     months of the expiration of the Term, or (e) Landlord's Mortgagee requires
     insurance proceeds be applied to pay or reduce indebtedness rather than
     repair the Premises, Landlord may, at its election exercisable by the
     giving of written notice to Tenant within forty-five (45) days after the
     casualty, terminate this Lease as of the date of the casualty or the date
     Tenant is deprived of possession of the Premises (whichever is later).  If
     this Lease is not terminated by Landlord as a result of a casualty,
     Landlord shall (subject to Section 15.2) restore the Premises to the
     condition prior to the casualty.  If restoration of the Premises to a
     Building Standard Condition is not completed, or estimated by Landlord or
     its agents to be completed, within a period of one hundred sixty (160)
     days, Tenant may elect to terminate this Lease by providing written notice
     to Landlord within thirty (30) days after expiration of the one hundred
     sixty (160) day period, or, as applicable, within thirty (30) days after
     receipt by Tenant of a written estimate from Landlord of a time in excess
     of one hundred sixty (160) days to complete the restoration.  If Tenant
     does not elect to terminate within this 30-day period, Tenant shall be
     deemed to have waived the option to terminate.  During the period of
     restoration, Base Rent and Additional Rent shall be abated to the extent
     the Premises are rendered untenantable and, after the period of
     restoration, Base Rent and Tenant's Share shall be reduced in the
     proportion that the area of the Premises remaining tenantable after the
     casualty bears to the area of the Premises just prior to the casualty.
     Except for abatement of Base Rent, if any, Tenant shall have no claim
     against Landlord for any loss suffered by reason of any such damage,
     destruction, repair or restoration, nor may Tenant terminate this Lease as
     the result of any statutory provision in effect on or after the date of
     this Lease pertaining to the damage and destruction of the Premises or the
     Building.  Landlord shall not be required to repair any damage or to make
     any restoration or replacement of any furnishings, trade fixtures,
     leasehold improvements, equipment, merchandise and other personal property
     installed in the Premises by Tenant or at the direct or indirect expense of
     Tenant.

          15.2  Intentionally Left Blank.
                ------------------------

     16.  SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT.
          ---------------------------------------------

          16.1  General.  This Lease, Tenant's leasehold estate created hereby,
                -------
     and all of Tenant's rights, titles and interests hereunder and in and to
     the Premises are hereby made subject and subordinate to any Mortgage
     presently existing or hereafter placed upon all or any portion of the
     Complex, and to any and all renewals, extensions, modifications,
     consolidations and replacements of any Mortgage and all advances made or
     hereafter to be made on the security of any Mortgage.  Notwithstanding the
     foregoing, Landlord and Landlord's Mortgagee may, at any time upon the
     giving of written notice to Tenant and without any compensation or
     consideration being payable to Tenant, make this Lease, and the aforesaid
     leasehold estate and rights, titles and interests, superior to any
     Mortgage.  In order to confirm the subordination (or, at the election of
     Landlord or Landlord's Mortgagee, the superiority of this Lease), upon the
     written request by Landlord or by Landlord's Mortgagee to Tenant, and
     within ten (10) days of the date of such request, and without any
     compensation or consideration being payable to Tenant, Tenant shall
     execute, have acknowledged and deliver a recordable instrument
     substantially in the form of Exhibit H hereto.  Without limiting the
     foregoing, upon request by Landlord's Mortgagee, the Landlord and Tenant
     shall execute such documents as Landlord's Mortgagee deems necessary to
     effect an amendment of this Lease; provided, however, any such amendment
     may not materially adversely affect any of Tenant's rights, privileges, and
     remedies provided for in this Lease, the amounts payable by Tenant under
     this Lease, Tenant's use, occupancy and quiet enjoyment of the Premises as

                                       18
<PAGE>

     set forth herein. Tenant's failure to execute and deliver such
     instrument(s) as required in this Section 16 shall constitute a default
     under this Lease.

          16.2  Attornment.  Upon the written request of any person or party
                ----------
     succeeding to the interest of Landlord under this Lease, Tenant shall
     automatically become the tenant of and attorn to such successor in interest
     without any change in any of the terms of this Lease.  No successor in
     interest shall be (a) bound by any payment of Rent for more than one month
     in advance, except payments of security for the performance by Tenant of
     Tenant's obligations under this Lease, or (b) subject to any offset,
     defense or damages arising out of a default or any obligations of any
     preceding Landlord.  Neither Landlord's Mortgagee nor its successor in
     interest shall be bound by any amendment of this Lease entered into after
     Tenant has been given written notice of the name and address of Landlord's
     Mortgagee and without the written consent of Landlord's Mortgagee or such
     successor in interest, not to be unreasonably withheld or delayed.  Any
     transferee or successor-in-interest shall not be liable for any acts,
     omissions or defaults of Landlord that occurred before the sale or
     conveyance, or the return of any security deposit except for deposits
     actually paid to the successor or transferee.  Tenant agrees to give
     written notice of any default by Landlord to the holder of any Mortgage.
     Tenant further agrees that, before it exercises any rights or remedies
     under the Lease, other than Rent abatement as expressly provided herein,
     the holder of any Mortgage or other successor-in-interest shall have the
     right, but not the obligation, to cure the default within the same time, if
     any, given to Landlord to cure the default, plus an additional thirty (30)
     days.  The subordination, attornment and mortgagee protection clauses of
     this Section 16 shall be self-operative and no further instruments of
     subordination, attornment or mortgagee protection need be required by any
     Landlord's Mortgagee or successor in interest thereto.  Nevertheless, upon
     the written request therefor and without any compensation or consideration
     being payable to Tenant, Tenant agrees to execute, have acknowledged and
     deliver such instruments substantially in the form of Exhibit H hereto to
     confirm the same.

     17.  INSURANCE.
          ---------

          17.1  General.  Tenant shall obtain and maintain throughout the Term
                -------
     the following policies of insurance:

               (a)  commercial general liability insurance with a combined
          single limit for bodily injury and property damage of not less than
          One Million Dollars ($1,000,000) per occurrence, including, without
          limitation, contractual liability coverage for the performance by
          Tenant of the indemnity agreements set forth in Section 18;

               (b)  hazard insurance with special causes of loss, including
          theft coverage, insuring against fire, extended coverage risks,
          vandalism and malicious mischief, and including boiler and sprinkler
          leakage coverage, in an amount equal to the full replacement cost
          (without deduction for depreciation) of all furnishings, trade
          fixtures, leasehold improvements, equipment, merchandise and other
          personal property from time to time situated in or on the Premises;

               (c)  workers' compensation insurance satisfying Tenant's
          obligations under the workers' compensation laws of the State of Utah;
          and

               (d)  such other policy or policies of insurance as Landlord may
          reasonably require or as Landlord is then generally requiring from
          other tenants in the Building.

     Such minimum limits shall in no event limit the liability of Tenant under
     this Lease except as otherwise provided in Section 17.2.  Such liability
     insurance shall name Landlord, and any other person specified from time to
     time by Landlord, as an additional insured; such property insurance shall
     name Landlord as a loss payee as Landlord's interests may appear; and both
     such liability and property insurance shall be with companies acceptable to
     Landlord, having a rating of not less than A:XII in the most recent issue
     of Best's Key Rating Guide, Property-Casualty.  All liability policies
        ------------------------------------------
     maintained by Tenant shall contain a provision that Landlord and any other
     additional insured, although named as an insured, shall nevertheless be
     entitled to recover under such policies for any loss sustained by Landlord
     and Landlord's agents and employees as a result of the acts or omissions of
     Tenant.  Tenant shall furnish Landlord with certificates of coverage.  No
     such policy shall be cancelable or subject to reduction of coverage or
     other modification except after thirty (30) days' prior written notice to
     Landlord by the insurer.  All such policies shall be written as primary
     policies, not contributing with and not in excess of the coverage which
     Landlord may carry, and shall only be subject to such deductibles as may be
     approved in writing in advance by Landlord.  Tenant shall, at least ten
     (10) days prior to the expiration of such policies, furnish Landlord with
     renewals of, or binders for, such policies.  Landlord and Tenant waive all
     rights

                                       19
<PAGE>

     to recover against each other, against any other tenant or occupant of the
     Complex, and against the officers, directors, shareholders, partners, joint
     venturers, employees, agents, customers, invitees or business visitors of
     each other, or of any other tenant or occupant of the Building, for any
     loss or damage arising from any cause covered by any insurance carried by
     the waiving party, to the extent that such loss or damage is actually
     covered. Tenant shall cause all other occupants of the Premises claiming
     by, through or under Tenant to execute and deliver to Landlord a waiver of
     claims similar to the waiver contained in this Section and to obtain such
     waiver of subrogation rights endorsements. Any Landlord's Mortgagee may, at
     Landlord's option, be afforded coverage under any policy required to be
     secured by Tenant under this Lease by use of a mortgagee's endorsement to
     the policy concerned.

          17.2  Waiver of Subrogation.  Landlord and Tenant hereby waive all
                ---------------------
     claims, rights of recovery and causes of action that either party or any
     party claiming by, through or under such party may now or hereafter have by
     subrogation or otherwise against the other party or against any of the
     other party's officers, directors, shareholders, partners or employees for
     any loss or damage that may occur to the Complex, the Premises, Tenant's
     improvements or any of the contents of any of the foregoing by reason of
     fire or other casualty, or by reason of any other cause except gross
     negligence or willful misconduct (thus including simple negligence of the
     parties hereto or their officers, directors, shareholders, partners or
     employees), that could have been insured against under the terms of (a) in
     the case of Landlord, the fire and extended coverage insurance policies
     required to be obtained and maintained by Landlord under Section 17.3, and
     (b) in the case of Tenant, the fire and extended coverage insurance
     policies required to be obtained and maintained under Section 17.1;
     provided, however, that the waiver set forth in this Section 17.2 shall not
     apply to any deductibles of more than $       on insurance policies carried
     by Landlord.  Landlord and Tenant shall cause an endorsement to be issued
     to their respective insurance policies recognizing this waiver of
     subrogation.

          17.3  Landlord's Insurance.  Landlord shall obtain and maintain
                --------------------
     throughout the Term the following policies of insurance:

                (a)  All-risk property damage insurance on the Complex, all
          improvements thereto, and personal property owned by Landlord in the
          amount of the full replacement values thereof, as the values may exist
          from time to time; and

                (b)  General liability insurance covering Landlord's operations
          and the Complex with combined single limits of not less than
          $1,000,000 per occurrence for bodily injury and property damage;

                (c)  Worker's compensation for all of Landlord's employees; and

                (d)  All policies shall be issued by reasonable insurance
          companies authorized to do business in the state in which the Premises
          are located.

     18.  INDEMNITY.  Subject to paragraph 17.2 and 17.1, and except to the
          ---------
extent caused by the gross negligence,  willful misconduct or breach of this
Lease by Landlord, its employees, representatives or contractors, Tenant agrees
to indemnify, defend and hold Landlord and its officers, directors, partners and
employees entirely harmless from and against all liabilities, losses, demands,
actions, expenses or claims, including reasonable attorneys' fees and court
costs, and including consequential damages, for injury to or death of any person
or for damages to any property or for violation of law arising out of or in any
manner connected with (i) the use, occupancy or enjoyment of the Premises and
Complex by Tenant or Tenant's agents, employees or contractors, or the clients
and other invitees of Tenant, (ii) any work, activity or other thing allowed or
suffered by Tenant or Tenant's agents, employees or contractors to be done in or
about the Premises or Complex, other than Landlord's Work, (iii) any breach or
default in the performance of any obligation of Tenant under this Lease, and
(iv) any negligent or otherwise tortious act or failure to act by Tenant or
Tenant's agents, employees or contractors on or about the Premises or Complex.

     19.  THIRD PARTIES; ACTS OF FORCE MAJEURE; EXCULPATION.  Except to the
          -------------------------------------------------
extent caused by the gross negligence or willful misconduct of Landlord, its
employees, representatives or contractors, Landlord shall have no liability to
Tenant, or to Tenant's officers, directors, shareholders, partners, employees,
agents, contractors or invitees, for bodily injury, death, property damage,
business interruption, loss of profits, loss of trade secrets or other direct or
consequential damages occasioned by (a) the acts or omissions of any other
tenant or such other tenant's officers, directors, shareholders, partners,
employees, agents, contractors or other invitees within the Complex, (b) Force
Majeure, (c) vandalism, theft, burglary and other criminal acts (other than
those committed by Landlord and its employees), (d) water leakage, or (e) the
repair, replacement, maintenance, damage, destruction or relocation of the
Premises.  Except to the extent an injury, loss, damage or destruction was
proximately caused by Landlord's gross negligence, fraud, willful act or
violation of law, Tenant waives all claims

                                       20
<PAGE>

against Landlord arising out of injury to or death of any person or loss of,
injury or damage to, or destruction of any property of Tenant.

     20.  INTENTIONALLY LEFT BLANK.
          ------------------------

     21.  CONTROL OF COMMON AREAS.  Subject to the terms of the Lease, Landlord
          -----------------------
shall have the exclusive control over the Common Areas.  Landlord may, from time
to time, create different Common Areas, close or otherwise modify the Common
Areas, and reasonably modify the Building Rules and Regulations with respect
thereto; provided, however, that the use by Tenant of the Building and Premises
for the purposes intended shall not be materially adversely impacted.

     22.  INTENTIONALLY LEFT BLANK.
          ------------------------

     23.  QUIET ENJOYMENT.  Provided Tenant has performed all its obligations
          ---------------
under this Lease, Tenant shall and may peaceably and quietly have, hold, occupy,
use and enjoy the Premises during the Term subject to the provisions of this
Lease.  Landlord shall warrant and forever defend Tenant's right to occupancy of
the Premises against the claims of any and all persons whosoever lawfully
claiming the same or any part thereof, by, through or under Landlord, but not
otherwise, subject to the provisions of this Lease.

     24.  DEFAULT BY TENANT.
          -----------------

          24.1  Events of Default.  Each of the following occurrences shall
                -----------------
     constitute an Event of Default (herein so called):

                (a)  the failure of Tenant to pay Base Rent, Additional Rent or
          any other amount due under this Lease as and when due hereunder and
          the continuance of such failure for a period of five (5) days after
          written notice from Landlord to Tenant specifying the failure;
          provided, however, after Landlord has given Tenant written notice
          pursuant to this clause 24.1(a) on two separate occasions in any
          calendar year, Landlord shall not be required to give Tenant any
          further notice under this clause 24.1(a) in such calendar year;
          provided, however, that the obligation of Tenant to pay a late charge
          or interest pursuant to this Lease shall commence as of the due date
          of the Rent or other monetary obligation and not on the expiration of
          any grace period;

                (b)  the failure of Tenant to perform, comply with or observe
          any other agreement, obligation or undertaking of Tenant, or any other
          term, condition or provision in this Lease, and the continuance of
          such failure for a period of thirty (30) days after written notice
          from Landlord to Tenant specifying the failure, or, if reasonably
          required, such longer period (not to exceed 120 days) so long as
          Tenant timely and diligently commences and continues to completion the
          required cure;

                (c)  the involuntary transfer by Tenant of Tenant's interest in
          this Lease or other than specifically permitted pursuant to Section 10
          hereof, the voluntary attempt to or actual transfer of its interest in
          this Lease, without Landlord's prior written consent;

                (d)  the failure of Tenant to discharge any lien placed as a
          result of Tenant's action or inaction upon the Premises or Building as
          set forth hereunder;

                (e)  the occurrence of a Net Tenant Delay, as defined in the
          Work Letter Agreement, of thirty (30) calendar days or more;

                (f)  the filing of a petition by or against Tenant (the term
          "Tenant" also meaning, for the purpose of this clause 24.1(d), any
          guarantor of the named Tenant's obligations hereunder) (i) in any
          bankruptcy or other insolvency proceeding, (ii) seeking any relief
          under the Bankruptcy Code or any similar debtor relief law, (iii) for
          the appointment of a liquidator or receiver for all or substantially
          all of Tenant's property or for Tenant's interest in this Lease, or
          (iv) to reorganize or modify Tenant's capital structure provided,
          however, that if such action is involuntary, then it shall not be an
          Event of Default unless Tenant acquiesces in such action or such
          action is not discharged within 60 calendar days of the filing
          thereof; and

                (g)  the admission by Tenant in writing that it cannot meet its
          obligations as they become due or the making by Tenant of an
          assignment for the benefit of its creditors.

