Document:

exv10w7

 

EXHIBIT 10.7

OFFICE LEASE AGREEMENT

by and between

C.M. STRATPLAN, INC.,

a California corporation

(“Landlord”)

and

Spatializer Audio Laboratories, Inc.,

a Delaware corporation

(“Tenant”)

For approximately

1,288 rentable square feet

at San Jose Gateway

(“Premises”)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1.
	 	Parties	 	 	1	 
	 
	 	 	 	 	 	 
	2.
	 	Premises	 	 	1	 
	 
	 	 	 	 	 	 
	3.
	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	4.
	 	Lease Term	 	 	3	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Term	 	 	3	 
	 
	 	B.                           Commencement Date	 	 	3	 
	 
	 	C.                           Commencement Date Memorandum	 	 	3	 
	 
	 	D.                           Tenant Delays	 	 	3	 
	 
	 	E.                           Early Entry	 	 	3	 
	 
	 	F.                           Termination	 	 	3	 
	 
	 	 	 	 	 	 
	5
	 	Rent	 	 	4	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Monthly Rent	 	 	4	 
	 
	 	B.                           Prorations	 	 	4	 
	 
	 	C.                           Periodic Adjustments	 	 	4	 
	 
	 	 	 	 	 	 
	6.
	 	Late Payment Charges	 	 	4	 
	 
	 	 	 	 	 	 
	7.
	 	Security Deposit	 	 	4	 
	 
	 	 	 	 	 	 
	8.
	 	Holding Over	 	 	4	 
	 
	 	 	 	 	 	 
	9.
	 	Tenant Improvements	 	 	5	 
	 
	 	 	 	 	 	 
	10.
	 	Condition of Premises	 	 	5	 
	 
	 	 	 	 	 	 
	11.
	 	Use of the Premises	 	 	5	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Tenant’s Use	 	 	5	 
	 
	 	B.                           Compliance	 	 	5	 
	 
	 	C.                           Toxic Material	 	 	6	 
	 
	 	D.                           Transportation Systems Management	 	 	6	 
	 
	 	E.                           Rules and Regulations	 	 	6	 
	 
	 	 	 	 	 	 
	12.
	 	Quiet Enjoyment	 	 	6	 
	 
	 	 	 	 	 	 
	13.
	 	Alterations	 	 	6	 
	 
	 	 	 	 	 	 
	14.
	 	Surrender of the Premises	 	 	7	 
	 
	 	 	 	 	 	 
	15.
	 	Operating Expenses	 	 	7	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Payment by Tenant	 	 	7	 
	 
	 	B.                           Operating Expenses	 	 	7	 
	 
	 	C.                           Adjustment	 	 	9	 
	 
	 	D.                           Failure to Pay	 	 	9	 
	 
	 	 	 	 	 	 
	16.
	 	Taxes and Assessments	 	 	9	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Payment by Tenant	 	 	9	 
	 
	 	B.                           Annual Assessments	 	 	9	 
	 
	 	C.                           Taxes Levied Against Tenant’s Alterations and Personal Property	 	 	9	 
	 
	 	D.                           Failure to Pay	 	 	10	 
	 
	 	 	 	 	 	 
	17.
	 	Utilities and Services	 	 	10	 
	 
	 	 	 	 	 	 
	18.
	 	Repair and Maintenance	 	 	10	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Premises, Building and Outside Area	 	 	10	 
	 
	 	B                            Control and Reconfiguration	 	 	10	 
	 
	 	C.                           Waiver	 	 	11	 
	 
	 	D.                           Compliance with Governmental Regulations	 	 	11	 
	 
	 	E.                           Repair Where Tenant at Fault	 	 	11	 
	 
	 	 	 	 	 	 
	19.
	 	Fixtures	 	 	11	 

i

 

	 	 	 	 	 	 	 
	20.
	 	Liens	 	 	11	 
	 
	 	 	 	 	 	 
	21.
	 	Landlord’s Right to Enter the Premises	 	 	11	 
	 
	 	 	 	 	 	 
	22.
	 	Signs	 	 	11	 
	 
	 	 	 	 	 	 
	23.
	 	Insurance	 	 	11	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Indemnification	 	 	12	 
	 
	 	B.                           Tenant’s Insurance	 	 	12	 
	 
	 	C.                           All-Risk Insurance	 	 	12	 
	 
	 	D.                           Evidence of Insurance	 	 	12	 
	 
	 	E.                           Co-Insurer	 	 	12	 
	 
	 	F.                           Insurance Requirements	 	 	12	 
	 
	 	G.                           No Limitation of Liability	 	 	13	 
	 
	 	H.                           Landlord’s Disclaimer	 	 	13	 
	 
	 	I.                           Increased Coverage	 	 	13	 
	 
	 	 	 	 	 	 
	24.
	 	Waiver of Subrogation	 	 	13	 
	 
	 	 	 	 	 	 
	25.
	 	Damage or Destruction	 	 	13	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Partial Damage — Insured	 	 	13	 
	 
	 	B.                           Partial Damage — Uninsured	 	 	13	 
	 
	 	C.                           Total Destruction	 	 	13	 
	 
	 	D.                           Landlord’s Obligations	 	 	14	 
	 
	 	E.                           Damage Near End of Term	 	 	14	 
	 
	 	 	 	 	 	 
	26.
	 	Condemnation	 	 	14	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Total Taking — Termination	 	 	14	 
	 
	 	B.                           Partial Taking	 	 	14	 
	 
	 	C.                           No Apportionment of Award	 	 	14	 
	 
	 	D.                           Temporary Taking	 	 	14	 
	 
	 	 	 	 	 	 
	27.
	 	Assignment and Subletting	 	 	14	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Landlord’s Consent	 	 	14	 
	 
	 	B.                           Information to be Furnished	 	 	15	 
	 
	 	C.                           Landlord’s Alternatives	 	 	15	 
	 
	 	D.                           Proration	 	 	15	 
	 
	 	E.                           Executed Counterpart	 	 	15	 
	 
	 	F.                           Surrender of Lease	 	 	15	 
	 
	 	G.                           No Mortgages	 	 	15	 
	 
	 	H.                           Effect of Default	 	 	15	 
	 
	 	I.                           Permitted Transfers	 	 	15	 
	 
	 	 	 	 	 	 
	28.
	 	Default	 	 	16	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Tenant’s Default	 	 	16	 
	 
	 	B.                           Remedies	 	 	16	 
	 
	 	C.                           Landlord’s Default	 	 	17	 
	 
	 	 	 	 	 	 
	29.
	 	Subordination	 	 	17	 
	 
	 	 	 	 	 	 
	30.
	 	Notices	 	 	18	 
	 
	 	 	 	 	 	 
	31.
	 	Attorneys’ Fees	 	 	18	 
	 
	 	 	 	 	 	 
	32.
	 	Estoppel Certificates	 	 	18	 
	 
	 	 	 	 	 	 
	33.
	 	Transfer of the Project by Landlord	 	 	18	 
	 
	 	 	 	 	 	 
	34.
	 	Landlord’s Right to Perform Tenant’s Covenants	 	 	18	 
	 
	 	 	 	 	 	 
	35.
	 	Tenant’s Remedy	 	 	19	 
	 
	 	 	 	 	 	 
	36.
	 	Mortgagee Protection	 	 	19	 
	 
	 	 	 	 	 	 
	37.
	 	Brokers	 	 	19	 
	 
	 	 	 	 	 	 
	38.
	 	Acceptance	 	 	19	 

ii

 

	 	 	 	 	 	 	 
	39.
	 	Recording	 	 	19	 
	 
	 	 	 	 	 	 
	40.
	 	Modifications for Lender	 	 	19	 
	 
	 	 	 	 	 	 
	41.
	 	Parking	 	 	19	 
	 
	 	 	 	 	 	 
	42.
	 	Use of “San Jose Gateway” Prohibited	 	 	20	 
	 
	 	 	 	 	 	 
	43.
	 	Interest	 	 	20	 
	 
	 	 	 	 	 	 
	44.
	 	Quitclaim	 	 	20	 
	 
	 	 	 	 	 	 
	45.
	 	Relocation	 	 	20	 
	 
	 	 	 	 	 	 
	46.
	 	General	 	 	20	 
	 
	 	 	 	 	 	 
	 
	 	A.                           Captions	 	 	20	 
	 
	 	B.                           Executed Copy	 	 	20	 
	 
	 	C.                           Time	 	 	20	 
	 
	 	D.                           Severability	 	 	20	 
	 
	 	E.                           Choice of Law	 	 	20	 
	 
	 	F.                           Interpretation	 	 	20	 
	 
	 	G.                           Effect of Remeasurement	 	 	20	 
	 
	 	H.                           Binding Effect	 	 	20	 
	 
	 	I.                           Waiver	 	 	21	 
	 
	 	J.                           Entire Agreement	 	 	21	 
	 
	 	K.                           Authority	 	 	21	 
	 
	 	L.                           Exhibits	 	 	21	 
	 
	 	M.                           Counterparts	 	 	21	 

iii

 

OFFICE LEASE AGREEMENT

INFORMATION SHEET

(“INFORMATION SHEET”)

	 	 	 	 	 
	A. PARTIES
	 	 	 	 
	 
	 	 	 	 
	1. Landlord:
	 	 	 	C.M. STRATPLAN, INC., a California corporation.
	 
	 	 	 	 
	2. Tenant:
	 	 	 	Spatializer Audio Laboratories, Inc., a Delaware corporation
	 
	 	 	 	 
	B. EFFECTIVE DATE
	 	 	 	September 14, 2004
	 
	 	 	 	 
	C. BASIC LEASE PROVISIONS
	 	 	 	 
	 
	 	 	 	 
	1. Premises:
	 	 	 	San Jose Gateway
	 
	 	 	 	 
	a. Address:
	 	 	 	2025 Gateway Place
	 
	 	 	 	San Jose, California  95110
	 
	 	 	 	 
	b. Suite:
	 	 	 	365
	 
	 	 	 	 
	c. Floor:
	 	 	 	Third
	 
	 	 	 	 
	d. Total Building
	 	 	 	One Hundred Fifty-Eight Thousand Three Hundred rentable area (approx.):        Thirty-Two (158,332) rentable square feet
	 
	 	 	 	 
	2. Rentable Area and Load
Factor:
	 	 	 	 
	 
	 	 	 	 
	a. Rentable Area
	 	 	 	One Thousand Two Hundred Eighty-Eight (1,288) rentable square feet
	 
	 	 	 	 
	b. Load Factor (approx.)
	 	 	 	14%
	 
	 	 	 	 
	3. Term:
	 	 	 	24 months
	 
	 	 	 	 
	4. Estimated Commencement Date:
	 	 	 	January 1, 2005.  Landlord shall provide one (1) month and two (2) weeks of Early Occupancy.
	 
	 	 	 	 
	5. Tenant’s Property Percentage:
	 	 	 	0.81%
	 
	 	 	 	 
	6. Base Rent:
	 	 	 	Two Thousand One Hundred Twenty Five and 20/100 Dollars ($2,125.20) based on a rate of _One and 65/100 Dollars ($1.65) per rentable square foot per month for each of months one (1) through twelve (12) of the term; and
	 
	 	 	 	 
	 
	 	 	 	Two  Thousand One Hundred Eight Nine and 60/100 Dollars ($2,189.60) based on a rate of _One and 70/100 Dollars ($1.70) per rentable square foot per month for each of months thirteen (13) through twenty four (24) of the term.
	 
	 	 	 	 
	7. Security Deposit:
	 	 	 	$2,125.20
	 
	 	 	 	 
	8. Operating Expense Base Year:
	 	 	 	2005
	 
	 	 	 	 
	9. Adjustments to Rent:
	 	 	 	Refer to Paragraph C.6 above.

	 	 	 	 	 
	

	 	Initials:	 	 
	 
	 	 	 	 
	

	 	 
	 	 
	

	 	Landlord
	 	Tenant

-i-

 

	 	 	 	 	 
	10. Broker(s):
	 	 	 	Dual Agency wherein Marne Michaels with Colliers International represents Tenant and Susan Gregory and Marne Michaels with of Colliers International represents Landlord.
	 
	 	 	 	 
	11. Address for Notices:
	 	 	 	 
	 
	 	 	 	 
	 Landlord:
	 	 	 	C.M. Stratplan, Inc.

	 
	 	 	 	c/o C. M. Capital Corporation

	 
	 	 	 	525 University Avenue, Suite 1500

	 
	 	 	 	Palo Alto, California  94301
	 
	 	 	 	 
	 
	 	 	 	with a copy to:
	 
	 	 	 	 
	 
	 	 	 	Property Manager Office

	 
	 	 	 	2025 Gateway Place, Suite 100

	 
	 	 	 	San Jose, California  95110
	 
	 	 	 	 
	 Tenant:
	 	 	 	Spatializer Audio Laboratories, Inc.

	 
	 	 	 	2025 Gateway Place, Suite 365

	 
	 	 	 	San Jose, CA  95110

	 	 	 	 	 
	

	 	Initials:	 	 
	 
	 	 	 	 
	

	 	 
	 	 
	

	 	Landlord
	 	Tenant

-ii-

 

OFFICE LEASE AGREEMENT

     1. Parties. THIS OFFICE LEASE AGREEMENT (“Lease”), effective as of the date
(“Effective Date”) set forth at B of the Office Lease Agreement Information Sheet (“Information
Sheet”), is entered into by and between C.M. Stratplan, Inc., a California corporation
(“Landlord”), and the entity set forth in the Information Sheet at A.2. (“Tenant”).

     2. Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, a portion of that certain Building (“Building”) in the City of San Jose, County of Santa
Clara, State of California containing the total rentable floor area set forth in C.2. of the
Information Sheet, as more particularly shown on EXHIBIT A (“Premises”), and located at the
address, and in the suite and floor, designated on the Information Sheet at C.1 of the Information
Sheet, together with a right in common to the Outside Area, as defined in Paragraph 3.K., of the
Property, as defined in Paragraph 3.M. Tenant’s right to use the Outside Area shall be a right in
common with other tenants of the Property and is subject to the reasonable rules and regulations
and changes therein from time to time promulgated by Landlord governing the use of the Outside
Area.

     3. Definitions. The following initially capitalized terms shall have the following
meanings when used in this Lease:

          A. Alterations. Any alterations, additions or improvements made in, on or about the
Building or the Premises after the Commencement Date, including, but not limited to, lighting,
heating, ventilating, air conditioning, electrical, telecommunication cabling, partitioning,
drapery and carpentry installations.