                                       21
<PAGE>

          24.2  Remedies of Landlord.  Upon any Event of Default, Landlord may,
                --------------------
     at Landlord's option in its sole discretion, and in addition to all other
     rights, remedies and recourses afforded Landlord hereunder or by law or
     equity, do any one or more of the following:

                (a) terminate this Lease by the giving of written notice to
          Tenant; reenter the Premises, with or without process of law; eject
          all parties in possession thereof; repossess and enjoy the Premises
          and all Tenant Improvements; and recover from Tenant all of the
          following: (i) all Rent and other amounts accrued hereunder to the
          date of termination, (ii) all amounts due under Section 24.3, and
          (iii) liquidated damages in an amount equal to (A) the total Rent that
          Tenant would have been required to pay for the remainder of the Term
          discounted to present value at the prime lending rate (or equivalent
          rate, however denominated) in effect on the date of termination at the
          largest national bank in the state where the Complex is located, minus
          (B) the then-present fair rental value of the Premises for such
          period, similarly discounted, plus any other amount necessary to
          compensate Landlord for all the detriment proximately caused by
          Tenant's failure to perform its obligations under this Lease or which
          would be likely to result therefrom, including, without limitation,
          reasonable attorneys' fees, brokers' commissions or finder's fees;

                (b) terminate Tenant's right to possession of the Premises
          without terminating this Lease by the giving of written notice to
          Tenant, in which event Tenant shall pay to Landlord (i) all Rent and
          other amounts accrued hereunder to the date of termination of
          possession, (ii) all amounts due from time to time under Section 24.3,
          and (iii) all Rent and other sums required hereunder to be paid by
          Tenant during the remainder of the Term, diminished by any net sums
          thereafter received by Landlord through reletting the Premises during
          said period.  Reentry by Landlord in the Premises will not affect the
          obligations of Tenant hereunder for the unexpired Term.  Landlord may
          bring action against Tenant to collect amounts due by Tenant on one or
          more occasions, without the necessity of Landlord's waiting until
          expiration of the Term.  If Landlord elects to proceed under this
          Section 24.2(b), it may at any time elect to terminate this Lease
          pursuant to Section 24.2(a);

                (c) with reasonable prior notice to Tenant, alter any and all
          locks and other security devices at the Premises without being
          obligated to deliver new keys to the Premises, unless Tenant has cured
          all Events of Default before Landlord has terminated this Lease under
          Section 24.2(a) or has entered into a lease to relet all or a portion
          of the Premises;

                (d) if an Event of Default specified in Section 24.1(c) occurs,
          Landlord may remove and store any property that remains on the
          Premises and, if Tenant does not claim such property within thirty
          (30) days after Landlord has delivered to Tenant notice of such
          storage, Landlord may appropriate, sell, destroy or otherwise dispose
          of the property in question without notice to Tenant or any other
          person, and without any obligation to account for such property;
          and/or

                (e) no taking possession of the Premises by Landlord shall be
          construed as Landlord's acceptance of a surrender of the Premises by
          Tenant or an election of Landlord to terminate this Lease unless
          written notice of such intention is given to Tenant.  Notwithstanding
          any leasing or subletting without termination of the Lease, Landlord
          may at any time thereafter elect to terminate the Lease for Tenant's
          previous breach.

          24.3  Payment by Tenant.  Upon any Event of Default, Tenant shall also
                -----------------
     pay to Landlord all costs and expenses incurred by Landlord, including
     court costs and reasonable attorneys' fees, in (a) retaking or otherwise
     obtaining possession of the Premises, (b) removing and storing Tenant's or
     any other occupant's property, (c) constructing the Tenant Improvements or
     otherwise incurred in connection with the Tenant Improvement Allowance
     Items as defined in the Work Letter Agreement; provided, however, that the
     amount recoverable by Landlord shall be limited to the unamortized portion
     of such costs determined on a straight-line basis, (d) repairing,
     restoring, altering, remodeling or otherwise putting the Premises into
     condition acceptable to a new tenant or tenants, (e) reletting all or any
     part of the Premises, (f) paying or performing the underlying obligation
     which Tenant failed to pay or perform, and (g) enforcing any of Landlord's
     rights, remedies or recourses arising as a consequence of the Event of
     Default.

          24.4  Reletting.  Upon termination of this Lease or upon termination
                ---------
     of Tenant's right to possession of the Premises, Landlord shall use
     reasonable efforts to relet the Premises on such terms and conditions as
     Landlord in its reasonable discretion may determine (including a term
     different than the Term, rental concessions, and alterations to and
     improvements of the Premises); however, Landlord shall

                                       22
<PAGE>

     not be obligated to relet the Premises before leasing other portions of the
     Building. Landlord shall not be liable for, nor shall Tenant's obligations
     hereunder be diminished because of, Landlord's failure to relet the
     Premises or collect rent due with respect to such reletting. If Landlord
     relets the Premises, rent Landlord receives from such reletting shall be
     applied to the payment of: first, any indebtedness from Tenant to Landlord
     other than Rent (if any); second, all costs, including for maintenance and
     alterations, incurred by Landlord in reletting; and third, Rent due and
     unpaid. In no event shall Tenant be entitled to the excess of any rent
     obtained by reletting over the Rent herein reserved.

          24.5  Landlord's Right to Pay or Perform.  Upon an Event of Default,
                ----------------------------------
     Landlord may, but without obligation to do so and without thereby waiving
     or curing such Event of Default, pay or perform the underlying obligation
     for the account of Tenant, and enter the Premises and expend the Security
     Deposit and any other sums for such purpose.

          24.6  No Waiver; No Implied Surrender.  Provisions of this Lease may
                -------------------------------
     only be waived by the party entitled to the benefit of the provision
     evidencing the waiver in writing.  Thus, neither the acceptance of Rent by
     Landlord following an Event of Default (whether known to Landlord or not),
     nor any other custom or practice followed in connection with this Lease,
     shall constitute a waiver by Landlord of such Event of Default or any other
     Event of Default.  Further, the failure by Landlord to complain of any
     action or inaction by Tenant, or to assert that any action or inaction by
     Tenant constitutes (or would constitute, with the giving of notice and the
     passage of time) an Event of Default, regardless of how long such failure
     continues, shall not extinguish, waive or in any way diminish the rights,
     remedies and recourses of Landlord with respect to such action or inaction.
     No waiver by Landlord of any provision of this Lease or of any breach by
     Tenant of any obligation of Tenant hereunder shall be deemed to be a waiver
     of any other provision hereof, or of any subsequent breach by Tenant of the
     same or any other provision hereof.  Landlord's consent to any act by
     Tenant requiring Landlord's consent shall not be deemed to render
     unnecessary the obtaining of Landlord's consent to any subsequent act of
     Tenant.  No act or omission by Landlord (other than Landlord's execution of
     a document acknowledging such surrender) or Landlord's agents, including
     the delivery of the keys to the Premises, shall constitute an acceptance of
     a surrender of the Premises.

     25.  DEFAULTS BY LANDLORD.  Landlord shall not be in default under this
          --------------------
Lease, and Tenant shall not be entitled to exercise any right, remedy or
recourse against Landlord or otherwise as a consequence of any alleged default
by Landlord under this Lease, unless Landlord fails to perform any of its
obligations hereunder and said failure continues for a period of thirty (30)
days after Tenant gives Landlord and (provided that Tenant shall have been given
the name and address of Landlord's Mortgagee) Landlord's Mortgagee written
notice thereof specifying, with reasonable particularity, the nature of
Landlord's failure.  If, however, the failure cannot reasonably be cured within
the thirty (30) day period, Landlord shall not be in default hereunder if
Landlord or Landlord's Mortgagee commences to cure the failure within the thirty
(30) days and thereafter pursues the curing of same diligently to completion.
If Tenant recovers a money judgment against Landlord for Landlord's default of
its obligations hereunder or otherwise, the judgment shall be limited to
Tenant's actual direct, but not consequential, damages therefor and shall be
satisfied only out of the interest of Landlord in the Complex as the same may
then be encumbered, and Landlord shall not otherwise be liable for any
deficiency.  In no event shall Tenant have the right to levy execution against
any property of Landlord other than its interest in the Complex.  The foregoing
shall not limit any right that Tenant might have to obtain specific performance
of Landlord's obligations hereunder.

     26.  RIGHT OF REENTRY.  Upon the expiration or termination of the Term for
          ----------------
whatever cause, or upon the exercise by Landlord of its right to reenter the
Premises without terminating this Lease, Tenant shall immediately, quietly and
peaceably surrender to Landlord possession of the Premises in "broom clean" and
good order, condition and repair, except only for ordinary wear and tear,
condemnation, damage by casualty not covered by Section 15.2 and repairs to be
made by Landlord pursuant to Section 15.1.  If Tenant is in default under this
Lease, Landlord shall have a lien on such personal property, trade fixtures and
other property as set forth in Section 38-3-1, et seq., of the Utah Code Ann.
                                               -- ---
(or any replacement provision).  Landlord may require Tenant to remove any
personal property, trade fixtures, other property, alterations, additions and
improvements made to the Premises by Tenant without Landlord's prior written
consent, and to restore the Premises to their condition on the date of this
Lease.  All personal property, trade fixtures and other property of Tenant not
removed from the Premises on the abandonment of the Premises or on the
expiration of the Term or sooner termination of this Lease for any cause shall
conclusively be deemed to have been abandoned and may be appropriated, sold,
stored, destroyed or otherwise disposed of by Landlord without notice to, and
without any obligation to account to, Tenant or any other person.  Tenant shall
pay to Landlord all expenses incurred in connection with the disposition of such
property in excess of any amount received by Landlord from such disposition.
Tenant shall not be released from Tenant's obligations under this Lease in
connection with surrender of the Premises until Landlord has inspected the
Premises and delivered to Tenant a written release.  While Tenant remains in
possession of the Premises after such expiration, termination or exercise by
Landlord of its

                                       23
<PAGE>

reentry right, Tenant shall be deemed to be occupying the Premises as a tenant-
at-sufferance, subject to all of the obligations of Tenant under this Lease,
except that the daily Rent shall be one hundred fifty percent (150%) of the per-
day Rent in effect immediately before such expiration, termination or exercise
by Landlord. No such holding over shall extend the Term. If Tenant fails to
surrender possession of the Premises in the condition herein required, Landlord
may, at Tenant's expense, restore the Premises to such condition.

     27.  MISCELLANEOUS.
          -------------

          27.1  Independent Obligations; No Offset.  The obligations of Tenant
                ----------------------------------
     to pay Rent and to perform the other undertakings of Tenant hereunder
     constitute independent unconditional obligations to be performed at the
     times specified hereunder, regardless of any breach or default by Landlord
     hereunder.  Tenant shall have no right, and Tenant hereby waives and
     relinquishes all rights which Tenant might otherwise have, to claim any
     nature of lien against the Complex or to withhold, deduct from or offset
     against any Rent or other sums to be paid to Landlord by Tenant.

          27.2  Time of Essence.  Time is of the essence with respect to each
                ---------------
     date or time specified in this Lease by which an event is to occur;
     provided, however, that if either Landlord or Tenant is  delayed or
     hindered in or prevented from the performance of any act required under
     this Lease by reason of inability to procure materials, failure of power,
     acts of God, riots, insurrection, war or other reason of a like nature
     (other than labor disputes) not the fault of the party delayed in
     performing work or doing acts required under the terms of this Lease or
     other Force Majeure events, then performance of such act will be excused
     for the period of delay and the time for the performance of any such act
     will be extended for a period equivalent to the period of such delay.  The
     provisions of this Section 27.2 will not operate to excuse Tenant from the
     prompt payment of Base Rent, Additional Rent or any other payments required
     by the terms of this Lease.

          27.3  Applicable Law.  This Lease shall be governed by, and construed
                --------------
     in accordance with, the laws of the State of Utah.  All monetary and other
     obligations of Landlord and Tenant are performable in the county where the
     Complex is located.

          27.4  Assignment by Landlord.  Landlord shall have the right to assign
                ----------------------
     without notice or consent, in whole or in part, any or all of its rights,
     titles or interests in and to the Complex or this Lease and, upon any such
     assignment, Landlord shall be relieved of all unaccrued liabilities and
     obligations hereunder to the extent of the interest so assigned arising
     after the date of such transfer.

          27.5  Estoppel Certificates; Financial Statements.  From time to time
                -------------------------------------------
     at the request of Landlord or Landlord's Mortgagee, Tenant will within
     seven (7) calendar days, and without compensation or consideration execute,
     have acknowledged and deliver a certificate substantially in the form of
     Exhibit H hereto, setting forth the following: (a) a ratification of this
     Lease; (b) the Commencement Date, expiration date and other Lease
     information; (c) that this Lease is in full force and effect and has not
     been assigned, modified, supplemented or amended (except by such writing as
     shall be stated); (d) that all conditions under this Lease to be performed
     by Landlord have been satisfied or, in the alternative, those claimed by
     Tenant to be unsatisfied; (e) that no defenses or offsets exist against the
     enforcement of this Lease by Landlord or, in the alternative, those claimed
     by Tenant to exist; (f) whether within the knowledge of Tenant there are
     any existing breaches or defaults by Landlord hereunder and, if so, stating
     the defaults with reasonable particularity; (g) the amount of advance Rent,
     if any (or none if such is the case), paid by Tenant; (h) the date to which
     Rent has been paid; (i) the amount of the Security Deposit; and (j) such
     other information as Landlord or Landlord's Mortgagee may reasonably
     request.  Landlord's Mortgagee and purchasers shall be entitled to rely on
     any estoppel certificate executed by Tenant.  Tenant shall, within twenty
     (20) calendar days after Landlord's request, furnish to Landlord current
     financial statements for Tenant, prepared in accordance with generally
     accepted accounting principles consistently applied and certified by Tenant
     to be true and correct.

          27.6  Signs, Building Name and Building Address.  Landlord may, from
                -----------------------------------------
     time to time at its discretion, place any and all signs anywhere in the
     Complex.  Notwithstanding the foregoing, Landlord shall not voluntarily
     change the street address of the Complex without Tenant's prior consent.
     Tenant shall not, without Landlord's prior written consent, use the name of
     the Building for any purpose other than as the address of the business to
     be conducted by Tenant from the Premises.

          27.7  Notices.  All notices and other communications given pursuant to
                -------
     this Lease shall be in writing and shall either be sent by overnight
     courier or mailed by first class United States mail, postage prepaid,
     registered or certified with return receipt requested, and addressed as set
     forth in Section "G" of the Basic Lease Information, or delivered in person
     to the intended addressee.  Notice sent by overnight courier shall become
     effective one (1) business day after being sent.  Notice mailed in the

                                       24
<PAGE>

     aforesaid manner shall become effective five (5) business days after
     deposit.  Notice given in any other manner, and any notice given to
     Landlord, shall be effective only upon receipt by the intended addressee.
     Each party shall have the continuing right to change its address for notice
     hereunder by the giving of fifteen (15) days' prior written notice to the
     other party in accordance with this Section 27.7.

          27.8   Entire Agreement, Amendment and Binding Effect.  This Lease
                 ----------------------------------------------
     constitutes the entire agreement between Landlord and Tenant relating to
     the subject matter hereof, and all prior agreements relative hereto which
     are not contained herein are terminated.  This Lease may be amended only by
     a written document duly executed by Landlord and Tenant (and, if a Mortgage
     is then in effect, by the Landlord's Mortgagee entitled to the benefits
     thereof), and any alleged amendment which is not so documented shall not be
     effective as to either party.  The provisions of this Lease shall be
     binding upon and inure to the benefit of the parties hereto and their
     heirs, executors, administrators, successors and assigns; provided,
     however, that this Section 27.8 shall not negate, diminish or alter the
     restrictions on Transfers applicable to Tenant set forth elsewhere in this
     Lease.

          27.9   Severability.  This Lease is intended to be performed in
                 ------------
     accordance with and only to the extent permitted by all Legal Requirements.
     If any provision of this Lease or the application thereof to any person or
     circumstance shall, for any reason and to any extent, be invalid or
     unenforceable, but the extent of the invalidity or unenforceability does
     not destroy the basis of the bargain between the parties as contained
     herein, the remainder of this Lease and the application of such provision
     to other persons or circumstances shall not be affected thereby, but rather
     shall be enforced to the greatest extent permitted by law.

          27.10  Number and Gender, Captions and References.  As the context of
                 ------------------------------------------
     this Lease may require, pronouns shall include natural persons and legal
     entities of every kind and character, the singular number shall include the
     plural, and the neuter shall include the masculine and the feminine gender.
     Section headings in this Lease are for convenience of reference only and
     are not intended, to any extent and for any purpose, to limit or define any
     section hereof.  Whenever the terms "hereof," "hereby," "herein,"
     "hereunder" or words of similar import are used in this Lease, they shall
     be construed as referring to this Lease in its entirety rather than to a
     particular section or provision, unless the context specifically indicates
     to the contrary.  Any reference to a particular "Section" shall be
     construed as referring to the indicated section of this Lease.

          27.11  Attorneys' Fees.  In the event either party commences a legal
                 ---------------
     proceeding to enforce any of the terms of this Lease, the prevailing party
     in such action shall have the right to recover reasonable attorneys' fees
     and costs from the other party, to be fixed by the court in the same
     action.  "Legal proceedings" includes appeals from a lower court judgment
     as well as proceedings in the Federal Bankruptcy Court ("Bankruptcy
     Court"), whether or not they are adversary proceedings or contested
     matters.  The "prevailing party" (i) as used in the context of proceedings
     in the Bankruptcy Court means the prevailing party in an adversary
     proceeding or contested matter, or any other actions taken by the non-
     bankrupt party which are reasonably necessary to protect its rights under
     this Lease, and (ii) as used in the context of proceedings in any court
     other than the Bankruptcy Court means the party that prevails in obtaining
     a remedy or relief which most nearly reflects the remedy or relief which
     the party sought.

          27.12  Brokers.  Tenant and Landlord hereby warrant and represent unto
                 -------
     the other that it has not incurred or authorized any brokerage commission,
     finder's fees or similar payments in connection with this Lease, other than
     that which is due pursuant to a separate written agreement between the
     Landlord and Landlord's agents and subagents.  Each party shall defend,
     indemnify and hold the other harmless from and against any claim for
     brokerage commission, finder's fees or similar payment arising by virtue of
     authorization of such party, or any Affiliate of such party, in connection
     with this Lease.  Landlord shall be responsible for the payment of Greg
     Gunn.

          27.13  Interest on Tenant's Obligations.  Any amount due from Tenant
                 --------------------------------
     to Landlord which is not paid when due shall bear interest at the lesser of
     ten percent (10%) per annum or the maximum rate allowed by law from the
     date such payment is due until paid, but the payment of such interest shall
     not excuse or cure the default in payment.

          27.14  Authority.  Each person executing this Lease on behalf of
                 ---------
     Tenant personally warrants and represents that (a) Tenant is a duly
     organized and existing legal entity, in good standing in the State of Utah,
     (b) Tenant has full right and authority to execute, deliver and perform
     this Lease, (c) this Lease is binding upon and enforceable against Tenant
     in accordance with its terms, (d) the person executing and delivering this
     Lease on behalf of Tenant was duly authorized to do so, and (d) upon
     request of Landlord, such person will deliver to Landlord satisfactory
     evidence of his or her authority to execute this Lease on behalf of Tenant.
     Each person executing this Lease on behalf of Landlord personally

                                       25
<PAGE>

     warrants and represents that (a) Landlord is a duly organized and existing
     legal entity, in good standing in the State of Utah, (b) Landlord has full
     right and authority to execute, deliver and perform this Lease, (c) this
     Lease is binding upon and enforceable against Landlord in accordance with
     its terms, (d) the person executing and delivering this Lease on behalf of
     Landlord was duly authorized to do so, and (d) upon request of Tenant, such
     person will deliver to Tenant satisfactory evidence of his or her authority
     to execute this Lease on behalf of Landlord.

          27.15  Recording.  Neither this Lease (including any Exhibit hereto)
                 ---------
     nor any memorandum hereof shall be recorded without the prior written
     consent of Landlord (such consent not to be unreasonably withheld).

          27.16  Exhibits.  All Exhibits and written addenda hereto are
                 --------
     incorporated herein for any and all purposes.

          27.17  Multiple Counterparts.  This Lease may be executed in two or
                 ---------------------
     more counterparts, each of which shall be an original, but all of which
     shall constitute but one instrument.

          27.18  Survival of Indemnities.  The indemnity obligations of Tenant
                 -----------------------
     and (if any) of Landlord contained in this Lease shall survive the
     expiration or earlier termination of this Lease to and until the last to
     occur of (a) the last day permitted by law for the bringing of any claim or
     action with respect to which indemnification may be claimed, or (b) the
     date on which any claim or action for which indemnification may be claimed
     under such provision is fully and finally resolved and any compromise
     thereof or judgment or award thereon is paid in full.  Payment shall not be
     a condition precedent to recovery upon any indemnification provision
     contained herein.

          27.19  Miscellaneous.  Any guaranty delivered in connection with this
                 -------------
     Lease is an integral part of this Lease and constitutes consideration given
     to Landlord to enter into this Lease.  No amendment to this Lease shall be
     binding on Landlord or Tenant unless reduced to writing and signed by both
     parties.  Each provision to be performed by Tenant shall be construed to be
     both a covenant and a condition.  Venue on any action arising out of this
     Lease shall be proper only in the District Court of Salt Lake County, State
     of Utah.  Landlord and Tenant waive trial by jury in any action, proceeding
     or counterclaim brought by either of them against the other on all matters
     arising out of this Lease or the use and occupancy of the Premises.  The
     submission of this Lease to Tenant is not an offer to lease the Premises or
     an agreement by Landlord to reserve the Premises for Tenant.  Landlord
     shall not be bound to Tenant until Tenant has duly executed and delivered
     duplicate original copies of this Lease to Landlord and Landlord has duly
     executed and delivered one of those duplicate original copies to Tenant.

          27.20  Smoking Shelter.  Landlord shall provide a smoking shelter at
                 ---------------
     the location shown on Exhibit B-1 attached hereto.  Landlord shall have the
     right to relocate the smoking shelter without Tenant's consent.

          27.21  Security Guard.  Tenant shall have the right, with Landlord's
                 --------------
     approval, to provide at its sole cost and expense a security guard in the
     main corridor on the first floor of the Building.

     28.  GENERATOR
          ---------

          28.1  Grant of License.  Landlord hereby grants to Tenant a license
                ----------------
     (the "License") during the Term of the Lease Agreement to own, operate and
     maintain an alternate power source (the "Generator") for the Premises in
     the event of a power outage in the Building or to the Premises, all at
     Tenant's sole cost and expense.  Landlord shall provide Tenant an area
     within or about the Building for location of the Generator.

                (a)  Landlord shall not be liable for damage to the Generator or
          theft, misappropriation or loss thereof.

                (b)  Landlord hereby reserves the right to grant, renew or
          extend similar licenses to other parties.

                (c)  In the event any third party or another licensee shall
          interfere with the enjoyment by Tenant of the rights hereunder, then
          Tenant shall have the right to take appropriate action against such
          interfering party, but not against Landlord, or to terminate this

                                       26
<PAGE>

          License upon one hundred twenty (120) days' written notice to
          Landlord.  Landlord shall not be liable in any manner to Tenant for
          any expenses or damages which Tenant may suffer as a result of such
          interference and premature termination of this License.

          28.2  Relocation of System.  Landlord reserves the right to require
                --------------------
     Tenant to relocate the Generator to other areas within or about the
     Building during the Term at Landlord's reasonable discretion.  In such
     event, Landlord shall reimburse Tenant for its reasonable expenses incurred
     in connection with any such relocation.  Should Landlord request the
     relocation of the Generator, Landlord agrees to allow Tenant reasonable
     time for such relocation.

          28.3  Tenant Responsibilities.  Tenant shall be responsible for any
                -----------------------
     and all cost, damage or expense arising from the installation, operation,
     maintenance or repair of the Generator by Tenant or Tenant's agents,
     employees, subcontractors, or representatives and any and all cost, damage
     or expense to the Premises or the Building or the property of Landlord or
     other licensees or tenants of the Building arising from such installation,
     operation, maintenance, or repair thereof.  Tenant shall indemnify and hold
     Landlord harmless from and against any and all claims, costs, damages,
     expenses, liens, claims of liens or expenses (including, without
     limitation, reasonable attorneys' fees) arising out of, or in connection
     with, Tenant's installation, operation, maintenance or repair of the
     Generator, except for any loss, cost, damage or expense arising from the
     gross negligence or willful misconduct of Landlord, its agents or
     employees.  This indemnity is in addition to and not in substitution of any
     other indemnity in the Lease Agreement.

          28.4  Compliance with Laws.  Tenant shall comply with all local, state
                --------------------
     and federal laws and regulations governing such installation, operation,
     maintenance and repair, including the sole and exclusive responsibility for
     obtaining all applicable federal, state, or local construction and building
     permits required in connection with the installation of the Generator.  In
     addition, Tenant shall provide Landlord with copies of such permits prior
     to the installation of the Generator.  Landlord shall render Tenant all
     reasonable assistance and cooperation in Tenant's endeavors to obtain such
     permits.  Tenant shall also have the sole and exclusive responsibility for
     complying with all applicable tests required by federal, state and local
     laws and ordinances.

          28.5  Tenant Representations and Warranties.  Tenant represents and
                -------------------------------------
     warrants to Landlord that:

                (a)  all obligations rendered by Tenant or by a representative
          of Tenant under this Section 28 shall meet or exceed industry
          standards in force at the time and to also be in conformance and
          compliance with applicable federal, state and local laws,
          administrative and regulatory requirements and any other authorities
          having jurisdiction over the subject matter herein and shall be
          responsible for applying for, obtaining and maintaining all
          registrations and certifications which may be required by such
          authorities.

                (b)  the Generator, and the installation, operation, maintenance
          and repair of the Generator will in no way damage the Building, or
          interfere with the use of the Building by Landlord, other tenants,
          invitees or otherwise.  If such damage shall occur, Landlord shall
          give Tenant written notice thereof and Tenant shall take immediate
          action to correct the same.  Landlord reserves the right to disconnect
          power to the Generator in the event Tenant fails to correct after
          proper notification and cure period.

                (c)  Tenant shall take all reasonable measures necessary to
          insure that the Generator does not interfere with or disturb the
          operation of any other equipment, system or business of Landlord or of
          any other tenant or occupant of the Building.

     29.  SATELLITE SPACE.
          ---------------

          29.1  Satellite Space.  Subject to the provisions of the Lease
                ---------------
     Agreement, and as part of the Premises leased to Tenant hereunder, Landlord
     does hereby grant Tenant the right to the following space ("Space"):

               (a)  Space on the roof of the Building to place Tenant's
          satellite dish, as reasonably and specifically described and
          designated by Landlord (the "Satellite Space"); and

                                       27
<PAGE>

                (b)  At the location and in the manner designated by Landlord,
          space for cabling attendant to Tenant's satellite dish from its
          location on the roof of the Building to its Premises on the first,
          fifth and sixth floors of the Building.

          29.2  Restrictions.  Tenant's rights as contained in this Section 29
                ------------
     shall be subject to the following requirements:

                (a)  the use and occupancy of the Satellite Space by Tenant
          shall be subject to all of the terms and provisions of the Lease
          Agreement;

                (b)  The occupancy by Tenant of the entire Premises during the
          Lease Term;

                (c)  Compliance with all applicable governmental laws, statutes,
          regulations, rules, codes and ordinances;

                (d)  Compliance with the provisions of the Lease Agreement in
          connection with the satellite dish and Satellite Space;

                (e)  All expenses in connection with the construction,
          installation and maintenance of the satellite dish and attendant
          cabling shall be paid by Tenant;

                (f)  The design, size, location and materials of the satellite
          dish and Satellite Space shall be reasonably approved in writing by
          Landlord;

                (g)  Payment by Tenant to Landlord, from time to time upon
          request from Landlord, of all expenses incurred by Landlord that are
          directly attributable to the satellite dish;

                (h)  Tenant's rights under this Section 29 may not be assigned
          or transferred to any assignee, subtenant or other Transferee, other
          than a Related Entity, of the Lease Agreement without Landlord's prior
          written consent; and

                (i)  Upon termination or expiration of the Term of the Lease
          Agreement, Landlord shall have the right to permanently remove
          Tenant's satellite dish and attendant cabling at Tenant's expense.

          29.3  Expenses.  Tenant shall bear all expenses relating to the costs
                --------
     associated with the repair or removal of the satellite dish and restoration
     of the Satellite Space to the condition in which those portions of the
     Building existed before installation of Tenant's satellite dish, reasonable
     wear and tear and insured casualty loss excepted.  Tenant's payment and
     other obligations under this paragraph shall survive any expiration or
     earlier termination of the Lease Term.

          29.4  Use of Satellite Dish.  Tenant will not use the satellite dish
                ---------------------
     or the Satellite Space for any purpose or in any manner which violates the
     provisions of the Lease Agreement, or might make undue noise or create
     undue vibrations, or exceed the structural loads of the Building.  It will
     be the responsibility of the Tenant to resolve all interference problems
     with other tenants of the Building, and Landlord shall have no
     responsibility or liability in connection therewith, regardless of cause.
     Tenant shall not operate the satellite dish in any manner which will
     conflict or interfere with the activities of, or cause electrical or other
     interference to, the Landlord or any other tenant of the Building.
     Notwithstanding any other provision in the Lease Agreement to the contrary,
     Landlord shall not be liable or responsible to correct any interference
     problem created by any tenant, customer, invitee, or third party to the
     transmission or other use of the satellite dish by Tenant.

          EXECUTED as of the date and year above first written.

                                       28
<PAGE>

TENANT ACKNOWLEDGES THAT LANDLORD HAS MADE NO WARRANTIES TO TENANT, EITHER
EXPRESS OR IMPLIED, AND LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED
WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL
PURPOSE.