          B. Building. That certain building on the Property, commonly known as 2025 Gateway
Place, San Jose, California 95110, containing an aggregate rentable area in the approximate amount
set forth in the Information Sheet at C.1.d.

          C. CC&R’s. The Declaration of Covenants, Conditions, Restrictions and Easements dated
May 25, 1972 established by Dillingham Development Company and recorded on June 2, 1972 in Book
9862 at page 57 et. Seq., of the official records of Santa Clara County, California, as they may be
amended from time to time. Tenant hereby acknowledges that it has received and read a copy of the
present CC&R’s.

          D. City. The City of San Jose, State of California.

          E. Commencement Date. The Commencement Date of this Lease shall be the first day of
the Lease Term determined in accordance with Paragraph 4.B.

          F. County. The County of Santa Clara, State of California.

          G. HVAC. Heating, ventilating and air conditioning.

          H. Interest Rate. Interest Rate shall have the meaning set forth in Paragraph 43.

          I. Landlord’s Agents. Landlord’s authorized agents, together with any partners and
any subsidiary, parent, and affiliate corporations of Landlord, and any directors, officers,
shareholders and employees of Landlord or of any such agents, partners, or subsidiary, parent or
affiliate corporations.

          J. Monthly Rent. The rent payable pursuant to Paragraph 5.A., as adjusted from time
to time pursuant to the terms of this Lease.

          K. Outside Area. All areas and facilities within the Property, but outside the
Building, as defined in Paragraph 3.M., provided and designated by Landlord for the general use and
convenience of Tenant and other tenants and occupants of the Building, including, without
limitation, the parking areas, access and perimeter roads, sidewalks, landscaped areas, service
areas, trash disposal facilities, and similar areas and facilities, and the exterior walls and
windows of the Building, subject to the reasonable rules and regulations and changes therein from
time to time promulgated by Landlord governing the use of the Outside Area.

	 	 	 	 	 
	

	 	Initials:	 	 
	 
	 	 	 	 
	

	 	 
	 	 
	

	 	Landlord
	 	Tenant

 

 

          L. Project. The Property, Building (including the Premises), and Outside Area.

          M. Property. That certain real property, described in EXHIBIT B and
consisting of approximately five and seven hundred and forty-four hundredths (5.744) acres, upon
which is located the Building .

          N. Real Property Taxes. Any form of assessment, license, fee, rent tax, levy,
interest or penalty (if a result of Tenant’s delinquency), or tax (other than net income, estate,
succession, inheritance, transfer or franchise taxes), imposed by any authority having the direct
or indirect power to tax, or by any city, county, state or federal government or any improvement or
other district or division thereof, whether such tax is: (i) determined by the value or area of
the Project or any part thereof (or any improvements now or hereafter made to the Project or any
portion thereof by Landlord, Tenant or other tenants) or the rent and other sums payable hereunder
by Tenant or by other tenants, including, but not limited to, any gross income or excise tax
levied by any of the foregoing authorities with respect to receipt of such rent or other sums due
under this Lease; (ii) upon any legal or equitable interest of Landlord in the Project or any part
thereof; (iii) upon this transaction or any document to which Tenant is a party creating or
transferring any interest in the Project; (iv) levied or assessed in lieu of, in substitution for,
or in addition to, existing or additional taxes against the Project whether or not now customary or
within the contemplation of the parties; (v) assessed for the purpose of constructing or
maintaining or reimbursing the cost of construction of any streets, utilities or other public
improvements; (vi) surcharged against the parking area; or (vii) levied upon any personal property
of Landlord, Tenant or other tenants located on or used exclusively in connection with the
operation of the Project.

          O. Rent. Monthly Rent plus any other amounts payable by Tenant under this Lease.

          P. Sublet. Any assignment or transfer of any estate or interest in this Lease; any
subletting or parting with or sharing of the occupation, control, or possession of the Premises, or
of any part thereof or any right or privilege appurtenant thereto; allowing anyone to conduct
business at or from the Premises (whether as concessionaire, franchisee, licensee, permittee,
subtenant or otherwise); if Tenant is a corporation, any transfer of the effective voting control
of Tenant; if Tenant is a partnership, the resignation, death or the cessation of existence of a
general partner; if Tenant is composed of more than one person or entity, any purported transfer
from one to one or any more of the others composing Tenant or to any other person; any other
transfer by voluntary or involuntary act or by operation of law (including by merger or
consolidation); or any attempt to do any of the foregoing.

          Q. Subrent. Any consideration of any kind received, or to be received, by Tenant
from a subtenant if such sums are related to Tenant’s interest in this Lease or in the Premises,
including, but not limited to, bonus money and payments (in excess of fair market value) for
Tenant’s assets including its trade fixtures, equipment and other personal property, goodwill,
general intangibles, and any capital stock or other equity ownership of Tenant.

          R. Subtenant. The person or entity with whom a Sublet agreement is proposed to be or
is made.

          S. Tenant Improvements. Those certain improvements to the Premises to be constructed
by Landlord pursuant to EXHIBIT C.

          T. Tenant’s Agents. Tenant’s agents, employees, officers, directors, invitees or
licensees.

          U. Tenant’s Property Percentage. The percentage determined by dividing the
approximate rentable square footage of the Premises by the approximate total rentable square
footage of the Building. Tenant’s Property Percentage is currently agreed to be the percentage set
forth in C.5. of the Information Sheet, subject to adjustment as a result of a remeasurement of the
Premises and/or the Building by Landlord pursuant to Paragraph 46.G.

          V. Tenant’s Personal Property. Tenant’s trade fixtures, furniture, equipment and
other personal property in the Premises.

2

	 	 	 	 	 
	

	 	Initials:	 	 
	 
	 	 	 	 
	

	 	 
	 	 
	

	 	Landlord
	 	Tenant

 

          W. Term. The term of this Lease set forth in Paragraph 4.A., as it may be extended
hereunder pursuant to any options to extend granted herein or by any written amendments to or
extensions of this Lease.

     4. Lease Term.

          A. Term. The Term shall be a period set forth at C.3. of the Information Sheet,
commencing on the Commencement Date, as defined below, and ending 5:00 p.m. on the last day of such
period, unless the Term is sooner terminated as hereinafter provided.

          B. Commencement Date. Commencement Date shall be defined to mean the earliest to
occur of the following, as determined by Landlord:

               (i) the date Tenant commences occupancy of any portion of the Premises; or

               (ii) the Estimated Commencement Date specified in the Information Sheet at C.4.

     If, for any reason, Landlord cannot deliver possession of the Premises to Tenant by the
Estimated Commencement Date, Landlord shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Tenant hereunder; but in such
case, Tenant shall not be obligated to pay any Monthly Rent hereunder, subject to the provisions
contained in Paragraph 4.D., until the date that Landlord gives Tenant notice that all work for the
Tenant Improvements to be constructed or performed pursuant to EXHIBIT C has been
substantially completed (which date shall then be deemed the Commencement Date).

          C. Commencement Date Memorandum. When the actual Commencement Date is determined, the
parties shall execute a Commencement Date Memorandum, in the form attached hereto as EXHIBIT
D, setting forth the date.

          D. Tenant Delays. If the Commencement Date of this Lease has not occurred on or
before the Estimated Commencement Date, and if the cause of any delay in the occurrence of the
Commencement Date is attributable to Tenant, then commencing on such date as the Commencement Date
would have occurred but for any delay attributable to Tenant, and continuing on the first day of
each calendar month thereafter until the Commencement Date, Tenant shall pay to Landlord the
Monthly Rent set forth in Paragraph 5. Payments for any partial month shall be prorated on the
basis of a thirty (30) day month. Delays attributable to Tenant shall include those caused by:

               (i) Tenant’s change requests in the space plan or the Plans for Tenant Improvements attached
as EXHIBIT C-1 after their approval by Landlord;

               (ii) Tenant’s failure to complete any of its own improvement work to the extent Tenant delays
completion by the City of its final inspection and approval of the Tenant Improvements described in
EXHIBIT C;

               (iii) Tenant’s failure to approve cost estimates if such approvals are required pursuant to
EXHIBIT C; or

               (iv) Interference with Landlord’s work caused by Tenant or by Tenant’s contractors or
subcontractors.

          E. Early Entry. Landlord gives permission for Tenant to enter the Premises six weeks
prior to the Commencement Date for the purpose of fixturing or any other purpose permitted by
Landlord, such early entry shall be at Tenant’s sole risk and subject to all the terms and
provisions hereof, except for the payment of Monthly Rent which shall commence on the date set
forth in Paragraph 4.B. Landlord shall have the right to impose such additional conditions on
Tenant’s early entry as Landlord shall deem appropriate.

          F. Termination. Either party, at its option, may terminate this Lease by giving
written notice of its election to terminate to the other party if the Commencement Date has not
occurred
on or before one hundred twenty (120) days after the Estimated Commencement Date specified in
the Information Sheet at C.4. through no fault of the terminating party.

3

	 	 	 	 	 
	

	 	Initials:	 	 
	 
	 	 	 	 
	

	 	 
	 	 
	

	 	Landlord
	 	Tenant

 

     5. Rent.

          A. Monthly Rent. In advance, on or before the first day of each calendar month,
without prior notice or demand, deduction or offset, Tenant shall pay monthly rent (“Monthly Rent”)
to Landlord, in lawful money of the United States at the Office of the Property Manager specified
in the Information Sheet at C.11., or to such other place or person as Landlord may designate in
the manner set forth in Paragraph 30. Monthly Rent shall consist of the sum of the following:

               (i) Base Rent. Base Rent (“Base Rent”) in the amount specified at C.6. of the
Information Sheet (subject to adjustment as provided for at C.9 of the Information Sheet); and

               (ii) Monthly Operating Expense Reimbursement. Monthly Operating Expense Reimbursement
(“Monthly Operating Expense Reimbursement”) equal to one twelfth (1/12) of Tenant’s Property
Percentage of the amount by which Landlord’s estimate of the Operating Expenses for the relevant
calendar year of the Term exceed the Base Year Operating Expenses, as such terms are defined in
Paragraph 15.

          B. Prorations. If the Commencement Date is not the first (1st) day of a month, or if
the termination date is not the last day of a month, a prorated monthly installment based on a
thirty (30) day month shall be paid for the fractional month during which this Lease commences or
terminates.

     6. Late Payment Charges. TENANT ACKNOWLEDGES THAT LATE PAYMENT BY TENANT TO LANDLORD
OF RENT AND OTHER CHARGES PROVIDED FOR UNDER THIS LEASE WILL CAUSE LANDLORD TO INCUR COSTS NOT
CONTEMPLATED BY THIS LEASE, THE EXACT AMOUNT OF SUCH COSTS BEING EXTREMELY DIFFICULT OR
IMPRACTICABLE TO FIX. THEREFORE, IF ANY INSTALLMENT OF RENT OR ANY OTHER CHARGE DUE FROM TENANT IS
NOT RECEIVED BY LANDLORD WITHIN FIVE DAYS OF THE DATE DUE, TENANT SHALL PAY TO LANDLORD AN
ADDITIONAL SUM EQUAL TO FIVE PERCENT (5%) OF THE AMOUNT OVERDUE AS A LATE CHARGE. THE PARTIES
AGREE THAT THIS LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS THAT LANDLORD
WILL INCUR BY REASON OF THE LATE PAYMENT BY TENANT. SUCH LATE CHARGE SHALL BE IN ADDITION TO, AND
NOT IN LIEU OF, ANY INTEREST THAT MAY ACCRUE ON ANY SUCH OVERDUE AMOUNT PURSUANT TO THE PROVISIONS
OF PARAGRAPH 43.

	 	 	 	 	 
	Initials:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Landlord

	 	 	 	Tenant

     7. Security Deposit. By execution hereof, Landlord acknowledges receipt of the sum
set forth at C.7. of the Information Sheet from Tenant, as security for the faithful performance by
Tenant of all of the terms and conditions of this Lease to be kept and performed by Tenant during
the term hereof (“Security Deposit”). The Security Deposit shall secure Tenant’s obligations
hereunder to pay rent and all other sums due to Landlord hereunder, to maintain the Premises and
repair damages thereto as provided in this Lease, to surrender the Premises to Landlord in clean
condition and good repair upon termination of this Lease and timely to discharge Tenant’s other
obligations hereunder. Landlord may use and commingle the Security Deposit with other funds of
Landlord. If Tenant fails to perform its obligations hereunder, then Landlord may, but without any
obligation so to do, apply all or any portion of the Security Deposit toward fulfillment of
Tenant’s unperformed obligations. If Landlord does so apply any portion of the Security Deposit,
Tenant, upon demand by Landlord, shall immediately pay to Landlord a sufficient amount in cash to
restore the Security Deposit to its full original amount. On termination of this Lease, if Tenant
has then fully performed all its obligations hereunder, Landlord shall return the Security Deposit
to Tenant. If Landlord, prior to the expiration of the term of this Lease, sells or otherwise
transfers Landlord’s rights or interest under this Lease, Landlord may deliver the Security Deposit
to the transferee, whereupon, Landlord shall have no further liability to Tenant concerning the
Security Deposit.

     8. Holding Over. If Tenant remains in possession of all or any part of the Premises
after the expiration of the Term, with the consent of Landlord, such tenancy shall be from
month-to-month only and not a renewal hereof or any extension for any further term, and in such
case, Base Rent shall be increased to an amount equal to one hundred fifty percent (150%) of the
Base Rent paid during the last

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month of the Term and all other sums due hereunder shall be payable
in the amount and at the time applicable at the time of expiration and at the time specified in
this Lease and such month-to-month tenancy shall be subject to every other term, covenant and
agreement of this Lease.

     9. Tenant Improvements. Landlord and Tenant agree to the terms and procedures for the
planning, construction and funding of the construction of the Tenant Improvements as set forth in
EXHIBIT C.