               TENANT:   SONIC INNOVATIONS, INC., a Delaware corporation

                         By:    /s/ William S. Barth
                                ---------------------------------------------

                         Name:  William S. Barth
                                ---------------------------------------------

                         Title: VP of Finance & CFO
                                ---------------------------------------------

                         Date:  4/28/99
                                ---------------------------------------------

               LANDLORD: 2795 E. COTTONWOOD PARKWAY, L.C., a Utah limited
                         liability company, by its Manager,

                         COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah limited
                         partnership, by CotNet Management, Inc. its general
                         partner

                              By: /s/ John L. West
                                 ---------------------------------------------
                                 JOHN L. WEST, President

                                       29
<PAGE>

                                   EXHIBIT A

                           GLOSSARY OF DEFINED TERMS
                           -------------------------

a.   "Addendum" shall mean all the addenda, exhibits and attachments, if any,
      --------
     attached to the Lease or to any exhibit to the Lease.  All addenda are by
     definition incorporated into the Lease Agreement.  Unless otherwise
     specifically provided, terms and phrases in any Addendum shall have the
     meaning of such terms and phrases as provided in the Lease Agreement and
     this Glossary of Defined Terms.

b.   "Affiliate" shall mean a person or party who or which controls, is
      ---------
     controlled by or is under common control with, another person or party.

c.   "Building" shall mean that certain office building and garage structure
      --------
     constructed on the Land, the street address of which is 2795 E. Cottonwood
     Parkway, Salt Lake County, Utah. The term "Building" shall include, without
     limitation, all fixtures and appurtenances in and to the aforesaid
     structure, including specifically but without limitation all above-grade
     walkways and all electrical, mechanical, plumbing, security, elevator,
     boiler, HVAC, telephone, water, gas, storm sewer, sanitary sewer and all
     other utility systems and connections, all life support systems,
     sprinklers, smoke detection and other fire protection systems, and all
     equipment, machinery, shafts, flues, piping, wiring, ducts, duct work,
     panels, instrumentation and other appurtenances relating thereto.

d    "Building Operating Hours" shall mean 7:30 a.m. to 6:00 p.m. Monday through
      ------------------------
     Friday, and Saturday 8:00 a.m. to 1:00 p.m., exclusive of Sundays and
     Holidays.

e.   "Building Rules and Regulations" shall mean the rules and regulations
      ------------------------------
     governing the Complex promulgated by Landlord from time to time.  The
     current Building Rules and Regulations maintained by Landlord are attached
     as Exhibit C hereto.
        ---------

f.   "Building Standard", when applied to an item, shall mean such item as has
      -----------------
     been designated by Landlord (orally or in writing) as generally applicable
     throughout the leased portions of the Building, as more fully set forth on
     Exhibit D2 hereto.

g.   "Commencement Date" shall mean the date of the commencement of the Term as
      -----------------
     determined pursuant to Section 6.3.

h.   "Common Areas" shall mean all areas and facilities within the Complex which
      ------------
     have been constructed and are being maintained by Landlord for the common,
     general, nonexclusive use of all tenants in the Building, as revised from
     time to time in Landlord's discretion (subject to paragraph 21 of the
     Lease), and shall include rest rooms, lobbies, corridors, service areas,
     elevators, stairs and stairwells, the Parking Facility, driveways, loading
     areas, ramps, walkways and landscaped areas.

i.   "Complex" shall mean the Land and all improvements thereon, including the
      -------
     Building and the Parking Facility.

j.   "Fiscal Year" shall mean each fiscal year (or portion thereof) as
      -----------
     designated by Landlord, in which any portion of the Lease Term falls,
     through and including the Fiscal Year in which the Lease Term expires.  The
     Fiscal Year currently commences on January 1.  Landlord may change the
     Fiscal Year at any time or times; provided, however, that Landlord may not
     change the Fiscal Year so as to materially adversely impact Tenant's
     expense reimbursement obligation.

k.   "Force Majeure" shall mean the occurrence of any event which hinders,
      -------------
     prevents or delays the performance a party of any of its obligations
     hereunder and which is beyond the reasonable control of such party.

l.   "Holidays" shall mean (a) New Year's Day, Memorial Day, Independence Day,
      --------
     Labor Day, Thanksgiving Day and Christmas Day, and (b) other days which are
     commonly observed as Holidays by the majority of tenants (by square
     footage) of the Building.  If the Holiday occurs on a Saturday or Sunday,
     the Friday preceding or the Monday following may, at Landlord's discretion,
     be observed as a Holiday.

m..  "HVAC" shall mean the heating, ventilation and air conditioning systems in
      ----
     the Building.

                                      A-1
<PAGE>

n.   "Impositions" shall mean (a) all real estate, personal property, rental,
      -----------
     water, sewer, transit, use, occupancy and other taxes, assessments,
     charges, excises and levies (including any interest, costs or penalties
     with respect thereto), general and special, ordinary and extraordinary,
     foreseen and unforeseen, of any kind and nature whatsoever which are
     assessed, levied, charged or imposed upon or with respect to the Complex,
     or any portion thereof, or the sidewalks, streets or alleyways adjacent
     thereto, or the ownership, use, occupancy or enjoyment thereof , and (b)
     all charges for any easement, license, permit or agreement maintained for
     the benefit of the Complex.  "Impositions" shall not include income taxes,
     estate and inheritance taxes, excess profit taxes, franchise taxes, taxes
     imposed on or measured by the income of Landlord from the operation of the
     Complex, and taxes imposed on account of the transfer of ownership of the
     Complex or the Land.  If any or all of the Impositions shall be
     discontinued and, in substitution therefor, taxes, assessments, charges,
     excises or impositions shall be assessed, levied, charged or imposed wholly
     or partially on the Rents received or payable hereunder (a "Substitute
                                                                 ----------
     Imposition"), then the Substitute Imposition shall be deemed to be included
     ----------
     within the term "Impositions."

o.   "Land" shall mean the real property on which the Building is constructed
      ----
     and which is further described in Exhibit E hereto.
                                       ---------

p.   "Landlord's Consent or Landlord's Approval" as used in this Agreement,
      -----------------------------------------
     shall mean the prior written consent or written approval of Landlord to the
     particular item or request.  Unless otherwise provided in this Lease, the
     Landlord's consent or approval shall be determined in Landlord's reasonable
     discretion.

q.   "Landlord's Mortgagee" shall mean the mortgagee of any mortgage, the
      --------------------
     beneficiary of any deed of trust, the pledgee of any pledge, the secured
     party of any security interest, the assignee of any assignment and the
     transferee of any other instrument of transfer (including the ground lessor
     of any ground lease on the Land) now or hereafter in existence on all or
     any portion of the Complex, and their successors, assigns and purchasers.
     "Mortgage" shall mean any such mortgage, deed of trust, pledge, security
      --------
     agreement, assignment or transfer instrument, including all renewals,
     extensions and rearrangements thereof and of all debts secured thereby.

r.   "Landlord's Work" shall mean all improvements, components, assemblies,
      ---------------
     installations, finish, labor, materials and services that Landlord is
     required to furnish, install, perform, provide or apply to the Premises as
     specified in the Work Letter Agreement.

s.   "Legal Requirements" shall mean any and all (a) judicial decisions, orders,
      ------------------
     injunctions, writs, statutes, rulings, rules, regulations, promulgations,
     directives, permits, certificates or ordinances of any governmental
     authority in any way applicable to Tenant or the Complex, including but not
     limited to the Building Rules and Regulations, zoning, environmental and
     utility conservation matters, and (b)  insurance requirements.

t.   "Parking Facility" shall mean (a) any parking garage and any other parking
      ----------------
     lot or facility adjacent to or in the Complex servicing the Building, and
     (b) any parking area, open or covered, leased by Landlord to service the
     Building.

u.   "Permitted Use" means only the uses described in Paragraph 4 of this Lease,
      -------------
     and no other purpose, in strict compliance with the Building Rules and
     Regulations from time to time in effect and all other Legal Requirements.

v.   "Premises" shall mean the area leased by Tenant pursuant to this Lease as
      --------
     outlined on the floor plan drawing attached as Exhibit B hereto and all
                                                    ---------
     other space added to the Premises pursuant to the terms of this Lease.  The
     Premises includes the space between the interior surface of the walls and
     the top surface of the floor slab of the outlined area and the finished
     surface of the ceiling immediately above.

w.   "Rent" shall mean Base Rent, Additional Rent, the parking charge called for
      ----
     in Section 5.4 and all other amounts provided for under this Lease to be
     paid by Tenant, whether as Additional Rent or otherwise.  "Base Rent" shall
                                                                ---------
     mean the base rent specified in Section 5.1.  "Additional Rent" shall mean
                                                    ---------------
     the additional rent specified in Section 5.3.

x.   "Rentable Area" shall mean the Rentable Area of the Premises and the
      -------------
     Rentable Area of the Building as stated in Section "A" of the Summary of
     Basic Lease Information.

y.   "Security Deposit" shall be defined as stated in Section 5.8 of the of the
      ----------------
     Lease.

                                      A-2
<PAGE>

z.   "Substantial Completion" of the Premises shall occur at such time as the
      ----------------------
     Premises are "Ready for Occupancy" as defined in the Work Letter Agreement.

aa.  "Taking" or "Taken" shall mean the actual or constructive condemnation, or
      ------      -----
     the actual or constructive acquisition by or under threat of condemnation,
     eminent domain or similar proceeding, by or at the direction of any
     governmental authority or agency.

bb.  "Tenant's Share" shall mean the percentage of Operating Expenses to be paid
      --------------
     by Tenant in accordance with the provisions of Section 5.3.1(b) of the
     Lease.  Landlord and Tenant stipulate that "Tenant's Share" shall mean the
     percentage stated in Section "D" of the Summary of Basic Lease Information.

cc.  "Transfer" shall mean (a) an assignment (direct or indirect, absolute or
      --------
     conditional, by operation of law or otherwise) by Tenant of all or any
     portion of Tenant's interest in this Lease or the leasehold estate created
     hereby, (b) a sublease of all or any portion of the Premises, or (c) the
     grant or conveyance by Tenant of any concession or license within the
     Premises.  If Tenant is a corporation, then any transfer of this Lease by
     merger, consolidation or dissolution, or by any change in ownership or
     power to vote a majority (excluding a public offering of securities) of the
     voting stock (being the shares of stock regularly entitled to vote for the
     election of directors) in Tenant outstanding at the time of execution of
     this Lease shall constitute a Transfer.  If Tenant is a partnership having
     one or more corporations as general partners, the preceding sentence shall
     apply to each corporation as if the corporation alone had been the Tenant
     hereunder.  If Tenant is a general or limited partnership, joint venture or
     other form of association, the Transfer of a majority of the ownership
     interests therein shall constitute a Transfer.  "Transferee" shall mean the
                                                      ----------
     assignee, sublessee, pledgee, concessionaire, licensee or other transferee
     of all or any portion of Tenant's interest in this Lease, the leasehold
     estate created hereby or the Premises.

dd.  "Work Letter Agreement" shall mean the agreement, if any, attached as
      ---------------------
     Exhibit D hereto between Landlord and Tenant for the construction of
     ---------
     improvements in the Premises.

ee.  "Phase One Space" shall mean the portion of Premises on floors 5, 6 and
      ---------------
     3,440 square feet of Rentable Area (2,991 usable square feet) of the first
     floor.

ff.  "Phase Two Space" shall mean the portion of the Premises on the remainder
      ---------------
     of the first floor (15,452 square feet of Rentable Area; 13,437 usable
     square feet) not included in the Phase One Space.

                                      A-3
<PAGE>

                                   EXHIBIT B

                                   PREMISES
                                   --------

                      Attach floor plan of the Premises.

                                   [Diagram]

                                      B-1
<PAGE>

                                  EXHIBIT B-1

                           SMOKING SHELTER LOCATION
                           ------------------------

                                   [Diagram]

                                      B-2
<PAGE>

                                   EXHIBIT C

                             RULES AND REGULATIONS
                             ---------------------

          Tenant shall comply with the following Rules and Regulations.
Landlord shall not be responsible to Tenant for the nonperformance of any of
these Rules and Regulations by Tenant, any other tenant, or any visitor,
licensee, agent, or other person or entity.

     1.   Security; Admission to Building.  Landlord may from time to time adopt
          -------------------------------
appropriate systems and procedures for the security or safety of the Building,
any persons occupying, using or entering the Building, or any equipment,
finishings or contents of the Building, and each tenant shall comply with such
systems and procedures.  Landlord shall in no case be liable for damages for any
error with regard to the admission to or exclusion from the Building of any
person.  In the event of an invasion, mob, riot, public excitement or other
commotion, Landlord reserves the right to prevent access to the Building during
the continuance of the same by closing of the doors of the Building or any other
reasonable method, for the safety of the tenants and protection of the Building
and property in the Building.

     2.   Conduct and Exclusion or Expulsion.  Tenant's employees, visitors, and
          ----------------------------------
licensees shall not loiter in or interfere with the use of the Parking Facility
or the Complex's driveway or parking areas, nor consume alcohol in the Common
Areas of the Complex or the Parking Facility.  The sidewalks, halls, passages,
exits, entrances, elevators, escalators, and stairways of the Building will not
be obstructed by any tenants or used by any of them for any purpose other than
for ingress to and egress from their respective premises.  The halls, passages,
exits, entrances, elevators, escalators, and stairways are not for the general
public, and Landlord may control and prevent access to them by all persons whose
presence, in the reasonable judgment of Landlord, would be prejudicial to the
safety, character, reputation and interests of the Building and its tenants.  In
determining whether access will be denied, Landlord may consider attire worn by
a person and its appropriateness for an office building, whether shoes are being
worn, use of profanity, either verbally or on clothing, actions of a person
(including without limitation spitting, verbal abusiveness, and the like), and
such other matters as Landlord may reasonably consider appropriate.

     3.   Signs, Notices and Decorations.  No sign, placard, picture,
          ------------------------------
decoration, name, advertisement or notice (collectively "Material") visible from
the exterior of any tenant's premises shall be inscribed, painted, affixed or
otherwise displayed by any tenant on any part of the Building without the prior
written consent of Landlord.  All approved signs or lettering will be printed,
painted, affixed or inscribed at the expense of the tenant desiring such by a
person approved by Landlord.  Material visible from outside the Building will
not be permitted.  Landlord may remove such Material without any liability, and
may charge the expense incurred by such removal to the tenant in question.

     4.   Curtains and Decorations.  No awnings, curtains, draperies, blinds,
          ------------------------
shutters, shades, screens, or other coverings, hangings or decorations will be
attached to, hung or placed in, or used in connection with any window of the
Building or a tenant's premises without Landlord's prior written consent.

     5.   Non-obstruction of Light.  The sashes, sash doors, skylights, windows,
          ------------------------
heating, ventilating, and air conditioning vents and doors that reflect or admit
light and air into the halls, passageways, tenant premises, or other public
places in the Building shall not be covered or obstructed by any tenant, nor
will any bottles, parcels or other articles or decorations be placed on any
window sills.

     6.   Showcases.  No showcases or other articles will be put in front of or
          ---------
affixed to any part of the exterior of the Building, nor placed in the public
halls, corridors or vestibules without the prior written consent of Landlord.

     7.   Cooking; Use of Premises for Improper Purposes.  No tenant will permit
          ----------------------------------------------
its premises to be used for lodging or sleeping.  No cooking will be done or
permitted by any tenant on its premises, except in areas of the premises which
are specially constructed for cooking as specifically provided in working
drawings approved by Landlord, so long as such use is in accordance with all
applicable federal, state, and city laws, codes, ordinances, rules and
regulations.  Notwithstanding the foregoing, microwave ovens and other
Underwriters' Laboratory (UL)-approved equipment may be used in the premises for
heating food and brewing coffee, tea, and similar beverages for employees and
visitors.  The premises shall not be used for any improper, reasonably
objectionable, or immoral purpose.

     8.   Janitorial Service.  No tenant will employ any person or persons other
          ------------------
than the cleaning service of Landlord for the purpose of cleaning the premises,
unless otherwise agreed by Landlord in writing.  If any tenant's actions result
in any increased expense for any required cleaning, Landlord may assess such
tenant for

                                      C-1
<PAGE>

such expenses. Janitorial service will not be furnished on nights to offices
which are occupied after business hours on those nights unless, by prior written
agreement of Landlord, service is extended to a later hour for specifically
designated offices.

     9.   Use of Restrooms.  The toilets, urinals, wash bowls and other plumbing
          ----------------
fixtures will not be used for any purposes other than those for which they were
constructed, and no sweepings, rubbish, rags or other foreign substances will be
thrown in them.  All damages resulting from any misuse of the fixtures will be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees, have caused the damage.

     10.  Defacement of Premises or Building.  No tenant will deface any part of
          ----------------------------------
such tenant's premises or the Building.  Without the prior written consent of
Landlord, no tenant will lay linoleum or other similar floor covering so that it
comes in direct contact with the floor of such tenant's premises.  If linoleum
or other similar floor covering is to be used, an interlining of builder's
deadening felt will be first affixed to the floor by a paste or other material
soluble in water.  The use of cement or other similar adhesive material is
expressly prohibited. Except as permitted by Landlord by prior written consent,
Tenant shall not mark on, paint signs on, cut, drill into, drive nails or screws
into, or in any way deface the walls, ceilings, partitions or floors of the
premises or of the Building, and any defacement, damage or injury directly or
indirectly caused by Tenant shall be paid for by Tenant.  Pictures or diplomas
shall be hung on tacks or small nails; Tenant shall not use adhesive hooks for
such purposes.