     10. Condition of Premises. Within ten (10) days after the Commencement Date, Tenant
and Landlord shall conduct a walk- through inspection of the Premises with Landlord and jointly
prepare and sign a final punch-list of items needing additional work by Landlord. Other than the
items specified in the punch-list, by taking possession of the Premises, Tenant shall be deemed to
have accepted the Premises in “As Is” condition as improved with the Tenant Improvements in good,
clean and completed condition and repair, subject to all applicable laws, codes and ordinances.
The punch-list to be prepared by Tenant shall not include any damage to the Premises caused by
Tenant’s move-in, which damage shall be repaired or corrected by Tenant, at its expense. Tenant
acknowledges that neither Landlord nor Landlord’s Agents have made any representations or
warranties as to the suitability or fitness of the Premises or any other part of the Project
(including, without limitation, the interbuilding network cabling) for the conduct of Tenant’s
business or for any other purpose, nor has Landlord or Landlord’s Agents agreed to undertake any
Alterations or construct any Tenant Improvements to the Premises except as expressly provided in
this Lease. If Tenant fails to submit a punch-list to Landlord within the ten (10) day period, it
shall be deemed that there are no items needing additional work or repair. Landlord’s contractor
shall complete all reasonable punch-list items within thirty (30) days after the walk-through
inspection or as soon as practicable thereafter. Upon Landlord or Landlord’s contractor’s
indication to Tenant of the completion of such punch-list items, Tenant shall acknowledge the
completion of such items in writing to Landlord. If Tenant fails either to so acknowledge the
completion of such items within seven (7) days of such stated completion or within such seven day
period to specify in writing to Landlord in reasonable detail any such previously listed punch-list
items that remain uncompleted, all such items shall be deemed approved by Tenant.

     11. Use of the Premises.

          A. Tenant’s Use. Tenant shall use the Premises solely for general office purposes and
shall not use the Premises for any other purpose without obtaining the prior written consent of
Landlord. Tenant agrees that the Property is subject and this Lease is subordinate to the CC&R’s.
Tenant acknowledges that it has read the CC&R’s and knows the contents thereof. Throughout the
Term, Tenant shall faithfully and timely perform and comply with the CC&R’s and any modification or
amendments thereof. Tenant shall comply with all duly adopted rules, regulations and restrictions
as may be adopted from time to time by any committee established pursuant to the CC&Rs
(“Association”). Any periodic or special dues or Outside Area assessments of the Association shall
be included within the definition of Operating Expenses pursuant to Paragraph 15.B. and Tenant
shall pay Tenant’s Property Percentage of such amounts over the Base Year amounts as further set
forth in Paragraph 15. Tenant shall defend, indemnify and hold Landlord, and Landlord’s Agents
free and harmless from and against any claim, loss, liability, expense or damage, including
attorneys’ fees and costs, arising out of the actual or asserted failure of Tenant to perform or
comply with the CC&R’s. Tenant shall not permit or make any use of the Premises which will
increase the existing rate of insurance upon the Project, or cause the cancellation of any
insurance policy covering the Project, or any part thereof. If the existing rate of insurance
shall be increased or any insurance policy covering the Project canceled as a result of Tenant’s or
Tenant’s Agent’s acts or omissions, then Landlord, in addition to such remedies as Landlord may
have under this Lease or pursuant to law or equity, shall be entitled to reimbursement from Tenant
upon written demand therefor for the entire amount of said increase or any additional amount which
must be paid for a new insurance policy.

          B. Compliance. Tenant shall not use the Project or suffer or permit Tenant’s Agents
to do anything in or about the Project in conflict with any law, statute, zoning restriction,
ordinance or governmental law, rule, regulation or requirement of duly constituted public
authorities now in force or which may hereafter be in force, or the requirements of the Board of
Fire Underwriters or other similar body now or hereafter constituted relating to or affecting the
condition, use or occupancy of
the Project. Tenant shall continuously and uninterruptedly conduct its business in the
Premises during the Term and shall not vacate or abandon the Premises. Tenant shall not commit any
public or private nuisance or any other act or practice which might or would disturb the quiet
enjoyment of any other tenant of Landlord or any occupant of nearby properties. Tenant shall place
no loads upon the floors,

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walls or ceilings in excess of the maximum designed load determined by
Landlord or which endanger the structure; nor place any harmful liquids in the drainage systems;
nor dump or store waste materials or refuse or allow such to remain outside the Building proper,
except in the enclosed trash areas provided. Tenant shall not store or permit to be stored or
otherwise placed any material of any nature whatsoever outside the Building. If as a result of any
use or change in use of the Premises by Tenant or any Alteration made to the Premises by or on
behalf of Tenant, any alterations are required to the Premises, the Building or the Project
(including, but not limited to, the Americans with Disabilities Act, and any state or local
building, fire or safety codes, ordinances or regulations), Tenant shall be responsible for the
same (or at the election of Landlord, for reimbursing Landlord for the cost of performing the
same).

          C. Toxic Material. Tenant, at its sole cost, shall comply with and cause Tenant’s
Agents to comply with all laws relating to the storage, use and disposal of hazardous, toxic or
radioactive matter, including those materials identified in Sections 66680 through 66685 of Title
22 of the California Administrative Code, Division 4, Chapter 30 (“Title 22”) as they may be
amended from time to time (collectively, “Toxic Materials”). If Tenant or Tenant’s Agents desire
to store, use or dispose of any Toxic Materials in, on or about the Premises (other than the
storage and use of reasonable quantities of customary office supplies), Tenant shall first request
and obtain Landlord’s approval to such proposed storage, use or disposal in writing, which request
must be made at least ten (10) days prior to the storage, use or disposal thereof in, on or about
the Premises. Whether or not Landlord is aware or approves of the storage, use or disposal of any
Toxic Material by Tenant or Tenant’s Agents, Tenant shall be solely responsible for and shall
defend, indemnify and hold Landlord and Landlord’s Agents harmless from and against all claims,
costs and liabilities, including attorneys’ fees and costs, arising out of or in connection with
the storage, use, generation, transportation, disposal or release of Toxic Materials by Tenant or
Tenant’s Agents, including without limitation, any such claims, costs, damages and liabilities
(including attorneys’ fees and costs) arising out of or in connection with any investigation,
testing, remediation, removal, clean-up and/or restoration services, work, materials and equipment
necessary to return the Premises and any other property of whatever nature to their condition
existing prior to the storage, use, generation, transportation, disposal or release of Toxic
Materials by Tenant or Tenant’s Agents in, on or about the Premises or the Project, and to
otherwise satisfactorily investigate and remediate the contamination arising therefrom to the
satisfaction of Landlord and all governmental authorities. If at any time during or after the term
of this Lease, as it may be extended, Tenant becomes aware of any injury, investigation,
administrative proceeding, or judicial proceeding regarding the storage, use or disposition of any
Toxic Materials by Tenant or Tenant’s Agents on or about the Premises or the Project, Tenant shall
within five (5) days after first learning of such injury, investigation or proceeding give Landlord
written notice advising Landlord of same.

          D. Transportation Systems Management. Tenant shall comply with the requirements of
the City or County mandated parking or transportation systems management ordinances.

          E. Rules and Regulations. The Rules and Regulations for the Project in effect as of
the Effective Date are attached hereto as EXHIBIT E. Landlord reserves the right to adopt
or amend the Rules and Regulations from time to time in its reasonable discretion. Tenant agrees
that Tenant, its employees and agents and, to the extent Tenant can require the same, its invitees
and others over whom Tenant can reasonably be expected to exercise control, shall observe and
perform the Rules and Regulations as they may be amended or adopted. A breach of the Rules and
Regulations by Tenant or such persons shall constitute a default under this Lease as if the Rules
or Regulations were contained in this Lease as covenants of the Tenant. Tenant acknowledges that
Landlord has no obligation to enforce, and shall have no liability for non-enforcement of, the
Rules and Regulations. The Rules and Regulations shall be consistent with the terms of the Lease.

     12. Quiet Enjoyment. Landlord covenants that Tenant, upon performing the terms,
covenants and conditions of this Lease, shall have quiet and peaceful possession of the Premises
as against any person claiming the same by, through or under Landlord.

     13. Alterations. Tenant shall not make or permit any Alterations in, on or about the
Premises without the prior written consent of Landlord, and according to plans and specifications
approved in writing by Landlord, which consent shall not be unreasonably withheld. Landlord, at
its sole option, may, however, require as a condition to the granting of any such consent, that
Tenant provide to
Landlord, at Tenant’s sole cost and expense, a lien and completion bond in an amount equal to
one and one-half (11/2) times any and all estimated costs of any intended improvements to the
Premises, to insure Landlord against any liability for mechanics’ and materialmen’s liens and to
insure completion of the work. Tenant shall, at its sole cost and expense, obtain all necessary
permits and governmental

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inspections and approvals required in connection with any Alterations.
All Alterations shall be installed at Tenant’s sole expense, in compliance with all applicable laws
(including, but not limited to, The Americans With Disabilities Act, and any state or local
building, fire or safety codes, ordinances or regulations), the Rules and Regulations and the
CC&R’s, by a licensed contractor reasonably acceptable to Landlord, shall be done in a good and
workmanlike manner conforming in quality and design with the Premises existing as of the
Commencement Date, and shall not diminish the value of the Project. In the event that any
Alteration made by Tenant necessitates the making of other alterations to the interior or exterior
of the Building, the Outside Area or elsewhere within the Project for purposes of complying with
applicable laws (including, but not limited to, The Americans With Disabilities Act, and any state
or local building, fire or safety codes, ordinances or regulations), Tenant shall undertake such
additional alterations at its sole cost and expense or shall, at Landlord’s option, reimburse
Landlord for the cost and expenses incurred with respect to such additional alterations required
for purposes of complying with applicable law as a result of Tenant’s Alterations. All Alterations
made by Tenant shall be and become the property of Landlord upon installation and shall not be
deemed Tenant’s Personal Property; provided, however, that Landlord may, at its option, require
that Tenant, at Tenant’s expense, remove any or all Alterations installed by Tenant and return the
Premises to their condition as of the Commencement Date of this Lease, normal wear and tear
excepted and subject to the provisions of Paragraph 25. Notwithstanding any other provisions of
this Lease, Tenant shall be solely responsible for the maintenance and repair of any and all
Alterations made by it to the Premises. Tenant shall give Landlord written notice of Tenant’s
intention to perform any work on the Premises at least twenty (20) days prior to the commencement
of such work to enable Landlord to post and record an appropriate Notice of Nonresponsibility or
other notice deemed proper before the commencement of any such work.

     14. Surrender of the Premises. Upon the expiration or earlier termination of the
Term, Tenant shall surrender the Premises to Landlord in its condition existing as of the
Commencement Date, normal wear and tear and fire or other insured casualty for which Tenant is not
otherwise obligated under the provisions of Paragraph 18. to repair excepted, with all interior
areas cleaned. Tenant shall prior to the expiration or termination of the Term remove from the
Premises all of Tenant’s Alterations required to be removed pursuant to Paragraph 13., and all
Tenant’s Personal Property and repair any damage and perform any restoration work caused or
necessitated by any such removal. If Tenant fails to remove such Alterations and Tenant’s Personal
Property, and such failure continues after the termination of this Lease, Landlord may retain such
property and all rights of Tenant with respect to it shall cease, or Landlord may place all or any
portion of such property in public storage for Tenant’s account. Tenant shall be liable to
Landlord for costs of removal of any such Alterations and Tenant’s Personal Property and storage
and transportation costs of same, and the cost of repairing and restoring the Premises, together
with interest at the Interest Rate from the date of expenditure by Landlord until paid.

     15. Operating Expenses.

          A. Payment by Tenant. During the term of this Lease, Tenant shall pay to Landlord, as
rent on a monthly basis as set forth in Paragraph 5.A., one-twelfth (1/12) of Tenant’s Property
Percentage of the amount by which Landlord’s estimate of the Operating Expenses for each calendar
year during the Term (after the Base Year) are estimated by Landlord to exceed the Operating
Expenses incurred by Landlord for the Base Year, as such Base Year is specified at C.8. of the
Information Sheet (“Base Year Operating Expenses”).

          B. Operating Expenses. The term “Operating Expenses” shall mean all expenses, costs
and disbursements (but not capital investment items except as otherwise expressly provided below,
or specific costs especially billed to and paid by specific tenants) of every kind and nature which
Landlord shall pay or become obligated to pay because of or in connection with the ownership,
maintenance, repair or operation of the Project and such additional building or Outside Area
facilities in subsequent years as may be determined by Landlord to be necessary or appropriate.
Operating Expenses shall include, but not be limited to, the following:

               (i) Wages and salaries of all employees engaged in the operation, maintenance and security of
the Project, including taxes, insurance and benefits relating thereto; and the rental cost and
overhead of any office and storage space used to provide such services;

               (ii) All supplies and materials used in operation, repair and maintenance of the Project;

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               (iii) Cost of all utilities, including surcharges, for the Project, including the cost of
water, sewer, gas, power, heating, lighting, air conditioning and ventilating for the Project;

               (iv) Cost of all maintenance and service agreements for the Project and the equipment thereon,
including but not limited to, security and energy management services, window cleaning, floor
waxing, elevator maintenance, janitorial service, engineers, gardeners, and trash removal services;

               (v) Cost of all insurance which Landlord or Landlord’s lender deems necessary or appropriate
for the Project such as the cost of “All-Risk” property insurance including, at Landlord’s option,
earthquake and flood coverage, insurance against loss of rents on an “All-Risk” basis, and a
lender’s loss payable endorsement in favor of any lenders with respect to the Project, and naming
Landlord and such lenders as insureds; and casualty and liability insurance applicable to the
Building, Property and Outside Area and Landlord’s personal property used in connection therewith,
naming Landlord and Landlord’s Agents as named or additional insureds;

               (vi) Cost of repairs and general maintenance (excluding repairs and general maintenance to the
extent then paid by proceeds of insurance or other third parties);

               (vii) A five percent (5%) management fee for the management of the Project (which management
may be provided either by Landlord, affiliates of Landlord and/or by third parties) (the
“Management Fee”);

               (viii) The costs of any additional services not provided to the Project at the Commencement
Date but thereafter provided by Landlord in its management of the Building, Property or Outside
Area;

               (ix) The cost of any capital improvements (including interest) made to the Project after
September 1, 1997 that are intended to reduce other Operating Expenses or are required under any
governmental law or regulation, or which enhance in any material respect the general appearance or
use of the Project or any portion thereof, such cost thereof to be amortized with interest at a
reasonable rate over the period Landlord reasonably determines to be the useful life of the capital
improvement, consistent with applicable governmental requirements and generally accepted accounting
principles;

               (x) Real property taxes, as that term is defined in Paragraph 16;

               (xi) Assessments, dues and other amounts payable pursuant to the CC&R’s, including any and all
assessments and dues of the Association; provided, however, that Landlord may elect that Tenant pay
directly any such assessments or dues relating to any particular uses of the Project made by Tenant
or arising out of any actions of Tenant or Tenant’s Agents; and

               (xii) Maintenance and repair costs for interbuilding network cabling.