     11.  Locks; Keys.  No tenant will alter, change, replace or rekey any lock
          -----------
or install a new lock or a knocker on any door of such tenant's premises.
Landlord, its agent or employee will retain a master key to all door locks on
the premises, subject to the provisions of 7.2 of the Lease.  Any new door locks
required by a tenant or any change in keying of existing locks will be installed
or changed by Landlord following such tenant's written request to Landlord and
will be at such tenant's expense.  All new locks and rekeyed locks will remain
operable by Landlord's master key.  Landlord will furnish to each tenant, free
of charge  keys to each door lock on its premises, and  Building access cards as
stated in Section 7.2 of each tenant's lease.  Landlord will have the right to
collect a reasonable charge for additional keys and cards requested by any
tenant.  Each tenant, upon termination of its tenancy, will deliver to Landlord
all keys and access cards for the premises and Building which have been
furnished to such tenant.  Tenant shall keep the doors of the premises closed
and securely locked when Tenant is not at the premises.

     12.  Furniture, Freight and Equipment.  No furniture, freight, packages,
          --------------------------------
merchandise, or equipment of any kind may be brought into the Building or
carried up or down in the elevators, except between those hours and in that
specific elevator designated by Landlord or otherwise upon consent of the
Landlord, without prior notice to and consent of Landlord.  Landlord may at any
time restrict the elevators and areas of the Building into which deliveries or
messengers may enter.  The elevator designated for freight by Landlord will be
available for use by all tenants in the Building during the hours and pursuant
to such procedures as Landlord reasonably may determine from time to time.  The
persons employed to move Tenant's equipment, material, furniture or other
property in or out of the Building must be reasonably acceptable to Landlord;
unless otherwise approved by Landlord, such persons must be a locally recognized
professional mover whose primary business is the performing of relocation
services, and must be bonded and fully insured.  Unless waived by Landlord in
writing, a certificate or other verification of such insurance must be received
and approved by Landlord prior to the start of any moving operations.  Insurance
must be sufficient, in Landlord's sole opinion, to cover all personal liability,
theft or damage to the Building, including without limitation floor coverings,
doors, walls, elevators, stairs, foliage and landscaping.  All moving operations
will be conducted at such times and in such a manner as Landlord may direct, and
all moving will take place during nonbusiness hours unless Landlord otherwise
agrees in writing.  The moving tenant shall be responsible for the provision of
Building security during all moving operations, and shall be liable for all
losses and damages sustained by any party as a result of the failure to supply
adequate security.  Landlord may prescribe the weight, size and position of all
equipment, materials, furniture or other property brought into the Building.
Heavy objects will, if considered necessary by Landlord, stand on wood strips of
such thickness as is necessary to distribute the weight properly.  Landlord will
not be responsible for loss of or damage to any such property from any cause,
and all damage done to the Building by moving or maintaining such property will
be repaired at the expense of the moving tenant.  Landlord may inspect all such
property to be brought into the Building and to exclude from the Building all
such property which violates any of these rules and regulations or the lease of
which these rules and regulations are a part.  Supplies, goods, materials,
packages, furniture and all other items of every kind delivered to or taken from
the Premises will be delivered or removed through the entrance and route
designated by Landlord.

     13.  Inflammable or Combustible Fluids or Materials; Noninterference of
          ------------------------------------------------------------------
Others.  No tenant will use or keep in the Premises or the Building any
------
kerosene, gasoline, inflammable, combustible or explosive fluid or material, or
chemical substance other than limited quantities of them reasonably necessary
for the operation or maintenance of office equipment or limited quantities of
cleaning fluids and solvents required in the normal operation of the Premises.
Without Landlord's prior written approval, no tenant will use any method of
heating

                                      C-2
<PAGE>

or air conditioning other than that supplied by Landlord. Tenant shall not waste
electricity, water, or air conditioning and shall cooperate fully with Landlord
to insure the most effective operation of the Building's heating and air
conditioning system. No tenant will keep any firearms within the Premises. No
tenant will use or keep, or permit to be used or kept, any foul or noxious gas
or substance in the Premises, or permit or suffer the Premises to be occupied or
used in any manner offensive or objectionable to Landlord or other occupants of
the Building by reason of noise, odors or vibrations, nor interfere in any way
with other tenants or those having business in the Building.

     14.  Address of Building.  Landlord shall not voluntarily change the street
          -------------------
address of the Building without the prior consent of Tenant.

     15.  Use of Building Name or Likeness.  Landlord will have the right to
          --------------------------------
prohibit any advertising by Tenant mentioning the Building which, in Landlord's
reasonable opinion, tends to impair the reputation of the Building or its
desirability as a Building for offices and, upon written notice from Landlord,
Tenant will discontinue such advertising.

     16.  Animals, Birds and Vehicles.  Tenant will not bring any animals or
          ---------------------------
birds into the Premises or Building, and will not permit bicycles or other
vehicles inside or on the sidewalks outside the Building, except in areas
designated from time to time by Landlord for such purposes.

     17.  Off-Hour Access.  All persons entering or leaving the Building at any
          ---------------
time other than the Building's business hours shall comply with such off-hour
regulations as Landlord may establish and modify from time to time.  Landlord
may limit or restrict access to the Building during such periods and shall not
be liable for any error with regard to the admission or exclusion of any person.

     18.  Disposal of Trash.  Each tenant will store all its trash and garbage
          -----------------
within its premises.  No material will be placed in the trash boxes or
receptacles if such material is of such nature that it may not be disposed of in
the ordinary and customary manner of removing and disposing of trash and garbage
without being in violation of any law or ordinance governing such disposal.  All
garbage and refuse disposal will be made only through entryways and elevators
provided for such purposes and at such times as Landlord may designate.  No
furniture, appliances, equipment or flammable products of any type may be
disposed of in the Building trash receptacles.

     19.  Disturbance of Tenants.  Canvassing, peddling, soliciting and
          ----------------------
distribution of handbills or any other written materials in the Building or
Parking Facility are prohibited, and each tenant will cooperate to prevent same.

     20.  Doors to Public Corridors.  Each tenant shall keep the doors of the
          -------------------------
Premises closed and locked, and shall shut off all water faucets, water
apparatus, and utilities before tenant or tenant's employees leave the Premises,
so as to prevent waste or damage, and for any default or carelessness in this
regard Tenant shall be liable for all injuries sustained by other tenants or
occupants of the Building or Landlord.  On multiple-tenancy floors, all tenants
will keep the doors to the Building corridors closed at all times except for
ingress and egress.

     21.  Concessions.  Tenant shall not grant any concessions, licenses or
          -----------
permission for the sale or taking of orders for food or services or merchandise
in the Premises, install or permit the installation or use of any machine or
equipment for dispensing food or beverage in the Building, nor permit the
preparation, serving, distribution or delivery of food or beverages in the
Premises, without the prior written approval of Landlord and only in compliance
with arrangements prescribed by Landlord; provided, however, Tenant shall be
allowed reasonable equipment for dispensing coffee/beverage services, candy and
a microwave oven.  Only persons approved by Landlord shall be permitted to
serve, distribute or deliver food and beverage within the Building or to use the
public areas of the Building for that purpose.

     22.  Telecommunication and Other Wires.  Tenant may not introduce
          ---------------------------------
Telecommunication wires or other wires into the Premises without first obtaining
Landlord's approval of the method and location of such introduction.

     23.  Rules Changes; Waivers.  Subject to Section 4 of the Lease, Landlord
          ----------------------
reserves the right at any time to reasonably change or rescind any one or more
of these Rules and Regulations or to make any additional reasonable Rules and
Regulations that, in Landlord's judgment, may be necessary or helpful for the
management, safety or cleanliness of the Premises or Building; the preservation
of good order; or the convenience of occupants and tenants of the Building
generally.  Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant.  No waiver by Landlord shall be
construed as a waiver of those Rules and Regulations in favor of any other
tenant, and no waiver shall prevent Landlord from enforcing those Rules and

                                      C-3

<PAGE>

Regulations against a tenant or any other tenant in the future. Tenant
shall be considered to have read these Rules and Regulations and to have agreed
to abide by them as a condition of Tenant's occupancy of the Premises.

                                      C-4

<PAGE>

                                   EXHIBIT D

                             WORK LETTER AGREEMENT
                             ---------------------

     This Work Letter Agreement is attached to and made a part of the Lease.
All terms used in this Work Letter Agreement which have been defined in the
Lease have the same meaning as set forth in the Lease.  This Work Letter
Agreement shall set forth the terms and conditions relating to the construction
of Tenant Improvements in the Premises.

I.   Landlord and Tenant Construction Obligations
     --------------------------------------------

     A.   Space Plan Preparation.  Tenant shall assist and fully cooperate with
          ----------------------
the space planner/architect (the "Space Planner") designated by Landlord to
prepare a detailed space plan ("Space Plan") containing all information listed
in Section II of this Work Letter Agreement for all tenant improvements ("Tenant
Improvements") proposed by Tenant in the Premises.  The Space Plan shall be
delivered to Landlord on or before the date specified in the Summary of Basic
Lease Information, Section "H."  If the Space Plan is not delivered by the date
listed above, then each calendar day of delay in delivery shall constitute one
day of "Tenant Delay" hereunder.

     B.   Space Plan Approval and Tenant Improvement Allowance.  Landlord will
          ----------------------------------------------------
review the Space Plan upon receipt from Tenant and shall thereafter meet with
Tenant and advise Tenant as to the matters set forth in this Section IB below.
In connection with construction of the Tenant Improvements, Tenant shall be
entitled to a one-time tenant improvement allowance (the "Tenant Improvement
Allowance") in the amount specified in the Summary of Basic Lease Information,
Section "H" for the costs relating to the design, modification and construction
of the Tenant Improvements as provided herein.  The Tenant Improvement Allowance
shall be disbursed by Landlord (pursuant to Landlord's disbursement process) for
the following items, each of which shall be applied against and reduce the
Tenant Improvement Allowance:  (i) the cost of materials, labor and other costs
related to the construction of the Tenant Improvements, (ii) the cost of
preparation and one modification of the Space Plan at a fee of seventeen cents
($.17) per usable square foot of the Premises, together with additional charges
for any additional modifications, (iii) the cost of the preparation of
construction plans or Working Drawings at a fee of fifty-two cents ($.52) per
usable square foot of the Premises, together with additional charges for any
additional modifications, (iv) a construction management and administration fee
of fifty cents ($.50) per usable square foot of the Premises, and (v) payment of
architectural and engineering fees associated with the Space Plan and Working
Drawings not otherwise included within the items specified above (collectively
the "Tenant Improvement Allowance Items").  In no event shall Landlord be
obligated to make disbursements for Tenant Improvements pursuant to this Work
Letter Agreement in excess of the Tenant Improvement Allowance, plus sums paid
by Tenant in accordance with the Pricing Agreement Letter (defined below).

     If the Landlord determines that the Space Plan does not conform to the
requirements of Section II below, or Tenant determines that the estimated costs
of Tenant Improvements which are in excess of the Tenant Improvement Allowance
are not within the scope of its budget, the Space Plan will be returned to
Tenant for review by Tenant with the Space Planner and for corrections or
revisions.  The cost of any correction or revision to the Space Plan shall be
included within the Tenant Improvement Allowance and borne by Tenant.  Tenant
will deliver a corrected Space Plan within the scope of its budget to Landlord
no later than ten (10) calendar days after the initial proposed Space Plan has
been returned to Tenant.  Each calendar day after the day the initial proposed
Space Plan is returned to Tenant until a revised and corrected Space Plan is
redelivered to Landlord shall constitute one day of Tenant Delay.  This process
will be repeated, as required, until mutual approval of Tenant's Space Plan and
estimated Tenant Improvement costs.  Upon approval of the final Space Plan and
estimated Tenant Improvement costs, Tenant will notify Landlord in writing of
such approval and that the preparation of working drawings may commence.

     C.   Preparation of Working Drawings.  Upon final approval of the Space
          -------------------------------
Plan and estimated  Tenant Improvement costs, Landlord shall direct the Space
Planner to prepare working drawings ("Working Drawings") based on the approved
Space Plan.  When prepared, the Working Drawings consistent with the Space Plan
shall be delivered by the Space Planner to the Tenant for approval.  If the
Tenant fails to deliver the Working Drawings, together with its written approval
thereof, to the Landlord within ten (10) calendar days after delivery of the
Working Drawings by the Space Planner to Tenant, then each day of delay in
delivery of the approved Working Drawings shall constitute one day of Tenant
Delay.

     D.   Pricing Agreement Letter.  Upon receipt of Working Drawings approved
          ------------------------
by Tenant, Landlord shall price the cost of the Tenant Improvements in
accordance with the Working Drawings, and furnish Tenant a Pricing Agreement
Letter in the form of Exhibit D1 hereto ("Pricing Agreement Letter") within
fourteen (14) calendar days from the receipt of approved Working Drawings.  The
Pricing Agreement Letter shall provide for

                                      D-1
<PAGE>

the Tenant Improvement Allowance to be paid by the Landlord and all Tenant
Improvement costs in excess of the Tenant Improvement Allowance to be paid by
the Tenant. If a Pricing Agreement Letter is not delivered to Tenant on or
before such date, then each day of delay in delivery shall constitute one day of
"Landlord Delay" hereunder; provided, however, that if a Pricing Agreement
Letter cannot be delivered within fourteen (14) calendar days due to the
complexity or amount of Above Standard Tenant Improvements, Landlord shall so
notify Tenant, and any delay associated therewith shall not constitute a
Landlord Delay.

     E.   Tenant Approval of Pricing Agreement Letter.  Tenant shall promptly
          -------------------------------------------
review the Pricing Agreement Letter and shall approve, execute and return same
to Landlord within ten (10) calendar days after delivery thereof to Tenant.  If
the Tenant fails to execute and deliver the Pricing Agreement Letter within said
ten (10) calendar day period, then each day of delay in delivery shall
constitute one day of Tenant Delay.  The Pricing Agreement Letter shall require
that Tenant pay fifty percent (50%) of all Tenant Improvement costs in excess of
the Tenant Improvement Allowance presented in the Pricing Agreement Letter upon
execution of the Pricing Agreement Letter.  Landlord reserves the right to bill
Tenant up to ninety-five percent (95%) of the Tenant Improvement costs in excess
of the Tenant Improvement Allowance during the construction period in proportion
to the amount of work completed or materials purchased, with the final five
percent (5%) due upon acceptance of the completed Premises and in any event no
later than one (1) day before occupancy by Tenant.

     F.   Installation of Tenant Improvements.  Upon approval and execution of
          -----------------------------------
the Pricing Agreement Letter by Tenant, Landlord or Landlord's designee shall
install the Tenant Improvements in the Premises in accordance with the Lease
Agreement, this Work Letter Agreement, the executed Pricing Agreement Letter and
the Working Drawings.  Landlord shall meet with Tenant and advise Tenant which
Tenant Improvements in the Working Drawings are in excess of Building Standard
Tenant Improvements as set forth in Exhibit D2 attached hereto and incorporated
herein by this reference.  Any Tenant Improvements which are determined by
Landlord to be in excess of the Building Standard Tenant Improvements shall be
referred to as "Above Standard Tenant Improvements."  The excess of time
required to complete the Above Standard Tenant Improvements over the time which
would have been required to complete the Premises for occupancy had only
Building Standard Tenant Improvements been used shall constitute Tenant Delay.
Landlord's Work will be performed in a good workmanlike manner and will be
adequate to deliver possession of the Premises Substantially Completed as
provided in this Work Letter Agreement.  Landlord will retain a general
contractor for the construction of Landlord's Work, and the general contractor
will supervise, construct and complete all Landlord's Work in accordance with
the Working Drawings.  The general contractor may be paid a general contractor's
fee, not to exceed sixteen percent (16%) of the costs of labor and material for
Landlord's Work, as set forth in the Pricing Agreement Letter, and such fee will
be applied against the Tenant Improvement Allowance.  Other than the fee
described in Paragraph I.B(iv), Landlord will not receive any fees or profit or
reimbursement for overhead or general conditions in connection with Landlord's
Work.  Landlord will supervise, bid and secure all permits and licenses
necessary to complete Landlord's Work, and Landlord will assume responsibility
for ensuring that all Landlord's Work and other construction work in the
Premises undertaken by or on behalf of Landlord is in compliance with all Legal
Requirements.  Changes in Landlord's Work will be authorized only by mutual
written agreement between the parties setting forth any additional cost and
expense and additional time required to complete the Premises as a result
thereof.

     G.   Payment by Tenant for All Costs in Excess of Tenant Improvement
          ---------------------------------------------------------------
Allowance.  Tenant shall pay all costs incurred in connection with the Tenant
---------
Improvements in excess of the Tenant Improvement Allowance, including, without
limitation, the costs of labor and materials.  To the extent that the actual
cost of any element of Landlord's Work is less than the amount budgeted therefor
in the Pricing Agreement Letter, the cost savings shall inure to the benefit of
Tenant.

     H.   Change Orders.  In the event that Tenant desires to change the Tenant
          -------------
Improvements as provided in the approved Working Drawings, Tenant shall deliver
notice of the same to Landlord, setting forth in detail the changes Tenant
desires to make.  Landlord may disapprove of said Tenant Changes in the event
that Landlord, in its sole discretion, determines that the changes would
constitute design problems for the Premises or Building.  In the event that
Landlord approves of the proposed Tenant Changes, Landlord shall provide Tenant
with an amendment to the Pricing Agreement Letter setting forth the costs and
the period of Tenant Delay necessitated by the Tenant Changes.  Thereafter, the
Tenant shall, within five (5) calendar days of receipt of Landlord's approval,
deliver written notice to Landlord stating whether or not Tenant elects to cause
Landlord to make such Tenant Changes.  Tenant shall bear the full costs for any
and all such changes in the Tenant Improvements and any delays associated with
such changes shall constitute Tenant Delay.  The costs for any and all change
orders shall be determined by the same pricing structure as the Tenant
Improvements as set forth in the Pricing Agreement Letter.

     I.   Net Tenant Delay.  Net Tenant Delay shall mean the total number of
          ----------------
days of Tenant Delay minus the total number of days of Landlord Delay.  If the
Premises are not ready for occupancy on or before the scheduled date specified
in paragraph 6 of this Lease, and there exists Net Tenant Delay, then,
notwithstanding
<PAGE>

anything to the contrary set forth in the Lease or this Work Letter Agreement,
and regardless of the actual date of the Substantial Completion of the Premises,
the Lease Commencement Date shall be deemed to be the date the Lease
Commencement Date would have occurred without the Net Tenant Delay and Tenant
shall timely pay to Landlord Base Rent and all other charges provided for in the
Lease commencing as of the Lease Commencement Date determined as if the Net
Tenant Delay had not occurred. In addition, a Net Tenant Delay of thirty (30)
calendar days or more shall constitute a default and breach by Tenant of the
Lease.

        J.  Warranties and Guaranties. Landlord hereby assigns to Tenant all
            -------------------------
warranties and guaranties by the Space Planner relating to the Working Drawings
and by the contractor who constructs the Tenant Improvements relating to the
Tenant Improvements and, in consideration therefor, Tenant hereby waives,
releases and agrees to indemnify Landlord from all loss, damages, delays and
claims relating to, or arising out of (i) the design, code compliance, quality,
omissions or errors and other like matters contained in the Working Drawings,
and (ii) the construction of the Tenant Improvements, including, without
limitation, lost profits and all incidental or consequential damages.

II.     Tenant Space Plan Must Contain, as a Minimum, the Following Information:
        -----------------------------------------------------------------------

        A.        Floor plan showing:

                  1.    Partitions: indicate location and type of all
                        partitions.

                  2.    Doors: indicate location, swing and type of all doors.
                        Also indicate hardware.

                  3.    Standard Electrical Items: indicate the location of all
                        building standard electrical items listed herein (wall-
                        mounted 110 volt duplex outlets, single-pole light
                        switches and building standard light fixtures).

                  4.    Standard Telephone Outlets: indicate the location of all
                        building standard telephone wall outlets, as listed
                        herein.

                  5.    "Above Standard" Electrical Items: indicate the location
                        and type of all "above standard" electrical items,
                        including lighting.

                  6.    Special Electrical Equipment and Requirements: indicate
                        the location and type of equipment that will have
                        special requirements and indicate the location and type
                        of special electrical equipment to be purchased.

                  7.    Telephone and Data Equipment Location: indicate location
                        of telephone equipment room, if any.

                  8.    Glass Items: indicate location, dimensions and type of
                        glass partitions, windows and doors. Include details if
                        not building standard.

                  9.    Heavy Items: indicate location, dimensions, weight per
                        square foot and description of any heavy equipment or
                        filing system exceeding fifty (50) pounds per square
                        foot live load.

                  10.   Special HVAC Requirements: Indicate location and
                        specific requirements for any special and/or
                        concentrated heating and/or air conditioning
                        requirements beyond that provided by the building HVAC
                        system and/or distribution network.

                  11.   Floor Covering: indicate location, type and color of all
                        floor covering.

                  12.   Wall Covering: indicate location, type and color of all
                        wall coverings.

                  13.   Paint: indicate location, type and color of paint
                        finishes.

                  14.   Millwork: indicate location, type and basic dimensions
                        of all cabinets, shelving and other millwork items.

                  15.   Plumbing: indicate location and type of all plumbing
                        items.

                  16.   Appliances: indicate location, type, dimensions and
                        special requirements of all appliances.

                                      D-3
<PAGE>

               17.   Critical Dimensions: indicate all critical dimensions
                     necessary for construction.

               18.   Fire Sprinkler Requirements: indicate location and type
                     of all fire sprinkling and/or special fire suppression
                     requirements.

               19.   Ceiling System and Finishes: indicate location, type and
                     color of all ceiling finishes and/or systems.

               20.   Security Requirements: indicate the location, type and
                     special requirements for any security system and/or
                     requirements.

               21.   Furniture System Requirements: indicate all interfacing
                     requirements with furniture systems (i.e., electrical,
                     telephone, data, anchoring, etc.).

III.     Other Provisions.
         ----------------

         A.    Substantial Completion.  For purposes of this Lease,
               ----------------------
"Substantial Completion" (and correlative terms) of the Premises shall occur at
such time as the Premises are "Ready for Occupancy". The Premises shall be
"Ready for Occupancy" at such time as all of the following conditions have been
satisfied:

               1.    Landlord will have completed the Landlord's Work
     substantially in accordance with the Working Drawings;

               2.    The Premises will be sufficiently complete so that Tenant
               can reasonably occupy and utilize them for the use for which they
               are intended without interference to the conduct of Tenant's
               business;

               3.    Landlord will have received any governmental approvals
     which are necessary in order for Tenant to occupy the Premises including a
     use and occupancy permit, if the same is required; and

               4.    The Architect's Certificate has been given.

          The following procedure will be followed to obtain the Architect's
Certificate. As soon as Landlord determines that all of the conditions in
clauses (i), (ii), and (iii) (the "Occupancy Conditions") have been satisfied,
it will give Tenant notice of such determination. Tenant will then cause
Tenant's architect, within three (3) days thereafter, to inspect the Premises
and certify as to whether the Occupancy Conditions have been satisfied (the
"Architect's Certificate"). Unless Tenant's architect notifies Landlord within
such 3-day period that, in the reasonable judgment of such architect, that the
Occupancy Conditions have not been satisfied and the reasons therefor, the
Occupancy conditions will be deemed satisfied and the Architect's Certificate
deemed given. If Tenant's architect notifies Landlord that the Occupancy
conditions have not been satisfied in the reasonable judgment of such architect,
Landlord will make any required adjustments and Tenant's architect will again
determine whether the Occupancy Conditions are satisfied in accordance with the
foregoing procedure. As soon as it is determined by Tenant's architect that all
of the Occupancy Conditions have been completed and the Architect"s Certificate
is given or deemed given, Landlord and Tenant will jointly conduct an inspection
of the Premises. Landlord and Tenant will in good faith prepare any necessary
punchlist of items (the "First Punchlist") to be completed for the Premises
together with a completion date for each item. Landlord will proceed promptly to
remedy all of the items of the First Punchlist. Sixty (60) days after the
Commencement Date, Landlord and Tenant will jointly conduct a second inspection
of the Premises and will prepare a punchlist (the "Second Punchlist") of items
to be completed for the Premises together with a completion date for each item.
No items will be included on the list which are the result of damage caused by
Tenant or its agents, employees, servants or contractors. Landlord agrees to
promptly remedy any items on the Second Punchlist. If Landlord fails to complete
any item on the First Punchlist or Second Punchlist by its completion date,
Tenant may proceed to complete such item at Landlord's expense. Preparation of
punchlists and completion of any punchlist items are not a condition precedent
to Lease Term Commencement and will not delay the Commencement Date.

          B. Time of the Essence. Unless otherwise indicated, all references
             -------------------
herein to "number of days" shall mean and refer to calendar days. In all
instances where Tenant is required to approve or deliver an item, if no written
notice of approval is given or the item is not delivered within the stated time
period, at Landlord's sole option, at the end of such period the item shall
automatically be deemed approved or delivered by Tenant and the next succeeding
time period shall commence.

          C. Tenant's Lease Default.  Notwithstanding any provision to the
             ----------------------
contrary contained in the Lease or this Work Letter Agreement, if an event of
default has occurred as set forth in the Lease or in this Work Letter

                                      D-4
<PAGE>

Agreement at any time on or before the Substantial Completion of the Premises,
then, (i) in addition to all other rights and remedies granted to Landlord
pursuant to the Lease, Landlord shall have the right to cease the construction
of the Premises (in which case, Tenant shall be responsible for any delay in the
Substantial Completion of the Premises caused by such work stoppage), (ii) all
other obligations of Landlord under the terms of this Work Letter Agreement
shall be suspended until such time as such default is cured pursuant to the
terms of the Lease, and (iii) Landlord shall have the right to recover from
Tenant the costs incurred for the Tenant Improvement Allowance Items, and
otherwise in connection with the construction of the Tenant Improvements.

          D.   Construction of Certain Improvements.  The construction of
               ------------------------------------
certain Tenant Improvement items specified below shall be completed in
accordance with the following provisions:

               1.   "Above Standard"
                    Electrical Items:            Tenant shall advise Landlord of
                                                 locations and types of all
                                                 "above standard" electrical
                                                 items, including lighting.

               2.   Special Electrical
                    Equipment and
                    Requirements:                Tenant shall advise Landlord of
                                                 locations and types of all
                                                 special electrical equipment.

               3.   Appliances:                  Tenant shall advise Landlord of
                                                 locations, types, dimensions
                                                 and special requirements of all
                                                 appliances.

               4.   Telephone and Data
                    Equipment Location:          Tenant shall advise Landlord of
                                                 location, of telephone
                                                 equipment room, if any.

               5.   Heavy Items:                 Tenant shall advise Landlord of
                                                 location, dimensions, weight
                                                 per square foot and description
                                                 of heavy equipment or filing
                                                 systems exceeding 50 pounds/SF
                                                 live load.

               6.   Millwork:                    Tenant shall advise Landlord of
                                                 location, type and basic
                                                 dimensions of all cabinets,
                                                 shelving and other millwork
                                                 items. Standard Plastic
                                                 Laminate Specifications:
                                                 Countertops: Wilsonart #1573-
                                                 60. Cabinets: Pionite #AT301-S.

               7.   Plumbing:                    Tenant shall advise Landlord of
                                                 location and type of all
                                                 plumbing fixtures. Standard
                                                 Sink Specification: Kohler,
                                                 stainless #K-3287-H with
                                                 stainless faucet #K-15176.

               8.   Special HVAC:                Tenant shall advise Landlord of
                                                 special HVAC requirements.

               9.   Critical Dimensions:         Tenant shall advise Landlord of
                                                 all critical dimensions
                                                 necessary for construction.

               10.  Security Requirements:       Tenant shall advise Landlord of
                                                 the location, type and any
                                                 special requirements.

               11.  Furniture Systems:           Tenant shall advise Landlord of
                                                 all interfacing requirements
                                                 between furniture and systems
                                                 for electrical, telephones,
                                                 data, anchoring, etc.

          E.   Removal of Certain Tenant Improvements; Repair and Restoration
               --------------------------------------------------------------
of the Affected Premises. Pursuant to Section 6.4 of the Lease Agreement, Tenant
------------------------
shall:

               1.   Replace with Building Standard windows the two mechanical
                    vents that vent to the outside, one of which is located in
                    the manufacturing lab and the other of which is located in
                    the shell lab.

                                      D-5
<PAGE>

               2.   Remove auditory labs one and two and pour a concrete floor
                    where the labs were located.

                                      D-6
<PAGE>

                                  EXHIBIT D1

                           PRICING AGREEMENT LETTER
                           ------------------------

         This Pricing Agreement Letter dated ___________, 19___, is entered into
by and between 2795 E. COTTONWOOD PARKWAY, L.C. ("Landlord") and SONIC
INNOVATIONS, INC., a Delaware corporation ("Tenant").

                               R E C I T A L S :
                               - - - - - - - -

         A.  Pursuant to that certain Lease Agreement between Landlord and
Tenant, and the Work Letter Agreement which is an Exhibit thereto (collectively
the "Lease Agreement"), Tenant has leased from Landlord commercial office space
in the building ("Building") constructed on certain real property owned by
Landlord, as more particularly described in the Lease Agreement.

         B.  Landlord and Tenant have agreed to construct certain Tenant
Improvements in the Building as set forth in the Lease Agreement, and more
particularly in the Work Letter Agreement and this Pricing Agreement Letter
which are exhibits thereto.

         C.  Landlord and Tenant now agree as to the pricing and payment of the
construction of the Tenant Improvements as set forth in this Pricing Agreement
Letter and the Itemization of Tenant Improvement Costs (hereinafter defined)
attached hereto as Exhibit "A."

             NOW, THEREFORE, for and in consideration of the parties' covenants
and agreements contained herein and in the Lease Agreement, Landlord and Tenant
covenant and agree as follows:

             1. Landlord and Tenant have approved the Working Drawings for the
Tenant Improvements, dated                             , 19__, signed copies of
                     --------------------------------------
which have been delivered to Landlord and Tenant. Landlord agrees to construct
the Tenant Improvements in accordance with the approved Working Drawings;
provided, however, the costs of Tenant Improvements shall be paid as provided
herein.

             2. If the actual cost of the Tenant Improvements exceeds the Tenant
Improvement Allowance (as defined in the Work Letter Agreement between the
parties), Tenant shall pay Landlord all amounts in excess of the Tenant
Improvement Allowance. The Tenant and Landlord acknowledge and agree that the
Tenant Improvement Allowance shall be disbursed for the Tenant Improvement
Allowance Items as set forth in the Work Letter Agreement. Any other provision
of the Lease, the Work Letter Agreement, or this Pricing Agreement Letter to the
contrary notwithstanding, the Tenant Improvement Allowance is to be considered
as a "pool", even though it is designated for certain categories as stated in
Paragraph 1.B. of the Work Letter Agreement, and may be transferred from one
allowance category to another, i.e., an unused portion of the Space Plan
allowance could be used for materials and labor for construction of the Tenant
Improvements. Further, any unused portion of the Tenant Improvement Allowance
may be taken in cash (with 30 days prior written notice to Landlord), on the
Phase II Move-In Date, or in free rent, commencing on the Phase II Move-In Date,
at Tenant's option.

             3. Attached to this Pricing Agreement Letter is an itemization of
Tenant Improvement costs ("Itemization of Tenant Improvement Costs") which sets
forth the cost of all Tenant Improvement Allowance Items and other costs to be
incurred in connection with the initial design and construction of the Tenant
Improvements in accordance with the Working Drawings. Concurrent with the
execution of this Pricing Agreement Letter, Tenant shall provide its written
consent and approval to the Itemization of Tenant Improvement Costs and deliver
the same to the Landlord. Upon receipt of the Itemization of Tenant Improvement
Costs and this Pricing Agreement Letter, executed by Tenant, Landlord shall be
released by Tenant to commence the construction of the Tenant Improvements in
accordance with the Working Drawings, this Pricing Agreement Letter and the
Itemization of Tenant Improvement Costs attached hereto.