     The cost of additional or extraordinary services provided to Tenant and not paid or payable by
Tenant pursuant to other provisions of this Lease shall be payable by Tenant and may be included by
Landlord as part of the Operating Expenses payable by Tenant on a monthly basis or may be billed to
Tenant separately, in a lump sum, as Landlord shall elect.

     Operating Expenses shall not include:

          (a) the cost of any additional or extraordinary services provided to other tenants of the
Building;

          (b) costs paid for directly by Tenant;

          (c) principal and interest payments on loans secured by deeds of trust recorded against the
Project;

          (d) real estate sales or leasing brokerage commissions; or

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          (e) executive salaries of off-site personnel employed by Landlord except for the charge (or
pro rata share) of the manager of the Project (which manager’s salary is not included within the
Management Fee).

          C. Adjustment.

               (i) Projected Increases. Prior to or at any time after the commencement of each
calendar year during the Term following the Base Year, Landlord may provide Tenant with notice of
Landlord’s estimate of the amount by which the then current year’s Operating Expenses are
projected, if at all, to exceed the Base Year Operating Expenses (the “Projected Increase in
Operating Expenses”). Tenant shall thereafter during such year pay adjusted Monthly Rent which
shall include as the Monthly Operating Expense Reimbursement an amount equal to one-twelfth (1/12)
of Tenant’s Property Percentage multiplied by any Projected Increase in Operating Expenses.

               (ii) Accounting. Within ninety (90) days (or as soon thereafter as possible) after
the close of each calendar year after the Base Year, Landlord shall provide Tenant a statement of
(a) such year’s actual Operating Expenses, (b) the Base Year Operating Expenses, (c) the amount, if
any, by which the actual Operating Expenses exceed the Base Year Operating Expenses (the “Actual
Increase in Operating Expenses”), (d) the amount equating to Tenant’s Property Percentage of any
Actual Increase in Operating Expenses and (e) the sum of any amounts theretofore paid by Tenant as
Monthly Operating Expense Reimbursements pursuant to Paragraph 5.A. with respect to such year. If
the amount set forth in clause (d) above exceeds the amount set forth in clause (e) above, Tenant
shall pay the amount of such excess to Landlord within ten (10) days of receipt of such statement,
which obligation shall survive the expiration or earlier termination of its Term of the Lease. If
the amount set forth in clause (e) above exceeds the amount set forth in clause (d) above, Landlord
shall credit the amount of such excess against the next accruing payment(s) of Monthly Operating
Expense Reimbursements or reimburse Tenant for same if this Lease has terminated prior to the date
such determination is made.

               (iii) Proration. Tenant’s liability to pay Tenant’s Property Percentage of Operating
Expenses in excess of Base Year Operating Expenses shall be prorated on the basis of a 365-day year
to account for any fractional portion of a year included at the commencement or expiration of the
term of this Lease.

               (iv) Not Fully Occupied. Notwithstanding any other provision to the contrary, it is
agreed that if the Building, in total, is less than ninety-five percent (95%) occupied during all
or any portion of any calendar year, an adjustment shall be made in calculating the Operating
Expenses for the Project for such year so that Tenant’s Percentage of Operating Expenses in excess
of the Base Year Operating Expenses shall be equivalent to the Operating Expenses calculated as
though the Building, in total, had been ninety-five percent (95%) occupied during the entirety of
such year.

               (v) Survival. Landlord and Tenant’s obligation to pay for or credit any increase or
decrease in payments pursuant to this Paragraph shall survive the expiration or termination of the
Term of this Lease.

          D. Failure to Pay. Failure of Tenant to pay any of the charges required to be paid
under this Paragraph 15. shall constitute a breach of this Lease and Landlord’s remedies shall be
as specified in Paragraph 28.B.

     16. Taxes and Assessments.

          A. Payment by Tenant. Except as provided for in Paragraph 16.C., Real Property Taxes
for the Project shall be included within Operating Expenses pursuant to Paragraph 15.B.

          B. Annual Assessments. With respect to any taxes or assessments which may be levied
against or upon the Project, or which under the laws then in force may be evidenced by improvement
or other bonds or may be paid in annual installments, only the amount of such annual installment
(with appropriate proration for any partial year) and interest due thereon shall be included within
the computation of the annual taxes and assessments levied against the Project.

          C. Taxes Levied Against Tenant’s Alterations and Personal Property. In addition to
Tenant’s obligation to pay its Property Percentage of Operating Expenses over Base Year Operating
Expenses as provided in Paragraphs 15. and 16.A., (i) Tenant shall be responsible for and shall

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pay to the taxing authority prior to delinquency to the extent Tenant is billed directly, all
Real Property Taxes assessed with respect to or against Tenant, or any Alterations, improvements,
fixtures, equipment, facilities, furniture or other Personal Property owned by Tenant or placed,
installed or located within, upon or about the Premises by Tenant or at Tenant’s direction
(collectively “Personal Property Taxes”), and (ii) to the extent any Personal Property Taxes are
billed to Landlord and Landlord elects not to include such Personal Property Taxes in Operating
Expenses, Tenant shall be responsible for and shall pay to Landlord within ten (10) days after
notice from Landlord, the amount of such Personal Property Taxes so billed to Landlord. Tenant
shall provide Landlord with evidence of Tenant’s payment of the same upon Landlord’s request.

          D. Failure to Pay. Failure of Tenant to pay any of the charges required to be paid
under this Paragraph 16. shall constitute a breach of this Lease and Landlord’s remedies shall be
as specified in Paragraph 28.B.

     17. Utilities and Services. Landlord agrees to provide the utilities and services to
the Premises on the terms more specifically set forth in EXHIBIT F. Landlord shall not be
liable in damages or otherwise for any failure or interruption of any utility service or other
service furnished to the Premises. Tenant shall be responsible for payment of all utility and
other services provided during other than normal business hours for the Building, as reasonably
determined by Landlord.

     18. Repair and Maintenance.

          A. Premises, Building and Outside Area.

               (i) Maintenance and Repair. Except as provided in this subparagraph (i), Tenant, at
all times during the Term and at Tenant’s sole cost and expense, shall keep the Premises and every
part thereof (including all fixtures and equipment located therein or exclusively servicing the
Premises) in good condition and repair, normal wear and tear and damage for which Landlord is
otherwise required to repair pursuant to Paragraph 25 of this Lease excepted. Landlord shall be
responsible for maintaining and repairing (a) the structural parts of the Building, which
structural parts include only the foundation, roof and subflooring of the Premises, the basic
plumbing, heating, ventilating, air conditioning and electrical systems installed or furnished by
Landlord, and (b) the Outside Area, except for any damage to Premises, Building or Outside Area
caused by the negligence or willful acts or omissions of Tenant or of Tenant’s Agents, or by reason
of the failure of Tenant to perform or comply with any terms, conditions or covenants in this
Lease, or caused by Alterations made by Tenant or by Tenant’s Agents, which shall be Tenant’s
responsibility. Except as otherwise provided in Paragraph 15.B., all costs of repair and
maintenance of the Project shall be included in Operating Expenses.

               (ii) Notice of Repairs Needed. Landlord shall not be liable for any failure to make
any of the repairs or to perform any maintenance unless the failure shall persist for an
unreasonable time after written notice of the need of the repairs or maintenance is given to
Landlord by Tenant.

               (iii) No Abatement. There shall be no abatement of rent and no liability of Landlord
by reason of any injury to or interference with Tenant’s business arising from the making of any
repairs, alterations or improvements in or to, or maintenance of, any portion of the Project, or
any fixtures, appurtenances and equipment therein.

          B. Control and Reconfiguration. Landlord shall at all times have exclusive control of
the Building (other than the Premises) and the Outside Area and may at any time temporarily close
any part thereof and exclude and restrain anyone from any part thereof, and may change the design
configuration or location of the Building or the Outside Area. In exercising any such rights,
Landlord shall make a reasonable effort to minimize any disruption of Tenant’s business. Landlord
shall have the right to reconfigure the parking area and ingress to and egress from the parking
area, and to modify the directional flow of traffic in the parking area. Landlord shall further
have the right to enter upon the Premises, upon the giving of the notice provided in Paragraph 21.,
for the purpose of installing, maintaining, repairing, adjusting and making connections to any
utilities (including but not limited to plumbing, HVAC, electrical, telephone, cable TV, and
computer wiring) serving the Premises or other spaces in the Building or for gaining access to the
structural portions of the Building and making alterations thereto for the benefit of Tenant,
Landlord or other occupants of the Building.

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          C. Waiver. Tenant waives the provisions of all laws, statutes or ordinances,
including Sections 1932(1), 1932(2), 1933(4), 1941 and 1942 of the California Civil Code and any
similar or successor law, which might now or at any time hereafter otherwise afford Tenant any
right to make repairs and deduct the expenses of such repairs from the Rent due under this Lease.

          D. Compliance with Governmental Regulations. Tenant shall, at its cost comply with,
including the making by Tenant of any Alteration to the Premises, all present and future
regulations, rules, laws, ordinances, and requirements of all governmental authorities (including,
state municipal, county and federal governments and their departments, bureaus, boards and
officials) arising from the use or occupancy of, or applicable to, the Project or privileges
appurtenant thereto (including, but not limited to, The Americans With Disabilities Act, and any
state or local building, fire or safety codes, ordinances or regulations).

          E. Repair Where Tenant at Fault. If all or part of the Project or the Premises
requires repair or becomes damaged or destroyed through any act or omission of Tenant or Tenant’s
Agents, Landlord may effect the necessary alterations, replacements or repairs at Tenant’s cost.

     19. Fixtures. Tenant shall, at its own expense, provide, install and maintain in good
condition all trade fixtures and equipment required in the conduct of its business in the Premises.
All fixtures and improvements, other than Tenant’s trade fixtures and equipment, which are
installed or constructed upon or attached to the Premises by either Landlord or Tenant shall become
a part of the realty and belong to Landlord. If Tenant is not then in default, Tenant may, at the
termination of this Lease, or at any other time, remove from the Premises all trade fixtures,
equipment and other personal property not permanently affixed to the Premises. Upon removal,
Tenant shall restore the Premises to its original condition at the time of occupancy, normal wear
and tear excepted. Tenant shall place a floor mat of sufficient strength under each desk chair to
protect the carpeting and shall be responsible for any damage to the carpet for failure to do so.

     20. Liens. Tenant shall keep the Project free from any liens arising out of any work
performed, materials furnished or obligations incurred by or on behalf of Tenant and shall defend,
indemnify and hold the Project, Landlord and Landlord’s Agents free and harmless from and against
any lien, claim, cause of action, loss, liability, damage or expense, including attorneys’ fees and
costs, in connection with or arising out of any such lien or claim of lien. Tenant shall cause any
such lien imposed to be released of record by payment or posting of a proper bond acceptable to
Landlord within ten (10) days after written request by Landlord. If Tenant fails to so remove any
such lien within the prescribed ten (10) day period, then Landlord may do so and Tenant shall
reimburse Landlord upon demand. Such reimbursement shall include all sums incurred by Landlord
including Landlord’s reasonable attorneys’ fees, with interest thereon at the Interest Rate.

     21. Landlord’s Right to Enter the Premises. Tenant shall permit Landlord and its
Agents to enter the Premises at all reasonable times to inspect the Premises, to post Notices of
Nonresponsibility and similar notices, “For Sale” signs, to show the Premises to interested parties
such as prospective lenders and purchasers, to make repairs or alterations to the Premises or the
Building and any utility system located therein, to discharge Tenant’s obligations hereunder when
Tenant has failed to do so within a reasonable time after written notice from Landlord, and at any
reasonable time within one hundred eighty (180) days prior to the expiration of the Term, to place
upon the Premises ordinary “For Lease” signs and to show the Premises to prospective tenants. The
above rights are subject to reasonable security regulations of Tenant, and to the fact that
Landlord shall seek to exercise its rights in a manner so as to minimize interference with Tenant’s
business.

     22. Signs. Subject to receipt of the necessary approvals of the City, Landlord shall
provide for Tenant a listing (to a maximum of four (4) lines) in the Building directory and a sign
adjacent to the main entrance of the Premises within the Building. Except as provided in
EXHIBIT C hereto, Tenant shall have no right to maintain Tenant identification signs in any
other location in, on or about the Project and shall not display or erect any other Tenant
identification sign, display or other advertising material that is visible from the exterior of
the Building without Landlord’s prior written consent which may be withheld in Landlord’s sole
discretion; all signage displayed, installed or erected by or on behalf of Tenant shall conform to
all signage criteria, from time to time, adopted by Landlord.

     23. Insurance.

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          A. Indemnification. Tenant shall protect, defend, indemnify and hold Landlord and
Landlord’s Agents free and harmless from and against any and all damage, loss, liability or expense
including, without limitation, attorneys’ fees, expert witness fees and legal costs suffered
directly or by reason of any claim, cause of action, suit or judgment brought by or in favor of any
person or persons for damage, loss or expense due to, but not limited to, bodily injury and
property damage sustained by such person or persons which arises out of, is occasioned by or in any
way attributable to (i) injury or damage occurring upon the Premises, (ii) the use or occupancy of
the Project or any part thereof and adjacent areas by the Tenant, (iii) the acts or omissions of
the Tenant, its agents or employees or any contractors brought onto the Project by Tenant, except
to the extent caused solely by the gross negligence or willful misconduct of Landlord or Landlord’s
Agents. Tenant agrees that the indemnity obligations assumed herein and in other provisions of
this Lease shall survive the expiration or earlier termination of the Term of this Lease.

          B. Tenant’s Insurance. Tenant shall maintain in full force and effect at all times
during the Term (including any extension(s)), at its own expense, for the protection of Tenant and
Landlord, as their interests may appear, policies of insurance issued by a responsible carrier or
carriers, acceptable to Landlord, which afford the following coverages:

               (i) Worker’s Compensation — In accordance with state law.