             4.  Concurrently with the approval and execution by Tenant of this
Pricing Agreement Letter and the Itemization of Tenant Improvement Costs, Tenant
shall pay fifty percent (50%) of all Tenant Improvement costs in excess of the
Tenant Improvement Allowance as presented on the Itemization of Tenant
Improvement Costs. Landlord reserves the right to bill Tenant up to ninety-five
percent (95%) of the costs in excess of the Tenant Improvement Allowance during
the construction period in proportion to the amount of work completed or
materials purchased, with the final five percent (5%) due upon acceptance of the
completed Premises and in any event no later than one (1) day before occupancy
by Tenant. In the event that any revisions, changes or substitutions shall be
made to the Working Drawings or the Tenant Improvements after execution by

                                     D1-1
<PAGE>

Tenant of this Pricing Agreement Letter and the Itemization of Tenant
Improvement Costs, any additional costs which arise in connection with such
revisions, changes or substitutions, or any other additional costs, shall be
paid by Tenant to Landlord immediately upon Landlord's request.

                  DATED effective as of the date first above written.

                                 LANDLORD:

                                 2795 E. COTTONWOOD PARKWAY, L.C., a Utah
                                 limited liability company, by its Manager,

                                 COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
                                 limited partnership, by CotNet Management,
                                 Inc. its general partner

                                 By:__________________________________________
                                    JOHN L. WEST, President

                                 TENANT:

                                 SONIC INNOVATIONS, INC., a Delaware corporation

                                 By:__________________________________________
                                    Title: ___________________________________

                                     D1-2
<PAGE>

                                  EXHIBIT "A"
                          TO PRICING AGREEMENT LETTER

                    ITEMIZATION OF TENANT IMPROVEMENT COSTS
                    ---------------------------------------

                                     D1-3
<PAGE>

                                  EXHIBIT D2

                     BUILDING STANDARD TENANT IMPROVEMENTS
                     -------------------------------------

1.   The "Building Standard Tenant Improvements" (herein so called) are the
     following:

     A.   Flooring:           Grade and quality of carpeting to be selected by
                              Landlord, with color to be selected by Tenant from
                              those offered by Landlord.

                              Standard Specification: Shaw Troubador 36, Shaw
                              Shoal Creek II 36, or Shaw Resolution 29.

                              Standard Specification for VCT flooring: Armstrong
                              Premium Excelon, Style: Canvas

     B.   Base:               Carpet base to match carpeting selected by Tenant.

                              Grade and quality of rubber base, when applicable,
                              to be selected by Landlord.

                              Standard Specification: Johnsonite, 4" rubber
                              base.

     C.   Partitions:         Demising Walls: 3-5/8" metal studs on 24" centers,
                              blanket sound insulation, 5/8" gypsum board on one
                              side. Studs and one layer of gypsum board extend
                              to bottom of steel deck on floor above.

                              Interior Walls: 3-5/8" metal studs on 24" centers,
                              5/8" gypsum board on each side. Walls to be
                              ceiling height and braced as per code
                              requirements.

                              All walls to be finished with tape, texture and
                              paint.

                              Standard Paint Specification: Kwal-Howells 2800
                              Series, Eggshell finish or Kwal-Howells 2300
                              Series, Semi-Gloss.

     D.   Doors/Side Lights:  3'-0" x 8'-0" solid core interior doors, 3'-0" x
                              8'-10" exterior solid core flush wood doors with
                              select white birch rotary cut veneer. Stain to be
                              selected from finish standards. Door frames are
                              hollow metal. Glass manufactured as per code
                              requirements, with hollow metal frames. Standard
                              hardware is Schlage, 626 series in brushed chrome.

     E.   Ceiling:            Armstrong RH90 Fireguard Tegular Lay-In, 24" x 24"
                              for use with 15/16" exposed tee grid.

     F.   Electrical Outlets: Standard 110v duplex wall outlets.

     G.   Light Switches:     Single pole switches.

     H.   Lighting Occupancy
          Sensor:             Automatic lighting control device-Uneco conserver
                              series.

     I.   Light Fixtures:     2' x 4', (3) lamp, 18-cell parabolic, recessed
                              ceiling fixture. Grade and quality of fixture
                              selected by Landlord.

     J.   Fire Sprinkler
          Requirements:       Design build per Landlord, except special
                              requirements, of which the Tenant shall advise the
                              Landlord.

     K.   Window Coverings:   Mechoshade vertical roller shades.

                                     D2-1
<PAGE>

                                   EXHIBIT E

                           LEGAL DESCRIPTION OF LAND
                           -------------------------

BEGINNING at a point North 0 08'51" East along the Section line 908.560 feet,
and North 89 04'36" East 409.306 feet; from the West Quarter Corner of Section
23, Township 2 South, Range 1 East, Salt Lake Base and Meridian: Thence North 89
04'36" East 293.456 feet; thence South 0 03'29" West 169.090 feet; thence South
89 49'14" East 16.454 feet to a point on a 565.000 foot radius Curve to the left
the center of which bears North 0 10'47" East; thence Northeasterly along said
Curve to the left through a central angle of 4 38'05" a distance of 45.704;
thence South 4 27'18" East 269.999 feet to a point on a 835.000 foot radius
Curve to the right the center of which bears North 4 27'18" West; thence South
along said Curve to the right through a central angle of 4 38'05" a distance of
67.544; thence North 89 49'13" West 310.216 feet; thence North 0 10'47" East
433.439 feet to the point of BEGINNING. Contains 147,859 square feet or 3.3944
acres.

                                      E-1
<PAGE>

                                   EXHIBIT F

                           LEASE EXTENSION ADDENDUM
                           ------------------------

          THIS LEASE EXTENSION ADDENDUM ("Addendum") is entered into as of
April 28, 1999, between Landlord and Tenant (as those terms are defined
in that certain Lease Agreement between Landlord and Tenant, dated April 28,
1999 (the "Lease"). Subject to the provisions of the Lease, Landlord hereby
grants to Tenant the option ("Extension Option") to extend the term of the Lease
for ONE successive extension term of FIVE years in accordance with the
provisions set forth in this Addendum (an "Extension Renewal Term"). If the Term
of the Lease is so extended, such extension shall be on the same terms and
conditions as are applicable during the initial Term as set forth in the Lease,
except that the Base Rent during the Extension Renewal Term shall be at the
"Prevailing Rental Rate" which shall mean the rental rate determined for the
most comparable office space located in the Cottonwood Corporate Center Project
as of the date of the Extension Notice (defined below) and taking into account
all relevant factors including, without limitation, any applicable tenant
improvement allowance, Base Year and expense then in effect, but in no event
less than the Rent under the Lease as of the date of the Extension Notice.

          1.   Exercise. If Tenant desires to exercise an Extension Option, it
               --------
shall send notice thereof (an "Extension Notice") to Landlord no more than three
hundred (300) nor less than two hundred seventy (270) calendar days prior to the
expiration of the Term or Extension Renewal Term of the Lease then in effect.
Landlord and Tenant shall endeavor in good faith to determine the Prevailing
Rental Rate within thirty (30) calendar days after Landlord's receipt of
Tenant's Extension Notice. If they cannot agree within thirty (30) calendar
days, each shall appoint an appraiser who shall arrive at an estimate of the
Prevailing Rental Rate within thirty (30) calendar days. If such estimates are
within five percent (5%) of each other, the average of the two shall be the new
Base Rent for the Extension Renewal Term. If the estimates are more than five
percent (5%) apart, each appraiser shall select a third appraiser within five
(5) calendar days or, if they fail to do so, Landlord shall select a third
appraiser. The third appraiser shall prepare an estimate of the Prevailing
Rental Rate as provided above within thirty (30) calendar days and the two
closest of the three estimates shall be averaged to determine the new Base Rent
for the new Extension Renewal Term. No later than one hundred twenty (120)
calendar days prior to the expiration of the Lease Term then in effect, Landlord
and Tenant shall execute an amendment to the Lease (an "Extension Amendment")
stating the new Base Rent and expiration date of the Lease Term. If such an
Extension Amendment is not fully executed by the parties for any reason as
provided above other than Landlord's breach, the Term shall not be extended and
all Extension Option(s) hereunder shall terminate. Notwithstanding the
foregoing, Tenant shall not be entitled to extend this Lease if an uncured Event
of Default has occurred under any term or provision contained in the Lease
Agreement or a condition exists which with the passage of time or the giving of
notice, or both, would constitute an Event of Default pursuant to the Lease
Agreement as of the date of exercise of this Extension Option. The rights
contained in this Addendum shall be personal to the originally named Tenant and
may be exercised only by the originally named Tenant and any Related Entity (and
not any other assignee, sublessee or other Transferee of Tenant's interest in
this Lease) and only if the originally named Tenant or Related Entity occupies
the entire Premises as of the date it exercises the Extension Option in
accordance with the terms of this Addendum. If Tenant properly exercises the
Extension Option and is not in default under this Lease at the end of the
initial Term of the Lease, the Lease Term, as it applies to the entire Premises
then leased by Tenant, shall be extended for the Extension Renewal Term.

          2.   Other Provisions. If Tenant fails to deliver a timely Extension
               ----------------
Notice, Tenant shall be considered to have elected not to exercise the Extension
Option. Any termination of the Lease during the initial or applicable Lease Term
or Extension Renewal Term shall terminate all renewal or lease extension rights
hereunder. The extension rights of Tenant hereunder shall not be severable from
the Lease, nor may such rights be assigned or otherwise conveyed in connection
with any permitted assignment of the Lease other than to a Related Entity.
During any Extension Renewal Term all leasehold improvements within the Premises
shall be provided in their then-existing condition (on an "as-is" basis) at the
time the Extension Renewal Term commences.

                                      F-1
<PAGE>

          DATED this 28 day of April, 1999.

                              LANDLORD:

                              2795 E. COTTONWOOD PARKWAY, L.C., a Utah limited
                              liability company, by its Manager,

                              COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
                              limited partnership, by CotNet Management, Inc.
                              its general partner

                                 By: /s/ John L. West
                                    -----------------------------------------
                                     JOHN L. WEST, President

                              TENANT:

                              SONIC INNOVATIONS, INC., a Delaware corporation

                              By: /s/ William S. Barth
                                 -------------------------------------------
                                 Title: VP of Finance & CFO
                                        ------------------------------------

                                      F-2
<PAGE>

                                   EXHIBIT G

                   ACKNOWLEDGMENT OF LEASE COMMENCEMENT DATE
                   -----------------------------------------

                         STATEMENT OF CONFIRMATION AND
                         -----------------------------
                   ACKNOWLEDGMENT OF LEASE COMMENCEMENT DATE
                   -----------------------------------------

     In accordance with that certain Lease Agreement between 2795 E. COTTONWOOD
PARKWAY, L.C., as Landlord and the undersigned, as Tenant (the "Lease"), the
Tenant hereby confirms the following:

     1.   Construction of the Tenant Improvements for the Phase One Space is
Substantially Complete, and the Lease Term shall commence as of
_________________, for a term of _________ years, _________ months, and
_________ days, ending on ________________.

     2.   In accordance with the Lease, Base Rent shall begin to accrue on
____________, in the amount of _____________________________ DOLLARS
($__________).

     3.   The dates applicable to Section 3.1 of the Lease for Tenant's right to
terminate the Lease shall be as follows:

          (a)  Dates for Landlord receipt of Tenant's exercise notice (Section
               3.1(a)):
               Between __________________ and ______________________.

          (b)  Dates for payment of $200,000 to Landlord and vacation by Tenant
               of at least one-half of Premises (Section 3.1(b)):
               Between __________________ and ______________________.

          (c)  Dates for vacation by Tenant of the remainder of the Premises
               (Section 3.1(c)):
               Between __________________ and ______________________.

                            LANDLORD:

                            2795 E. COTTONWOOD PARKWAY, L.C., a Utah limited
                            liability company, by its Manager,

                            COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah limited
                            partnership, by CotNet Management, Inc. its general
                            partner

                              By:_____________________________________________
                                  JOHN L. WEST, President

                            TENANT:

                            SONIC INNOVATIONS, INC., a Delaware corporation

                            By:_______________________________________________
                               Title:_________________________________________

                                      G-1
<PAGE>

                                   EXHIBIT H
                                   ---------

WHEN RECORDED, RETURN TO:
------------------------

U.S. Bank National Association
107 South Main Street
Salt Lake City, Utah 84111
Attn:  Commercial Real Estate Division

                             ESTOPPEL CERTIFICATE,
                             ---------------------
                        SUBORDINATION, NON-DISTURBANCE
                        ------------------------------
                           AND ATTORNMENT AGREEMENT
                           ------------------------

          THIS AGREEMENT, made and entered into as of the ______ day of
_____________, 199___, by and between U.S. BANK NATIONAL ASSOCIATION, with its
principal office at 107 South Main Street, Salt Lake City, Utah 84111 ("Bank"),
2855 E. COTTONWOOD PARKWAY, L.C., a Utah general limited liability company, with
its principal office at 2855 E. Cottonwood Parkway, Suite 560, Salt Lake City,
Utah 84121 ("Lessor"), and SONIC INNOVATIONS, INC., a Delaware corporation, with
its principal office at ____________________________________________ ("Lessee").

                               R E C I T A L S:
                               - - - - - - - -

     A.   Lessee has by a written lease dated ___________, 19____, and any
future amendments and extensions approved by Bank (the "Lease") leased from
Lessor commercial office space in the improvements constructed on certain real
property owned by Lessor located in Salt Lake County, Utah, as more particularly
described in Exhibit "A" attached to and incorporated in this Agreement by
reference (the "Premises").

     B.   Lessor has executed in favor of Bank a Deed of Trust which encumbers
the Premises as security for a loan from Bank to Lessor (the "Deed of Trust").

     C.   Lessee, Lessor and Bank have agreed to the following with respect to
their mutual rights and obligations pursuant to the Lease and the Deed of Trust.

          NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid
by each party to the other and the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt of which is
hereby acknowledged, Bank, Lessor and Lessee covenant and agree as follows:

          1.   Lessee represents to and covenants with the Bank that:

               (a)  Lessee is the tenant under the Lease and the same has not
     been modified, changed, altered, or amended in any respect and is the only
     lease agreement between Lessee and Lessor relating to the Premises, and the
     Lease represents the entire understanding between Lessee and Lessor with
     respect to the Premises.

               (b)  Lessee is not in default under any provision of the Lease,
     nor is there any fact or condition which, with notice or lapse of time,
     would constitute a default.

               (c)  The Lease is in full force and effect, and, except as
     otherwise provided in the Lease, Lessee is not entitled to any lien,
     credit, offset, or reduction in rent.

               (d)  Lessee's initial monthly installment of rent under the Lease
     is to be a minimum of $__________.

               (e)  Except for a security deposit of $__________ and prepaid
     rent in the amount of $_________, Lessee has no other claim against Lessor
     for any deposit or prepaid rent.

               (f)  Except as otherwise permitted under the Lease, Lessee has
     not transferred, hypothecated or assigned Lessee's interest under the
     Lease. Except for assignments or sublettings which do not require Lessor's
     consent under the Lease, Lessee shall not authorize or consent to any
     assignment

                                      H-1
<PAGE>

     or subletting of the Premises without the prior written consent of the
     Bank, which consent shall not be unreasonably withheld.

               (g)  There are no actions or proceedings, whether voluntary or
     otherwise, pending or threatened against Lessee under any bankruptcy or
     insolvency laws or under any other laws providing relief to debtors.

               (h)  To the best of Lessee's knowledge, Lessor is not in default
     in any respect of its obligations under the Lease, nor is there now any
     fact or condition which, with notice or lapse of time, would constitute a
     default.

               (i)  Other than the possessory rights arising under the Lease,
     Lessee has no option to purchase the Premises or otherwise acquire title to
     or an interest in the Premises.

               (j)  Other than the assignment to the Bank described herein,
     Lessee has no knowledge of any other assignment, hypothecation, mortgage or
     pledge of Lessor's interest in the Lease or the rents payable thereunder,
     except as may be disclosed by other recorded instruments.