               (ii) Commercial general liability insurance in an amount not less than Two Million and
no/100ths Dollars ($2,000,000.00) combined single limit for both bodily injury and property damage
which includes blanket contractual liability, broad form property damage, personal injury,
completed operations, and products liability naming Landlord as an additional insured.

               (iii) “All Risk” property insurance (including, without limitation, vandalism, malicious
mischief, inflation endorsement, and sprinkler leakage endorsement) on Tenant’s Personal Property
located on or in the Premises together with any improvement or Alteration for which Landlord is not
obligated to repair pursuant to Paragraph 25.D. Such insurance shall be in the full amount of the
replacement cost, as the same may from time to time increase as a result of inflation or otherwise.

          C. All-Risk Insurance. During the Term Landlord shall maintain “All Risk” property
insurance (including, at Landlord’s option, inflation endorsement, sprinkler leakage endorsement,
and earthquake and flood coverage) on the Project, excluding coverage of all Tenant’s Personal
Property located on or in the Premises, but including the Tenant Improvements. At Landlord’s
option, the coverage shall also include insurance against loss of rents on an “All Risk” basis,
including flood, in an amount equal to the Monthly Rent, and any other sums payable under the
Lease, for a period of at least twelve (12) months commencing on the date of loss. Such insurance
shall name Landlord as a named insured and may at Landlord’s option include Landlord’s Agents as
named insureds and lender’s loss payable endorsement(s) in favor of lenders with respect to the
Property. The insurance premiums, including the premiums resulting from increases in the valuation
of the Project shall be included in Operating Expenses.

          D. Evidence of Insurance. Tenant shall deliver to Landlord, at least thirty (30) days
prior to the time the insurance first is required to be carried by Tenant, written evidence of the
insurance for the coverage specified in Paragraph 23.B., with the limits not less than those
specified therein. The written evidence shall include a statement providing for written
notification to Landlord by the insurer not less than thirty (30) days prior to cancellation or
reduction of any required coverage.

          E. Co-Insurer. If, on account of the failure of Tenant to comply with the foregoing
provisions, Landlord is adjudged a co-insurer by its insurance carrier, then, any loss or damage
Landlord shall sustain by reason thereof, including attorneys’ fees and costs, shall be borne by
Tenant and shall be immediately paid by Tenant upon receipt of a bill therefor and evidence of such
loss.

          F. Insurance Requirements. All insurance shall be in a form satisfactory to Landlord.
All policies required by Paragraph 23.B. shall be carried with companies that have a general
policy holder’s rating of not less than “A” and a financial rating of not less than Class “X” in
the most current edition of Best’s Insurance Reports. All policies required by Paragraph 23.B.
shall provide that the policies shall not be subject to material alteration or cancellation except
after at least thirty (30) days’ prior written notice to Landlord, and they shall be primary as to
Landlord. If Tenant fails to procure and maintain the insurance required hereunder, Landlord may,
but shall not be required to, order such insurance at Tenant’s expense and Tenant shall reimburse
Landlord. Such reimbursement shall include

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all sums incurred by Landlord, including reasonable attorneys’ fees, with interest thereon at
the Interest Rate.

          G. No Limitation of Liability. Landlord makes no representation that the limits of
liability specified to be carried by Tenant under the terms of this Lease are adequate to protect
Tenant or Landlord, and in the event Tenant believes that any such insurance coverage called for
under this Lease is insufficient, Tenant shall provide, at its own expense, such additional
insurance as Tenant deems adequate.

          H. Landlord’s Disclaimer. Landlord and Landlord’s Agents shall not be liable for any
loss or damage to persons or property resulting from fire, explosion, falling plaster, glass, tile
or sheetrock, steam, gas, electricity, water or rain which may leak from any part of the Project,
or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface or
whatsoever, unless caused by or due to the gross negligence or willful misconduct of Landlord.
Landlord and Landlord’s Agents shall not be liable for interference with the light, air, or any
latent defect in the Project. In no event whatsoever shall Landlord be liable for losses
attributable to interruption of telephone services. Tenant shall give prompt written notice to
Landlord in the case of a casualty, accident or repair needed in the Project.

          I. Increased Coverage. Upon demand, Tenant shall provide Landlord, at Tenant’s
expense, with such increased amount of existing insurance, and such other insurance as Landlord or
Landlord’s lender may reasonably require, to afford Landlord and Landlord’s lender adequate
protection.

     24. Waiver of Subrogation. Landlord and Tenant each hereby waive all rights of
recovery against the other on account of loss and damage occasioned to such waiving party for its
property or the property of others under its control to the extent that such loss or damage is
insured against under any insurance policies which may be in force at the time of such loss or
damage. Tenant and Landlord shall, upon obtaining policies of insurance required hereunder, give
notice to the insurance carrier that the foregoing mutual waiver of subrogation is contained in
this Lease and Tenant and Landlord shall cause each insurance policy obtained by such party to
provide that the insurance company waives all right of recovery by way of subrogation against
either Landlord or Tenant in connection with any damage covered by such policy.

     25. Damage or Destruction.

          A. Partial Damage — Insured. If the Premises are damaged by any casualty which is
covered under the “All-Risk” insurance carried by Landlord pursuant to Paragraph 23.C., then
Landlord shall restore the damage, provided insurance proceeds are available to pay the cost of
restoration and provided such restoration can be completed within one hundred twenty (120) days
after the commencement of the work in the opinion of Landlord. In such event this Lease shall
continue in full force and effect, except that Tenant shall be entitled to a proportionate
reduction of Monthly Rent while such restoration for which Landlord is obligated hereunder takes
place, such proportionate reduction to be based upon the extent to which the damage and restoration
efforts interfere with Tenant’s use of the Premises.

          B. Partial Damage — Uninsured. If the Premises or the Building is damaged by a risk
not covered by Landlord’s insurance, or the available proceeds of insurance are less than the cost
of restoration, or if the restoration cannot be completed within one hundred twenty (120) days
after the commencement of work, in the opinion of Landlord, then Landlord shall have the option
either to: (i) repair or restore such damage, this Lease continuing in full force and effect, but
the Monthly Rent to be proportionately abated as provided in Paragraph 25.A.; or (ii) give notice
to Tenant at any time within thirty (30) days after such damage terminating this Lease as of a date
to be specified in such notice, which date shall be not less than thirty (30) nor more than sixty
(60) days after giving such notice. If notice of termination is given, this Lease shall expire and
all interest of Tenant in the Premises shall terminate on the date specified in the notice and the
Monthly Rent shall be reduced in proportion to the extent, if any, to which the damage interferes
with the use of the Premises by Tenant. All insurance proceeds for the Premises shall be payable
solely to Landlord, and Tenant shall have no interest in the proceeds.

          C. Total Destruction. If the Premises or the Building is totally destroyed or the
Premises or Building, as the case may be, cannot be restored as required herein under applicable
laws and regulations or due to the presence of hazardous factors such as earthquake faults,
chemical waste and

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similar dangers, notwithstanding the availability of insurance proceeds, this Lease shall be
terminated effective the date of the damage.

          D. Landlord’s Obligations. Landlord shall not be required to insure against or repair
any injury or damage by fire or other cause, or to make any restoration or replacement of any
paneling, decorations, partitions, railings, floor coverings, office fixtures or other items which
are Alterations or Personal Property installed in the Premises by Tenant or at the direct or
indirect expense of Tenant. Tenant shall be required at Tenant’s sole cost and expense, separately
to insure the same and promptly to restore or replace same in the event of damage. Except for any
abatement of Monthly Rent relating to the plan of restoration of damage for which Landlord is
obligated to repair hereunder, Tenant shall have no claim against Landlord for any damage suffered
by reason of any such damage, destruction, repair or restoration; nor shall Tenant have the right
to terminate this Lease as the result of any statutory provision now or hereafter in effect
pertaining to the damage and destruction of the Premises, except as expressly provided herein.

          E. Damage Near End of Term. Anything herein to the contrary notwithstanding, if the
Premises or the Building is destroyed or damaged during the last twelve (12) months of the Term,
then Landlord may, at its option, cancel and terminate this Lease as of the date of the occurrence
of the damage. If Landlord does not elect to terminate this Lease, the repair of the damage shall
be governed by the other provisions of this Paragraph 25. If this Lease is terminated, Landlord
may keep all the insurance proceeds resulting from the damage, except for the proceeds which
specifically insured Tenant’s Personal Property.

     26. Condemnation.

          A. Total Taking — Termination. If title to all of the Premises or so much thereof is
taken or appropriated for any public or quasi-public use under any statute or by right of eminent
domain so that reconstruction of the Premises will not, in Landlord’s and Tenant’s mutual opinion,
result in the Premises being reasonably suitable for Tenant’s continued occupancy for the uses and
purposes permitted by this Lease, this Lease shall terminate as of the date that possession of the
Premises or part thereof be taken. A sale by Landlord to any authority having the power of eminent
domain, either under threat of condemnation or while condemnation proceedings are pending, shall be
deemed a taking under the power of eminent domain for all purposes of this Paragraph.

          B. Partial Taking. If any part of the Premises or the Building is taken and the
remaining part is reasonably suitable for Tenant’s continued occupancy for the purposes and uses
permitted by this Lease, this Lease shall, as to the part so taken, terminate as of the date that
possession of such part of the Premises or Building is taken. If the Premises is so partially
taken the Rent and other sums payable hereunder shall be reduced in the same proportion that
Tenant’s use and occupancy is reduced.

          C. No Apportionment of Award. No award for any partial or entire taking shall be
apportioned. Tenant assigns to Landlord its interest in any award which may be made in such taking
or condemnation, together with any and all rights of Tenant arising in or to the same or any part
thereof. Nothing contained herein shall be deemed to give Landlord any interest in or require
Tenant to assign to Landlord any separate award made to Tenant for the: taking of Tenant’s
Personal Property, for the interruption to Tenant’s business, or its moving costs, or for the loss
of its good will.

          D. Temporary Taking. No temporary taking of the Premises shall terminate this Lease
or give Tenant any right to any abatement of Rent. Any award made to Tenant by reason of such
temporary taking shall belong entirely to Tenant and Landlord shall not be entitled to share
therein. Each party agrees to execute and deliver to the other all instruments that may be
required to effectuate the provisions of this Paragraph.

     27. Assignment and Subletting.

          A. Landlord’s Consent. Tenant shall not enter into a Sublet without Landlord’s prior
written consent, which consent shall not be unreasonably withheld. Any attempted or purported
Sublet without Landlord’s prior written consent shall be void and confer no rights upon any third
person and, at Landlord’s election, shall terminate this Lease. Each Subtenant shall agree in
writing, for the benefit of Landlord, to assume, to be bound by, and to perform and observe the
terms, covenants and conditions of this Lease to be performed and observed by Tenant. Every Sublet
shall recite that it is and

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shall be subject and subordinate to the provisions of this Lease, and that the termination of
this Lease shall constitute a termination (at the option of the Landlord) of every such Sublet.
Notwithstanding anything contained herein, (i) Tenant shall not be released from personal liability
for the performance of any of the terms, covenants and conditions of this Lease by reason of
Landlord’s consent to a Sublet unless Landlord specifically grants such release in writing, and
(ii) the parties agree that it shall be reasonable for Landlord to withhold its consent to any
proposed Sublet when the proposed Subtenant is an occupant of the Property or is a third party
which is already involved in negotiations with Landlord to lease space in the Project.

          B. Information to be Furnished. If Tenant desires at any time to Sublet the Premises
or any portion thereof, it shall first notify Landlord of its desire to do so and shall submit in
writing to Landlord: (i) the name of the proposed Subtenant; (ii) the nature of the proposed
Subtenant’s business to be carried on in the Premises; (iii) the terms and provisions of the
proposed Sublet and a copy of the proposed Sublet form containing a description of the subject
premises; and (iv) such financial information, including financial statements, as Landlord may
reasonably request concerning the proposed Subtenant. If Tenant requests Landlord’s consent to a
proposed Sublet, Tenant shall pay to Landlord, whether or not consent is ultimately given,
Landlord’s reasonable attorneys’ fees incurred in connection with such request.

          C. Landlord’s Alternatives. At any time within thirty (30) days after Landlord’s
receipt of all the information specified in Paragraph 27.B., Landlord may, by written notice to
Tenant, elect: (i) to lease for its own account the Premises or the portion thereof so proposed to
be Sublet by Tenant, upon the same terms as those offered to the proposed Subtenant but on a form
acceptable to Landlord; (ii) to terminate this Lease as it relates to the Premises or the portion
thereof so proposed to be Sublet by Tenant as of the later of (x) the proposed effective date of
such Sublet or (y) thirty (30) days after the date Landlord is in receipt of the information
specified in Paragraph 27.B.; (iii) to consent to the Sublet by Tenant; or (iv) to refuse its
consent to the Sublet.

     If Landlord consents to the Sublet, Tenant may thereafter enter a valid Sublet of the Premises
or portion thereof, upon the terms and conditions and with the proposed Subtenant set forth in the
information furnished by Tenant to Landlord pursuant to Paragraph 27.B., subject, however, to the
condition that any excess of the Subrent over the Rent required to be paid by Tenant hereunder
shall be split evenly between Landlord and Tenant as and when received by Tenant.

          D. Proration. If a portion of the Premises is Sublet, the pro rata share of the Rent
attributable to such partial area of the Premises shall be determined by Landlord by dividing the
Rent payable by Tenant hereunder by the total square footage of the Premises and multiplying the
resulting quotient (the per square foot rent) by the number of square feet of the Premises which
are Sublet.

          E. Executed Counterpart. No Sublet shall be valid nor shall any Subtenant take
possession of the Premises until an executed counterpart of the Sublet agreement has been delivered
to Landlord.

          F. Surrender of Lease. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord,
terminate all or any existing Sublets, or may, at the option of Landlord, operate as an assignment
to it of any or all such Sublets.

          G. No Mortgages. Tenant shall not pledge, hypothecate or encumber this Lease or
Tenant’s interest herein or in the Premises in any manner, including without limitation, by means
of any mortgage, deed of trust, security interest or assignment for security purposes, and any such
attempted pledge, hypothecation or encumbrance shall be void and constitute a default under this
Lease.

          H. Effect of Default. Notwithstanding any provision of this Paragraph 27 to the
contrary, in the event of the occurrence of any uncured default by Tenant in the performance of any
term or condition of this Lease, any right of Tenant at such time to seek to Sublet this Lease
pursuant to this Paragraph 27 and any obligations of Landlord to review any proposed Sublet or
exercise its rights under Paragraph 27.C above shall be suspended, and any applicable period for
review or action by Landlord shall be tolled, until such default is cured of no force or effect.

          I. Permitted Transfers. Notwithstanding anything to the contrary contained in this
Lease, Tenant, without Landlord’s prior written consent, may sublet the Premises or assign this

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Lease to: (i) a subsidiary, affiliate, division or corporation controlling, controlled by or
under common control with Tenant; (ii) a successor corporation related to Tenant by merger,
consolidation, nonbankruptcy reorganization or government action; or (iii) a purchaser of
substantially all of Tenant’s assets located at the Premises (collectively “Permitted
Transferees”); provided Tenant enters into such a transaction in good faith and not for the purpose
of indirectly entering into a sublet or assignment of this Lease with a person or entity other than
a Permitted Transferee through a step transaction or otherwise. For purposes of this Lease, a sale
of Tenant’s capital stock through any public exchange shall not be deemed an assignment, subletting
or other transfer of this Lease or the Premises requiring Landlord’s consent. Tenant shall not be
required to obtain Landlord’s consent thereof, nor shall provisions of (ii) or (iv) of Paragraph
27.C hereof apply (but all other provisions of said Paragraph, including the second full
grammatical paragraph thereof, shall apply); in no event shall such assignment or sublease release
Tenant from any liability for the performance of the obligations under this Lease, unless Landlord
shall have released Tenant in writing. Further, the requirements contained in the third and fourth
sentences of Paragraph 27.A shall apply to all such transfers.

     28. Default.

          A. Tenant’s Default. A default under this Lease by Tenant shall exist if any of the
following events shall occur:

               (i) If Tenant fails to pay Rent or any other sum required to be paid hereunder within five (5)
days after the date when the same is due; or

               (ii) If Tenant fails to perform any term, covenant or condition of this Lease except those
requiring the payment of money, and Tenant shall have failed to cure such breach within twenty (20)
days after written notice from Landlord; provided, however, that when such failure could not
reasonably be cured within the twenty (20) day period, then Tenant shall not be in default if
Tenant promptly commences the performance of such cure within the twenty (20) day period and
diligently thereafter prosecutes the same to completion; or

               (iii) If Tenant shall have failed to continuously and uninterruptedly conduct its business in
the Premises, or shall have abandoned or vacated the Premise; or

               (iv) In the event of a general assignment by Tenant for the benefit of creditors; the filing
of any voluntary petition in bankruptcy by Tenant or the filing of an involuntary petition by
Tenant’s creditors, which involuntary petition remains undischarged for thirty (30) days; the
employment of a receiver to take possession of substantially all of Tenant’s assets or any part of
the Premises, if such receivership remains undissolved for ten business days after creation
thereof; the attachment, execution or other judicial seizure of all or substantially all of
Tenant’s assets or any part of the Premises, if such attachment or other seizure remains
undismissed or undischarged for ten business days after the levy thereof; the admission by Tenant
in writing of its inability to pay its debts as they become due; the filing by Tenant of a petition
seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or regulation; the filing by Tenant of an
answer admitting or failing timely to contest a material allegation of a petition filed against
Tenant in any such proceeding; or, if within thirty (30) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute, law or regulation,
such proceeding shall not have been dismissed.

          B. Remedies. Upon a default, Landlord shall have the following remedies, in addition
to all other rights and remedies provided by law or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:

               (i) Landlord may continue this Lease in full force and effect, and this Lease shall continue
in full force and effect as long as Landlord does not terminate this Lease, and Landlord shall have
the right to collect Rent when due. During the period Tenant is in default, Landlord may enter the
Premises and relet it, or any part of it, to third parties for Tenant’s account, provided that any
rent in excess of the Monthly Rent due hereunder shall be payable to Landlord. Tenant shall be
liable immediately to Landlord for all costs Landlord incurs in reletting the Premises or any part
thereof, including, without limitation, broker’s commissions, expenses of cleaning and redecorating
the Premises required by the reletting and like costs. Reletting may be for a period shorter or
longer than the

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remaining Term of this Lease. No act by Landlord other than giving written notice to Tenant
shall terminate this Lease.

               (ii) Landlord may by written notice terminate Tenant’s right to possession of the Premises at
any time and relet the Premises or any part thereof. Acts of maintenance, efforts to relet the
Premises or the appointment of a receiver on Landlord’s initiative to protect Landlord’s interest
under this Lease shall not constitute a termination of Tenant’s right to possession. On
termination, Landlord has the right to remove all Tenant’s Personal Property and store same at
Tenant’s cost and to recover from Tenant:

          (a) the worth at the time of award of the unpaid Rent which had been earned at the time of
termination including interest at the Interest Rate;

          (b) the worth at the time of award of the amount by which the unpaid Rent which would have
been earned after termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided, including interest at the Interest Rate;

          (c) the worth at the time of award of the amount by which unpaid Rent for the balance of the
term after the time of award exceeds the amount of such rental loss for the same period that Tenant
proves could be reasonably avoided, discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%);

          (d) 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 in the ordinary course of
things would be likely to result therefrom, including without limitation the following: (i) all
expenses for repairing or restoring the Premises, (ii) all brokers’ fees, advertising costs and
other expenses of repairing or restoring the Premises, (iii) all expenses in retaking possession of
the Premises, and (iv) reasonable attorneys’ fees, expert witness fees and court costs; and

          (e) as used in subparagraphs (a) through (c) above, the term “time of award” shall mean the
date of entry of a judgment or award against Tenant in an action or proceeding arising out of
Tenant’s breach of this Lease.

     Tenant waives redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event Tenant is evicted or
Landlord takes possession of the Premises by reason of any default of Tenant hereunder.

               (iii) Landlord may, with or without terminating this Lease, re-enter the Premises and remove
all persons and property from the Premises; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant. No re-entry or taking
possession of the Premises by Landlord pursuant to this Paragraph shall be construed as an election
to terminate this Lease unless a written notice of such intention is given to Tenant.

          C. Landlord’s Default. Landlord shall not be deemed to be in default in the
performance of any obligation required to be performed by it hereunder unless and until it has
failed to perform such obligation within twenty (20) days after receipt of written notice by Tenant
to Landlord specifying the nature of such default; provided, however, that if the nature of
Landlord’s obligation is such that more than twenty (20) days are required for its performance,
then Landlord shall not be deemed to be in default if it shall commence such performance within
such twenty (20) day period and thereafter diligently prosecute the same to completion.

     29. Subordination. This Lease is and shall automatically be subject and subordinate
to all ground and underlying leases, mortgages, and deeds of trust (collectively, “Encumbrance”)
which may now or hereafter affect the Premises, to the CC&R’s and to all renewals, modifications,
consolidations, replacements and extensions thereof; provided, however, if the holder or holders of
any such Encumbrance (“Holder”) shall require that this Lease be prior and superior thereto, then
upon written notice from Holder to Tenant this Lease shall be automatically prior and superior to
the lien of such Encumbrance without regard to the sequence of recordation. Within ten (10) days
after Landlord or Holder’s written request, Tenant shall execute any and all documents requested by
Landlord or Holder to further effectuate and evidence such subordination of this Lease to any lien
of the Encumbrance or to evidence the Holder’s election that this Lease be prior and senior to the
Encumbrance. Notwithstanding anything to the contrary set forth in this Paragraph, Tenant hereby
attorns and agrees to attorn to the

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Holder and any person purchasing or otherwise acquiring the Premises at any sale or other
proceeding or pursuant to the exercise of any other rights, powers or remedies under such
Encumbrance, which obligation to attorn shall survive any foreclosure of any Encumbrance; and
Tenant agrees within ten (10) days of request of Holder or any such other person to execute an
attornment agreement recognizing Holder or such other person as Landlord under this Lease and
acknowledging that this Lease is and shall remain in full force and effect and binding upon Tenant
notwithstanding any foreclosure of such Encumbrance.

     30. Notices. Every notice to be given by any party to any other party with respect
hereto, shall be in writing and shall not be effective for any purpose unless the same shall be
delivered to the addressee personally, by a reputable express delivery service, a recognized
overnight air courier service, or United States certified mail, return receipt requested, addressed
to the respective parties at the addresses set forth at C.11. of the Information Sheet, or to such
other address as either party may from time to time designate by notice to the other given in
accordance with this Paragraph. All notices shall be effective (i) when delivered locally by hand
or by a reputable express delivery service (ii) one business day after deposit with a recognized
overnight air courier service or (iii) five business days after having been sent by certified mail,
return receipt requested.

     31. Attorneys’ Fees. In the event Landlord engages an attorney to pursue the recovery
of any Rent owed by Tenant hereunder (whether or not any action or legal proceeding is ultimately
filed) or if either party brings any action or legal proceeding for damages for an alleged breach
of any provision of this Lease, to recover Rent or other sums due, to terminate the tenancy of the
Premises or to enforce, protect or establish any term, condition or covenant of this Lease or right
of either party, the prevailing party shall be entitled to recover as a part of such action or
proceedings, or in a separate action brought for that purpose, reasonable attorneys’ fees and
costs, including expert witness fees (and without regard to whether or not such action or
proceedings are pursued to judgment).

     32. Estoppel Certificates. Tenant shall within ten (10) days following written
request by Landlord:

               (i) Execute and deliver to Landlord any documents, including estoppel certificates, in the
form prepared by Landlord (a) certifying the date of commencement of this Lease, (b) certifying
that this Lease is unmodified and in full force and effect or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full force and effect, (c)
stating the dates to which Rent and any other amounts payable hereunder have been paid and the
amount of any unforfeited security deposit then held by Landlord, and (d) acknowledging that there
are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord, or, if there are
uncured defaults on the part of the Landlord, stating the nature of such uncured defaults, (e)
acknowledging that Tenant does not have any claim or right of offset against Landlord (or if Tenant
does have any such claim or right of offset, the nature of such claim or right of offset), and (f)
setting forth such other matters as may reasonably be requested by Landlord. Tenant’s failure to
deliver an estoppel certificate within ten (10) days after delivery of Landlord’s written request
therefor shall be conclusive upon Tenant (a) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (b) that there are now no uncured defaults
in Landlord’s performance and (c) that no Rent has been paid in advance and no security deposit is
held by Landlord, (d) that Tenant has no claims or rights of offset against Landlord and (e) that
such other matters as were set forth in such estoppel certificate as prepared by Landlord are true
and correct; provided, further, that such failure shall constitute a breach of this Lease and
Landlord’s remedies shall be as specified in Paragraph 28.B.

               (ii) Deliver to Landlord the current financial statements of Tenant, and financial statements
of the two (2) years prior to the current financial statements year, with an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for the most recent
prior year, all prepared in accordance with generally accepted accounting principles consistently
applied.

     33. Transfer of the Project by Landlord. In the event of any conveyance of the
Project or the Building and assignment by Landlord of this Lease, Landlord shall be and is hereby
entirely released from all liability under any and all of its covenants and obligations contained
in or derived from this Lease occurring or accruing after the date of the conveyance and
assignment, and Tenant agrees to attorn to such transferee.

     34. Landlord’s Right to Perform Tenant’s Covenants. If Tenant fails to make any
payment or perform any other act on its part to be made or performed under this Lease, Landlord
after

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	 	Tenant

 

fifteen (15) days’ written notice may, but shall not be obligated to, and without waiving or
releasing Tenant from any obligation of Tenant under this Lease, make such payment or perform such
other act to the extent Landlord may deem desirable, and in connection therewith, pay expenses and
employ counsel. All sums so paid by Landlord and all penalties, interest and costs in connection
therewith shall be due and payable by Tenant on the next day after any such payment by Landlord,
together with interest thereon at the Interest Rate from such date to the date of payment by Tenant
to Landlord, plus collection costs and attorneys’ fees. Landlord shall have the same rights and
remedies for the nonpayment thereof as in the case of default in the payment of Rent.

     35. Tenant’s Remedy. The obligations of Landlord under this Lease do not and shall
not constitute personal obligations of Landlord or any of Landlord’s Agents, and Tenant agrees that
it shall look solely to the real estate that is the subject of this Lease and to no other assets of
Landlord or Landlord’s Agents for satisfaction of any liability that may now or hereafter arise in
respect of this Lease and will not seek recourse against Landlord or Landlord’s Agents or any of
their personal assets for such satisfaction.

     36. Mortgagee Protection. If Landlord defaults under this Lease, Tenant shall, if
earlier requested by Landlord or any lender with respect to the Project, notify by registered or
certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage covering the
Premises and offer such beneficiary or mortgagee a reasonable opportunity to cure the default,
including time to obtain possession of the Premises by power of sale or a judicial foreclosure, if
such should prove necessary to effect a cure.

     37. Brokers. Tenant warrants and represents that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this Lease, except for the broker(s)
specified at C.10. of the Information Sheet, and that it knows of no real estate broker or agent
who is or might be entitled to a commission in connection with this Lease. Tenant agrees to
defend, indemnify and hold Landlord and Landlord’s Agents free and harmless from and against any
and all liabilities or expenses, including attorneys’ fees and costs, arising out of or in
connection with claims made by any broker or individual for commissions or fees resulting from
Tenant’s execution of this Lease.

     38. Acceptance. Delivery of this Lease, duly executed by Tenant, constitutes an offer
to lease the Premises, and under no circumstances shall such delivery be deemed to create an option
or reservation to lease the Premises for the benefit of Tenant. This Lease shall only become
effective and binding upon full execution hereof by Landlord and delivery of a signed copy to
Tenant.

     39. Recording. Neither party shall record this Lease nor a short form memorandum
thereof.

     40. Modifications for Lender. If, in connection with obtaining financing for the
Project, or any portion thereof, Landlord’s lender shall request reasonable modifications to this
Lease as a condition to such financing, Tenant shall not unreasonably withhold, delay or defer its
consent thereto, provided such modifications do not materially adversely affect Tenant’s rights
hereunder.