          2.   Lessee's interest in the Lease and all rights of Lessee
thereunder, including any purchase option, shall be and are hereby declared
subject and subordinate to the lien and encumbrance of the Deed of Trust. The
term "Deed of Trust" as used in this Agreement shall also include any amendment,
supplement, modification, renewal, refinance or replacement thereof.

          3.   In the event of any foreclosure of the Deed of Trust or any
conveyance in lieu of foreclosure, provided that the Lessee shall not then be in
default beyond any grace period under the Lease and that the Lease shall then be
in full force and effect, the Lease shall not be terminated nor shall Lessee be
joined in foreclosure proceedings, nor shall Lessee's possession be disturbed,
and the Lease shall continue in full force and effect as a direct lease between
Lessee and Bank.

          4.   After the receipt by Lessee of notice from Bank of any
foreclosure of the Deed of Trust or any conveyance of the Premises in lieu of
foreclosure, Lessee will thereafter attorn to and recognize Bank or any
purchaser from Bank at any foreclosure sale or otherwise as Lessee's substitute
lessor on the terms and conditions set forth in the Lease.

          5.   Lessee shall not prepay any of the rents under the Lease more
than one month in advance (except as provided otherwise in the Lease) without
the prior written consent of Bank.

          6.   In no event shall Bank be liable for any act or omission of the
Lessor, nor shall Bank be subject to any offsets or deficiencies which Lessee
may be entitled to assert against the Lessor as a result of any act or omission
of Lessor occurring prior to Bank's obtaining possession of the Premises.

          7.   The Lease may not be terminated (except as permitted in the Lease
and except for Landlord's default) without the prior written consent of Bank. No
amendment of the Lease will be binding on Bank unless consented to by Bank which
consent shall not be unreasonably withheld.

          8.   If the Lease is cancelled or terminated for any reason, if any
purchase option contained in the Lease is exercised, or if the Lessee is
required to pay to Lessor any payment in excess of one calendar month in
advance, including, but not limited to lease termination or purchase option
payments, refund of any type, prepayments of rents, litigation settlements or
settlements of past-due rents (all of which shall be referred to herein
collectively as "Extraordinary Rental Payments"), Lessor and Lessee will notify
Bank and Lessor consents to Lessee remitting and Lessee agrees to remit any
Extraordinary Rental Payments to Bank directly and immediately.

          9.   This Agreement and its terms shall be binding upon and inure to
the benefit of Bank, Lessor, Lessee and their respective successors and assigns,
including, without limitation, any purchaser at any foreclosure sale.

          10.  This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, and such counterparts when taken together,
shall constitute but one agreement.

                                      H-2
<PAGE>

          DATED effective as of the date first above written.

                              BANK:

                              U.S. BANK NATIONAL ASSOCIATION

                              By:___________________________________________
                                  ROBERT M. BOWEN, Vice President

                              LESSOR:

                              2795 E. COTTONWOOD PARKWAY, L.C., a Utah limited
                              liability company, by its Manager,

                              COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
                              limited partnership, by CotNet Management, Inc.
                              its general partner

                                   By:______________________________________
                                       JOHN L. WEST, President

                              LESSEE:

                              SONIC INNOVATIONS, INC., a Delaware corporation

                              By:___________________________________________
                                 Title:_____________________________________

                                      H-3
<PAGE>

STATE OF UTAH              )
                           : ss.
COUNTY OF SALT LAKE        )

          The foregoing instrument was acknowledged before me this _____ day of
_____________, 199__, by ROBERT M. BOWEN, who is a Vice President of U.S. BANK
NATIONAL ASSOCIATION.

                              _________________________________________
                              NOTARY PUBLIC
                              Residing at Salt Lake County, Utah

My Commission Expires:

______________________

STATE OF UTAH              )
                           : ss.
COUNTY OF SALT LAKE        )

          The foregoing instrument was acknowledged before me this ______ day of
______________, 199__, by JOHN L. WEST, the President of COTNET MANAGEMENT,
INC., General Partner of COTTONWOOD PARTNERS MANAGEMENT, LTD., Manager of 2795
E. COTTONWOOD PARKWAY, L.C., a Utah limited liability company.

                              _________________________________________
                              NOTARY PUBLIC
                              Residing at Salt Lake County, Utah
My Commission Expires:

______________________

STATE OF UTAH              )
                           : ss.
COUNTY OF SALT LAKE        )

          The foregoing instrument was acknowledged before me this _____ day of
_____________, 19___, by _______________________________, who is a
_____________________________________ of ______________________________________,
a _______________ corporation.

                              _________________________________________
                              NOTARY PUBLIC
                              Residing at Salt Lake County, Utah

My Commission Expires:

______________________

                                      H-4
<PAGE>

                                  EXHIBIT "A"

     The following described real property is located in Salt Lake County, Utah:

     PARCEL 1 ("COTTONWOOD CORPORATE CENTER PARCEL 9"):

     BEGINNING at a point North 0 08'51" East along the Section line 908.560
     feet, and North 89 04'36" East 409.306 feet; from the West Quarter Corner
     of Section 23, Township 2 South, Range 1 East, Salt Lake Base and Meridian:
     Thence North 89 04'36" East 293.456 feet; thence South 0 03'29" West
     169.090 feet; thence South 89 49'14" East 16.454 feet to a point on a
     565.000 foot radius Curve to the left the center of which bears North 0
     10'47" East; thence Northeasterly along said Curve to the left through a
     central angle of 4 38'05" a distance of 45.704; thence South 4 27'18" East
     269.999 feet to a point on a 835.000 foot radius Curve to the right the
     center of which bears North 4 27'18" West; thence South along said Curve to
     the right through a central angle of 4 38'05" a distance of 67.544; thence
     North 89 49'13" West 310.216 feet; thence North 0 10'47" East 433.439 feet
     to the point of BEGINNING. Contains 147,859 square feet or 3.3944 acres.

     PARCEL 2 ("COMMON ROADWAY"):

     A perpetual, nonexclusive right-of-way and easement for vehicular and
     pedestrian ingress and egress, appurtenant to PARCEL 1, as established by a
     Declaration of Easements, Covenants and Restrictions recorded January 17,
     1996, as Entry No. 6259074, in Book 7311, at page 821 of the official
     records of the Salt Lake County Recorder, as amended by a First Amendment
     to Declaration of Easements, Covenants and Restrictions, recorded July 3,
     1996, as Entry No. 6398547, in Book 7437, at page 265 of the official
     records of the Salt Lake County Recorder, over the following described
     property:

     BEGINNING at a point which is North 0 08'51" East along the Section line
     447.50 feet and South 89 49'13" East 50.00 feet from the West Quarter
     Corner of Section 23, Township 2 South, Range 1 East, Salt Lake Base and
     Meridian, and running thence North 0 08'51" East 71.00 feet; thence South
     89 49'13" East 669.22 feet; thence North 0 10'47" East 12.00 feet to a
     point of a 787.50 foot radius curve to the left, the chord of which bears
     North 72 37'45" East; thence Easterly along the arc of said curve and
     through a central angle of 35 06'03" a distance of 482.44 feet to a point
     of tangency; thence North 55 04'44" East 161.13 feet to a point of a 257.50
     foot radius curve to the right, the chord of which bears South 81 12'57"
     East; thence Easterly along the arc of said curve and through a central
     angle of 87 24'39" a distance of 392.84 feet to a point of tangency; thence
     South 37 30'37" East 388.28 feet to a point of a 282.50 foot radius curve
     to the left, the chord of which bears South 57 30'40" East; thence
     Southeasterly along the arc of said curve and through a central angle of 40
     00'07" a distance of 197.23 feet to a point of tangency; thence South 77
     30'44" East 203.08 feet; thence South 35 38'28" East 52.78 feet to the West
     right-of-way line of 3000 East Street; thence South 12 27'22" West along
     said West line 71.77 feet; thence North 77 30'44" West 147.86 feet to a
     point of a 693.16 foot radius curve to the right, the chord of which bears
     North 71 09'19" West; thence Northwesterly along the arc of curve and
     through a central angle of 13 28'28" a distance of 163.01 feet to a point
     of a compound curve to the right, the radius point of which is North 22
     43'23" East 377.50 feet; thence Northwesterly along the arc of said curve
     and through a central angle of 29 46' a distance of 196.12 feet to a point
     of tangency; thence North 37 30'37" West 388.28 feet to a point of a 162.50
     foot radius curve to the left, the chord of which bears North 81 12'57"
     West; thence Westerly along the arc of said curve and through a central
     angle of 87 24'39" a distance of 247.91 feet to a point of tangency; thence
     South 55 04'44" West 161.13 feet to a point of a 882.50 foot radius curve
     to the right, the chord of which bears South 72 37'45" West; thence
     Westerly along the arc of said curve and through a central angle of 35
     06'03" a distance of 540.64 feet to a point of tangency; thence North 89
     49'13" West 441.91 feet; thence North 0 10'47" East 12.00 feet; thence
     North 89 49'13" West 227.27 feet to the point of BEGINNING.

                                      H-5
<PAGE>

                            MONUMENT SIGN ADDENDUM
                            ----------------------

          THIS ADDENDUM ("Addendum"), dated as of even date with, and as an
addendum to, that certain Lease Agreement between 2795 E. COTTONWOOD PARKWAY,
L.C. ("Landlord") and SONIC INNOVATIONS, INC., a Delaware corporation
("Tenant"), dated as of the 28 day of April, 1999 ("Lease Agreement").

                               R E C I T A L S :
                               - - - - - - - -

     A.   Pursuant to the Lease Agreement, Tenant has leased from Landlord
certain commercial office space in the building ("Building") constructed on real
property owned by Landlord located in Salt Lake County, Utah, as more
particularly described in the Lease Agreement.

     B.   Landlord and Tenant have agreed as set forth in this Addendum to the
nonexclusive right of Tenant to have its name displayed on a monument sign to be
located by Landlord in front of the Building in accordance with the drawing
attached hereto as Exhibit "A" and incorporated herein (the "Monument Sign").

          NOW, THEREFORE, for and in consideration of the parties' covenants and
agreements contained herein and in the Lease Agreement, Landlord and Tenant
covenant and agree as follows:

          1.   Tenant shall have the nonexclusive right to have its name
displayed on the Monument Sign in accordance with Exhibit "A" hereto to be
located in front of the Building. Tenant's right to have its name on the
Monument Sign shall be subject to the following requirements and conditions:

               (a)  Obtaining all required governmental permits, licenses,
     authorizations and approvals for the Monument Sign;

               (b)  The occupancy by Tenant of no less than 10,000 square feet
     of Rentable Area in the Building during the Lease Term;

               (c)  Tenant shall bear the cost of acquisition and/or preparation
     of the panel containing Tenant's name for placement on the Monument Sign;

               (d)  Compliance with all applicable governmental laws, statutes,
     regulations, rules, codes and ordinances;

               (e)  Compliance with the provisions of the Lease Agreement;

               (f)  The design, size, location, materials and colors of the
     Monument Sign shall be determined by Landlord in Landlord's reasonable
     discretion;

               (g)  Landlord shall have the right to relocate, redesign and/or
     reconstruct the Monument Sign from time to time in its sole discretion; and

               (h)  Tenant's signage rights under this Addendum may not be
     assigned to any assignee of this Lease other than a Related Entity or any
     subtenant of Tenant without Landlord's prior written consent, exercised in
     its sole discretion.

          2.   The Lease Agreement, as modified hereby, shall remain in full
force and effect, enforceable in accordance with its terms.

          3.   Upon termination or expiration of the Term of the Lease
Agreement, or upon expiration of Tenant's sign rights under this Addendum,
Landlord shall have the right to permanently remove Tenant's name from the
Monument Sign.
<PAGE>

          DATED effective as of even date with the Lease Agreement.

                              LANDLORD:

                              2795 E. COTTONWOOD PARKWAY, L.C., a Utah limited
                              liability company, by its Manager,

                              COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
                              limited partnership, by CotNet Management, Inc.
                              its general partner

                              By: /s/ John L. West
                                 ----------------------------------------
                                 JOHN L. WEST, President

                              TENANT:

                              SONIC INNOVATIONS, INC., a Delaware corporation

                              By: /s/ William S. Barth
                                  ---------------------------------------
                                 Title: VP of Finance & CFO
                                        ---------------------------------
<PAGE>

                                  EXHIBIT "A"

                                 MONUMENT SIGN
                                 -------------

                                   [Diagram]
<PAGE>

                            BUILDING SIGN ADDENDUM
                            ----------------------

          THIS BUILDING SIGN ADDENDUM ("Addendum"), dated as of even date with,
and as an addendum to, that certain Lease Agreement between 2795 E. COTTONWOOD
PARKWAY, L.C. ("Landlord") and SONIC INNOVATIONS, INC., a Delaware corporation
("Tenant"), dated as of the 28 day of April, 1999 ("Lease Agreement").

                               R E C I T A L S :
                               - - - - - - - -

     C.   Pursuant to the Lease Agreement, Tenant has leased from Landlord
certain commercial office space in the building ("Building") constructed on real
property owned by Landlord located in Salt Lake County, Utah, as more
particularly described in the Lease Agreement.

     D.   Landlord and Tenant have agreed as set forth in this Addendum to the
nonexclusive right of Tenant to have its name displayed on the top fascia of the
Building in accordance with the blue line drawing attached hereto as Exhibit "A"
and incorporated herein by this reference (the "Building Sign").

          NOW, THEREFORE, for and in consideration of the parties' covenants and
agreements contained herein and in the Lease Agreement, Landlord and Tenant
covenant and agree as follows:

          1.   Tenant shall have the nonexclusive right to have its name
displayed on the Building Sign in accordance with Exhibit "A" hereto and as
provided herein, subject to each of the following requirements and conditions:

               (a)  Obtaining all required governmental permits, licenses,
     authorizations and approvals for the Building Sign;

               (b)  The occupancy by Tenant of no less than 30,000 square feet
     of Rentable Area in the Building during the Lease Term;

               (c)  Compliance with all applicable governmental laws, statutes,
     regulations, rules, codes and ordinances;

               (d)  Compliance with the provisions of the Lease Agreement;

               (e)  All expenses in connection with the construction,
     installation, repair and maintenance of the Building Sign, and Tenant's
     name thereon, shall be paid by Tenant;

               (f)  The design, size, location, materials, colors and lighting
     of the Building Sign shall be approved in writing by Landlord, in
     Landlord's reasonable discretion; and

               (g)  Tenant's signage rights under this Addendum may not be
     assigned to any assignee of this Lease other than a Related Entity or any
     subtenant of Tenant without Landlord's prior written consent, exercised in
     its sole discretion.

          2.   The Lease Agreement as modified hereby shall remain in full force
and effect, enforceable in accordance with its terms.

          3.   Upon termination or expiration of the Term of the Lease
Agreement, or upon expiration of Tenant's sign rights under this Addendum,
Landlord shall have the right to permanently remove Tenant's Building Sign from
the Building. Tenant shall bear all reasonable expenses relating to the costs
associated with the removal of Tenant's Building Sign, repair of any damage
caused by such removal, and restoration of the site of Tenant's sign on the
Building to the condition in which those portions of the Building existed before
the installation of Tenant's sign. Tenant's obligations under this paragraph, as
well as other provisions of this Addendum, shall survive the expiration or
earlier termination of the Lease Term.

          4.   Tenant shall at all times during the Lease Term maintain Tenant's
sign in working order and first-class condition.
<PAGE>

          DATED effective as of even date with the Lease Agreement.

                              LANDLORD:

                              2795 E. COTTONWOOD PARKWAY, L.C., a Utah limited
                              liability company, by its Manager,

                              COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
                              limited partnership, by CotNet Management, Inc.
                              its general partner

                              By: /s/ John L. West
                                  -------------------------------------
                                  JOHN L. WEST, President

                              TENANT:

                              SONIC INNOVATIONS, INC., a Delaware corporation

                              By: /s/ William S. Barth
                                 --------------------------------------
                                 Title: VP of Finance & CFO
                                        -------------------------------
<PAGE>

                                  EXHIBIT "A"

                                 BUILDING SIGN
                                 -------------

                                   [Diagram]

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