     41. Parking. Tenant shall have the right to park in the Project’s parking facilities
in common with other tenants of the Building upon terms and conditions, as may from time to time be
established by Landlord and in accordance with any parking control or monitoring devices from time
to time installed or implemented by Landlord. Tenant shall not overburden the parking facilities
and shall not use more than one (1) parking space per three hundred thirty-three (333) rentable
square feet of the Premises. Tenant also agrees to cooperate with Landlord and other tenants in
the use of the parking facilities. Landlord reserves the right, in its discretion, to allocate and
assign parking spaces among Tenant and the other tenants or to restrict the use of certain parking
spaces for certain tenants and to install or otherwise implement parking control or monitoring
devices for the parking facilities. In the event that parking control or monitoring devices for
the parking facilities are installed, Landlord reserves the right to charge a reasonable fee for
use of the parking facilities. Tenant shall establish and maintain during the Term hereof a
program to encourage maximum use of public transportation by personnel of Tenant employed on the
Premises, including without limitation, the distribution to such employees of written materials
explaining the convenience and availability of public transportation facilities adjacent or
proximate to the Building, staggering working hours of employees, and encouraging use of such
facilities, all at Tenant’s sole reasonable cost and expense. Tenant agrees to comply with any
lawful regulation or ordinance of the City of San Jose or the County of Santa Clara respecting
transportation management in those jurisdictions, related to the conduct of Tenant’s business
within the Premises.

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	 	Tenant

 

     42. Use of “San Jose Gateway” Prohibited. Tenant shall not employ the term “San Jose
Gateway” in the name or title of its business or occupation without Landlord’s prior written
consent.

     43. Interest. Any rent or other amount not paid by Tenant to Landlord when due
hereunder shall bear interest at the lesser of (i) the rate of twelve percent (12%) per annum or
(ii) the maximum rate permitted by applicable law (with such rate of interest sometimes referred to
herein as the “Interest Rate”) from the date due until paid.

     44. Quitclaim. Upon any termination of this Lease, Tenant, at Landlord’s request,
shall execute, have acknowledged and deliver to Landlord a quitclaim deed for all Tenant’s interest
in the Project.

     45. Relocation. Landlord shall have the right, upon ninety (90) days’ prior written
notice to Tenant, at any time and from time to time during the Term, to relocate Tenant from the
Premises to any other premises (“Relocation Premises”) in the Project provided that the total
rentable square footage of the Relocation Premises is reasonably comparable, as determined in
Landlord’s sole discretion, to the total rentable square footage of the Premises. If, as a result
of any such relocation, the total rentable square footage of Tenant’s premises is reduced, there
shall be an appropriate adjustment in monthly Base Rent and an appropriate concomitant adjustment
in Tenant’s Property Percentage. Landlord shall also provide tenant improvements in the Relocation
Premises which are comparable to the then existing tenant improvements in the Premises. Except as
provided in this Paragraph 45, none of the other terms of this Lease shall change in the event of
any relocation of Tenant made pursuant to this Paragraph 45. Following any such relocation, the
term “Premises” as used in this Lease shall mean the Relocation Premises. Any relocation will be at
Landlord’s sole cost.

     46. General.

          A. Captions. The captions and headings used in this Lease are for the purpose of
convenience only and shall not be construed to limit or extend the meaning of any part of this
Lease.

          B. Executed Copy. Any fully executed copy of this Lease shall be deemed an original
for all purposes.

          C. Time. Time is of the essence for the performance and observance of each term,
covenant and condition of this Lease.

          D. Severability. If one or more of the provisions contained herein, except for the
payment of Rent, is for any reason held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other provision of this
Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had
not been contained herein.

          E. Choice of Law. This Lease shall be construed and enforced in accordance with the
laws of the State of California. The language in all parts of this Lease shall in all cases be
construed as a whole according to its fair meaning and not strictly for or against either Landlord
or Tenant.

          F. Interpretation. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The term “including” shall be deemed to mean “including, but not by
way of limitation” and the term “or” has the inclusive meaning represented by the term “and/or.”

          G. Effect of Remeasurement. The total rentable square feet of the Premises and of the
Building is subject to remeasurement, at Landlord’s discretion, by an architect selected by
Landlord using the standard of the Building Owners and Managers Association ANSI/BOMA-Z65.1-1996 or
such other standard as then in effect and generally used by the Building Owners and Managers
Association for such purposes. In the event the actual square footage for the Premises and/or the
Building as determined by a remeasurement by Landlord differs from the square footage set forth in
this Lease, there shall be an appropriate adjustment in monthly Base Rent and an appropriate
concomitant adjustment in Tenant’s Property Percentage based on the square footage as determined by
the remeasurement.

          H. Binding Effect. The covenants and agreement contained in this Lease shall be
binding on the parties hereto and on their respective successors and assigns to the extent this
Lease is assignable.

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	 	Landlord
	 	Tenant

 

          I. Waiver. The waiver by Landlord of any breach of any term, covenant or condition of
this Lease shall not be deemed to be a waiver of such provision or any subsequent breach of the
same or any other term, covenant or condition of this Lease. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach at the time of
acceptance of such payment. No term, covenant or condition of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in writing signed by Landlord.

          J. Entire Agreement. This Lease, including the Information Sheet, is the entire
agreement between the parties, and there are no agreements or representations between the parties
except as expressed herein. Except as otherwise provided herein, no subsequent change or addition
to this Lease shall be binding unless in writing and signed by the parties hereto.

          K. Authority. If Tenant is a corporation or a partnership, each individual executing
this Lease on behalf of the corporation or partnership, as the case may be, represents and warrants
that he is duly authorized to execute and deliver this Lease on behalf of the entity in accordance
with its corporate bylaws, statement of partnership or certificate of limited partnership, as the
case may be, and that this Lease is binding upon the entity in accordance with its terms.
Landlord, at its option, may require a copy of such written authorization to enter this Lease. The
failure of Tenant to deliver the same to Landlord within fifteen (15) days of Landlord’s request
therefor shall be deemed a default under this Lease.

          L. Exhibits. All exhibits, amendments, riders and addenda attached hereto are hereby
incorporated herein and made a part hereof.

          M. Counterparts. This Lease may be executed in counterparts, each of which shall be
an original, but all counterparts shall constitute one (1) instrument.

     THIS LEASE, executed as of the date(s) set forth below, is effective as of the Effective Date
set forth in B. of the Information Sheet.

	 	 	 	 	 	 	 
	Dated                     , 2004	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	 	 	Spatializer Audio
Laboratories, Inc.

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	Its:	 	 	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated                     , 2004	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 
	 	 	C.M. STRATPLAN, INC.,

a California corporation	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	Its:	 	 	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	Its:	 	 	 	 
	

	 	 	 	 	 	 

21

	 	 	 	 	 
	 

	 	Initials:	 	 
	 
	 	 	 	 
	

	 	 
	 	 
	

	 	Landlord
	 	Tenant

 

EXHIBIT A

[to be attached when available]

1

 

EXHIBIT B

Legal Description:

The Property is located in the City of San Jose, County of Santa Clara, State of California:

All of Parcel C, as shown upon that certain Map entitled, “Parcel Map Being a Portion of Pueblo
Tract No. 1”, which Map was filed for record in the office of the Recorder of the County of Santa
Clara, State of California, on April 28, 1972 in Book 300 of Maps, at page 19.

1

 

EXHIBIT C

TENANT IMPROVEMENTS

	1.  	Landlord shall furnish and install within the Premises the tenant improvements described in
the Space Plans attached hereto as EXHIBIT C-1 (“Tenant Improvements”) in accordance
with the working drawings (“Working Drawings”) approved as provided in Section 3 below. Any
additional work (“Tenant Extra Improvements”) requested by Tenant shall be subject to
Landlord’s approval, and if approved shall be at Tenant’s expense.
	 
	2.  	Tenant shall bear all costs of Tenant Extra Improvements. Any modifications requested by
Tenant to Tenant Improvements shall constitute Tenant Extra Improvements as used herein.
	 
	3.  	Landlord and Tenant will supply the information necessary for construction of Tenant
Improvements pursuant to the following schedule:

	 	A.  	Tenant hereby approves the Space Plan (attached hereto as EXHIBIT C-1);
	 
	 	B.  	Tenant shall sign off on approved finishes, built-in furniture plans,
mechanical and electrical information and any then approved Tenant Extra Improvements
prior to October 1, 2004;
	 
	 	C.  	Tenant shall sign off on the Working Drawings for the Tenant Improvements and
any approved Tenant Extra Improvements and the estimated cost thereof within two (2)
days of receipt;
	 
	 	D.  	Landlord shall exercise due diligence to cause the Tenant Improvements and any
Tenant Extra Improvements approved by Landlord and Tenant in accordance with the terms
hereof to be substantially completed on or before the Early Occupancy Date, which is
November 15, 2004, provided that Tenant has not made changes in the scope of work or
Working Drawings and has not requested special materials not available when needed for
construction in accordance with the schedule. Any delays occasioned by the same or any
delays occasioned by the construction of any Tenant Extra Improvements shall be deemed
delays attributable to Tenant, and the provisions in Paragraph 4.D. of the Lease shall
apply to such instances.

	4.  	If any changes are made by agreement of Landlord and Tenant in the Space Plan presently
attached as EXHIBIT C-1, the revised Space Plan shall replace the present Space Plan.
	 
	5.  	Landlord and Tenant shall diligently pursue the preparation of all Working Drawings for the
Tenant Improvements and any approved Tenant Extra Improvements.
	 
	6.  	After receipt and approval of the Working Drawings, Landlord shall cause the Tenant
Improvements and any approved Tenant Extra Improvements to be constructed substantially in
accordance with the Working Drawings, subject to any changes that may be required by any
approving authority to comply with applicable law or relevant site conditions. In no event
shall Landlord be required to install any Tenant Improvements or Tenant Extra Improvements
which do not conform to the plans and specifications for the Project, or do not conform to any
applicable regulations, laws, ordinances, codes and rules. Tenant shall not unreasonably
withhold its approval of any changes to the Working Drawings required in order to obtain the
necessary governmental approvals and permits.
	 
	7.  	Tenant shall pay Landlord within ten (10) days of receipt any invoice for expenses related to
making any Tenant Extra Improvements.

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EXHIBIT C-1

APPROVED PLANS AND SPECIFICATIONS

[to be attached when available]

1

 

EXHIBIT D

COMMENCEMENT DATE MEMORANDUM

	 	 	 
	LANDLORD:
	 	 
	

	 	C.M Stratplan, Inc.
	

	 	a California corporation
	 
	 	 
	TENANT:

	 	Spatializer Audio Laboratories, Inc.
	

	 	A Delaware corporation
	 
	 	 
	LEASE DATE:

	 	September 14, 2004
	 
	 	 
	PREMISES:

	 	
	
	 	2025 Gateway Place
	

	 	Suite 365
	

	 	San Jose, California 95110

Pursuant to Paragraph 4.C. of the above-referenced Lease, the Commencement Date is hereby
established as      , 200_

	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 
	 	 	C.M. STRATPLAN, INC.,
a California corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Its:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Its:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 
	 	 	Spatializer Audio Laboratories, Inc.
a Delaware corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Its:	 	 
	

	 	 	 	 

1

 

EXHIBIT E

RULES AND REGULATIONS

	1.  	No sign, placard, picture, advertisement, name or notice shall be installed or displayed on
any part of the outside or the inside of the Building without the prior written consent of
Landlord. Landlord shall have the right to remove, at Tenant’s expense and without notice,
any sign installed or displayed in violation of this rule. All approved signs or lettering on
doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a
person chosen by Landlord.
	 
	2.  	The directory of the Building will be provided exclusively for the display of the name and
location of tenants, and Landlord reserves the right to exclude any other names therefrom.
Tenant shall pay Landlord’s standard charge for Tenant’s listing thereon and for any changes
by Tenant.
	 
	3.  	Except as consented to in writing by Landlord or in accordance with Building standard
improvements, no draperies, curtains, blinds, shades, screens or other devices shall be hung
at or used in connection with any window or exterior door or doors of the Premises. No awning
shall be permitted on any part of the Premises. Tenant shall not place anything against or
near glass partitions or doors or windows which may appear unsightly from outside the
Premises.
	 
	4.  	Tenant shall not obstruct any sidewalks, halls, lobbies, passages, exits, entrances,
elevators or stairways of the Building. No tenant and no employee or invitee of any tenant
shall go upon the roof of the Building or make any roof or terrace penetrations. Tenant shall
not allow anything to be placed on the outside terraces or balconies without the prior written
consent of Landlord.
	 
	5.  	Tenant shall not have any right to enter into any telephone closet or room located in the
Building, including, without limitation, any telephone closet or room serving the Premises,
even if located within the Premises, except upon the prior written consent of Landlord.
Tenant shall have no right to make any alterations to interbuilding network cabling.
	 
	6.  	All cleaning and janitorial services for the Building shall be provided exclusively through
Landlord, and, except with the written consent of Landlord, no person or persons other than
those approved by Landlord shall be employed by Tenant or permitted to enter the Building for
the purpose of cleaning. Tenant shall not cause any unnecessary labor by carelessness or
indifference to the good order and cleanliness of the Premises. Landlord shall not in any way
be responsible to any Tenant for any loss of property on the Premises, however occurring, or
for any damage to any Tenant’s property by the janitor or any other employee or person.
	 
	7.  	Landlord will furnish Tenant, free of charge, with two keys to Tenant’s suite entrance.
Landlord may make a reasonable charge for any additional keys and for having any locks
changed. Tenant shall not make or have made additional keys without Landlord’s prior written
consent, and Tenant shall not alter any lock or install a new additional lock or bolt on any
door of its Premises without Landlord’s prior written consent. Tenant shall deliver to
Landlord, upon the termination of its tenancy, the keys to all locks for doors on the
Premises, and in the event of loss of any keys furnished by Landlord, shall pay Landlord
therefor.
	 
	8.  	If Tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first
obtain, and comply with, Landlord’s instructions for their installation.
	 
	9.  	The elevators shall be available for use by all tenants in the Building, subject to
reasonable scheduling as Landlord in its discretion shall deem appropriate. No equipment,
materials, furniture, packages, supplies, merchandise or other property will be received in
the Building or carried in the elevators except between the hours, and in the manner and in
the elevators as may be designated by Landlord.
	 
	10.  	Tenant shall not place a load upon any floor of the Premises which exceeds the maximum load
per square foot which the floor was designed to carry and which is allowed by law. Tenant’s
business machines and mechanical equipment which cause noise or vibration which may be
transmitted to the structure of the Building or to any space therein, and which is
objectionable to Landlord or to any tenants in the Building, shall be placed and maintained by
Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate
noise or vibration.
	 
	11.  	Tenant shall not use or keep on the Premises any toxic or hazardous materials or any
kerosene, gasoline or inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office equipment. Tenant shall not
use or permit

1

 

	   	to be used in the Premises any foul or noxious gas or substance, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors or vibrations. No animal, except seeing
eye dogs when in the company of their master, may be brought into or kept in the Building.
	 
	12.  	Tenant shall not use any method of heating or air-conditioning other than that supplied by
Landlord, unless Tenant receives the prior written consent of Landlord.
	 
	13.  	Tenant shall cooperate fully with Landlord to assure the most effective operation of the
Building’s heating and air-conditioning and to comply with any governmental energy-saving
rules, laws or regulations of which Tenant has actual notice. Tenant shall refrain from
attempting to adjust controls other than room thermostats installed for Tenant’s use. Tenant
shall keep corridor doors and sliding glass doors closed, and shall close window coverings at
the end of each business day.
	 
	14.  	Landlord reserves the right, exercisable without notice and without liability to Tenant, to
change the name and street address of the Building.
	 
	15.  	Landlord reserves the right to exclude any person from the Building between the hours of 6
p.m. and 7 a.m. the following day, or any other hours as may be established from time to time
by Landlord, and on Saturdays, Sundays and legal holidays, unless that person is known to the
person or employee in charge of the Building and has a pass or is properly identified. Tenant
shall be responsible for all persons for whom it requests passes and shall be liable to
Landlord for all acts of those persons. Landlord shall not be liable for damages for any
error in admitting or excluding any person from the Building. Landlord reserves the right to
prevent access to the Building by closing the doors or by other appropriate action in case of
invasion, mob, riot, public excitement or other commotion.
	 
	16.  	Tenant shall close and lock the doors of its Premises, shut off all water faucets or other
water apparatus and turn off all lights and other equipment which is not required to be
continuously run. Tenant shall be responsible for any damage or injuries sustained by other
tenants or occupants of the Building or Landlord for noncompliance with this Rule.
	 
	17.  	The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any
purpose other than that for which they were constructed, and no foreign substance of any kind
whatsoever shall be placed therein. The expense of any breakage, stoppage or damage resulting
from any violation of this rule shall be borne by the tenant who, or whose employees or
invitees, shall have caused it.
	 
	18.  	Tenant shall not install any radio or television antenna, loudspeaker or other device on the
roof or exterior walls of the Building. Tenant shall not interfere with radio or television
broadcasting or reception from or in the Building or elsewhere.
	 
	19.  	Tenant shall not cut or bore holes for wires in the partitions, woodwork or plaster of the
Premises. Tenant shall not affix any floor covering to the floor of the Premises in any
manner except as approved by Landlord. Tenant shall repair, or be responsible for the cost of
repair of any damage resulting from noncompliance with this Rule.
	 
	20.  	Tenant shall not install, maintain or operate upon the Premises any vending machine without
the prior written consent of Landlord.
	 
	21.  	Canvassing, soliciting and distributing handbills or any other written material and peddling
in the Building are prohibited, and each tenant shall cooperate to prevent these activities.
	 
	22.  	Landlord reserves the right to exclude or expel from the Building any person who, in
Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in
violation of any of the Rules and Regulations of the Building.
	 
	23.  	Tenant shall store all its trash and garbage within its Premises. Tenant shall not place in
any trash box or receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal within the Building. All garbage and refuse
disposal shall be made in accordance with directions issued from time to time by Landlord.
	 
	24.  	Use by Tenant of Underwriters’ Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages and microwaving food shall be permitted, provided that the
equipment and use is in accordance with all applicable federal, state, county and city laws,
codes, ordinances, rules and regulations.

2

 

	25.  	Tenant shall not use the name of the Building in connection with or in promoting or
advertising the business of Tenant, except as Tenant’s address, without the written consent of
Landlord.
	 
	26.  	Tenant shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency. Tenant shall be responsible
for any increased insurance premiums attributable to Tenant’s use of the Premises, Building or
Property.
	 
	27.  	Tenant assumes any and all responsibility for protecting its Premises from theft and robbery,
which responsibility includes keeping doors locked and other means of entry to the Premises
closed.
	 
	28.  	Tenant shall not use the Premises, or suffer or permit anything to be done on, in or about
the Premises, which may result in an increase to Landlord in the cost of insurance maintained
by Landlord on the Project.
	 
	29.  	Tenant’s requests for assistance will be attended to only upon appropriate application to the
office of the Building by an authorized individual. Employees of Landlord shall not perform
any work or do anything outside of their regular duties unless under special instructions from
Landlord, and no employee of Landlord will admit any person (Tenant or otherwise) to any
office without specific instructions from Landlord.
	 
	30.  	Tenant shall comply with all parking monitoring controls or devices from time to time
installed or otherwise implemented by Landlord. Tenant shall not park its vehicles in any
parking areas designated by Landlord as areas for parking by visitors to the Building or other
reserved parking spaces. Tenant shall not leave vehicles in the Building parking areas
overnight without the prior written consent of Landlord’s manager for the Property, nor park
any vehicles in the Building parking areas other than automobiles, motorcycles, motor driven
or non-motor driven bicycles or four-wheeled trucks. Tenant, its agents, employees and
invitees shall not park any one (1) vehicle in more than one (1) parking space.
	 
	31.  	The scheduling and manner of all Tenant move-ins and move-outs shall be subject to the
discretion and approval of Landlord, and move-ins and move-outs shall take place only after 6
p.m. on weekdays, on weekends or at other times as Landlord may designate. Landlord shall
have the right to approve or disapprove the movers or moving company employed by Tenant, and
Tenant shall cause the movers to use only the entry doors and elevators designated by
Landlord. If Tenant’s movers damage the elevator or any other part of the Property, Tenant
shall pay to Landlord the amounts required to repair the damage.
	 
	32.  	Landlord may waive any one or more of these Rules and Regulations for the benefit of Tenant
or any other tenant, but no waiver by Landlord shall be construed as a waiver of the Rules and
Regulations in favor of Tenant or any other tenant, nor prevent Landlord from thereafter
enforcing the Rules and Regulations against any or all of the tenants of the Building.
	 
	33.  	These Rules and Regulations are in addition to, and shall not be construed to in any way
modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any
lease of premises in the Building.
	 
	34.  	Landlord reserves the right to make other reasonable Rules and Regulations as, in its
judgment, may from time to time be needed for safety and security, for care and cleanliness of
the Building and for the preservation of good order therein. Tenant agrees to abide by all
Rules and Regulations hereinabove stated and any additional rules and regulations which are
adopted.
	 
	35.  	Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s
employees, agents, clients, customers, invitees and guests.

3

 

EXHIBIT F

UTILITIES AND SERVICES

     The standards set forth below for Utilities and Services are in effect. Landlord reserves the
right to adopt nondiscriminatory modifications and additions hereto, which do not materially affect
Tenant’s rights. Landlord shall give notice to Tenant, in accordance with provisions of the Lease,
of material modification and additions.

     1. Provision by Landlord. As long as Tenant is not in default under any of the terms
of this Lease, Landlord shall:

          a. Elevator. Provide unattended automatic elevator facilities Monday through Friday,
except holidays, from 7:00 a.m. to 6:00 p.m., and have at least one elevator available at all other
times.

          b. Ventilation. Ventilate the Premises and furnish air-conditioning or heating Monday
through Friday, except holidays, from 7:00 a.m. to 6:00 p.m. (and at other times for the additional
charges described in Paragraph 2) to the extent required for the comfortable occupancy of the
Premises, subject to governmental regulation. The air-conditioning system achieves maximum cooling
when the window coverings and sliding glass doors are closed. Landlord shall not be responsible
for room temperatures if Tenant does not keep all sliding glass doors in the Premises closed
whenever the system is in operation. Tenant shall cooperate to the best of its ability at all
times with Landlord and shall abide by all reasonable regulations and requirements which Landlord
may prescribe for the proper functioning and protection of the air-conditioning system. Tenant
shall not connect any apparatus, device, conduit or pipe to the Building’s chilled and hot water
air-conditioning supply lines. Tenant and Tenant’ servants, employees, agents, visitors, licensees
or contractors shall not enter at any time the mechanical installations or facilities of the
Building, or adjust, tamper with, touch or otherwise in any manner affect the installations or
facilities. If any installation of partitions, equipment or fixtures by Tenant necessitates the
rebalancing of the climate control equipment in the Premises, the rebalancing shall be performed by
Landlord at Tenant’s expense.

          c. Electricity. Subject to government regulations (including, without limitation,
applicable energy conservation requirements existing or enacted under any governmental regulation)
and the provisions of Paragraph 2, furnish to the Premises electric current as required by the
Building standard office lighting and fractional horsepower office business machines in the amount
of approximately two and one-half (2.5) watts per square foot. If Tenant’s electrical installation
or electrical consumption is in excess of the quantity described above, or extends beyond normal
business hours, Tenant shall reimburse Landlord monthly for the measured consumption. Tenant shall
not connect any apparatus or device with wires, conduits or pipes, or other means by which the
services are supplied, for the purpose of using additional or unusual amounts of the services
without the prior written consent of Landlord. At all times Tenant’s use of electric current shall
not exceed the capacity of the feeders to the Building or the risers or wiring installation, except
as provided in working drawings approved by Landlord.

          d. Water. Make water available in public areas for drinking and lavatory purposes
only.

          e. Janitorial Service. Provide building standard janitorial service to the Premises,
provided the Premises are used exclusively as offices, and are kept reasonably in order by Tenant.
Tenant shall pay to Landlord any cost incurred by Landlord for janitorial services in excess of
those generally provided for other tenants in the Building. Tenant shall pay to Landlord the cost
of removal of any of Tenant’s refuse and rubbish.

     2. Additional Charges. Landlord may impose a reasonable charge for any utilities and
services, including air-conditioning, electric current, water and janitorial service, required to
be provided by Landlord by reason of (i) any use of the Premises at any time other than between the
hours of 7:00 a.m. and 6:00 p.m. Monday through Friday, except holidays; (ii) any use beyond what
Landlord agrees to furnish as described above; or (iii) special electrical, cooling and ventilating
needs created in certain areas by hybrid telephone equipment, computers and other similar equipment
or uses.

     3. Rules and Regulations. Tenant agrees to cooperate at all times with Landlord and
to abide by all reasonable regulations and requirements which Landlord may prescribe for the use of
the utilities and services. Any failure to pay any excess costs as described above with the next
installment of Rent due after receipt of a statement for such services shall constitute a breach of
the obligation to pay Rent under this Lease and shall entitle Landlord to the rights granted in
this Lease for a breach.

1

 

     4. Stopping of Service. Landlord reserves the right to stop services of the elevator,
plumbing, ventilation, air-conditioning and electric systems when necessary by reason of accident
or emergency, or for repairs, alterations or improvements, in the judgment of Landlord desirable or
necessary to be made, until the repairs, alterations or improvements have been completed. Landlord
shall have no responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air-conditioning or electric service when prevented by strike or accident or by any
cause beyond Landlord’s reasonable control, or by laws, rules, orders, ordinances, directions,
regulations or requirements of any federal, state, county or municipal authority or failure of gas,
oil or other suitable fuel supply or inability by exercise of reasonable diligence to obtain gas,
oil or other suitable fuel. It is expressly understood and agreed that any covenants on Landlord’s
part to furnish any service pursuant to any of the terms, covenants, conditions, provisions or
agreements of this Lease, or to perform any act or thing for the benefit of Tenant, shall not be
deemed breached if Landlord is unable to furnish or perform the same by virtue of a strike or labor
trouble or any other cause whatsoever beyond Landlord’s reasonable control.

     5. Notice. To the extent practical, Landlord shall attempt to give Tenant notice of
proposed shutdowns of services.

2<PAGE>
                                                                   EXHIBIT 10.10

                            DOMENICO CALDERARI AG/SA

                                 LEASE AGREEMENT

                                     between

EINFACHE GESELLSCHAFT CALDERARI & SCHWAB, Schloss-Str. 10, 2560 NIDAU

                                                                - Lessor  -

                                       and

STARR SURGICAL AG, Junkerngasse 21, 3011 BERN

                                                                - Lessee  -

1.      Leased Premises

        Lessee leases an area of 460 m2 on the 2nd floor of the property known
        as Hauptstrasse 104, 2560 Nidau, as a production site and office as well
        as Parking Area West on the 3rd floor.

        Lessor shall also grant Lessee permission to use the free space in the
        "Kaminraum" [chimney space], which is located outside of the Leased
        Premises, where it may place a compressor, vacuum device and similar
        objects there.

2.      Commencement of Lease:

        The Lease shall commence on October 1st, 1994. For the purpose of
        organizing the business, Lessee may have use of the keys starting
        immediately. There shall be no rent payable for the period up until
        October 1st, 1994.

3       Term of Lease

        The term of the Lease is fixed and the Lease shall expire on October 31.
        1999.

3.1     Option

        After expiration of the fixed-term Lease, Lessee shall have the option
        to extend the Lease by 5 more years. If Lessee elects to exercise this
        option, it must notify Lessor in writing no later than March 31, 1999.
        If Lessee does not exercise the option and as long as neither of the
        parties to the contract terminates the Lease effective October 31, 1999,
        after expiration of the term the Lease shall be automatically extended
        by one year at a time. In case of termination, notice must be given 6
        months in advance.

<PAGE>

4.      Rent

4.1     Net Rent

        Net rent for the production and office space until 09.30.1996 shall be
        Sfr. 59,800.00 annually (= Sfr. 130.00 per m2 for that year) and is
        payable in monthly installments of Sfr. 4,983.00.

        After October 1st, 1996, the rent shall be increased to Sfr.150.00 per
        m2, which results in an annual rent of Sfr. 69,230.00 payable in monthly
        installments of Sfr. 5,769.00.

        Net rent for Parking Area "West" shall be Sfr. 4,800.00 annually and
        shall be payable in monthly installments of Sfr. 400.00.

4.1.1   After October 1st, 1996, the annual net rent of Sfr. 69,230.00/ 4,800.00
        shall be tied to the consumer price index BIGA(1). The rent corresponds
        to the level of the index applicable at that point in time, i.e. August
        1996. Upon request by one of the parties, the net rent may be adjusted
        once annually on January 1st regardless of the fixed term of the Lease,
        taking into account the entire percentage of change undergone by this
        index. The first adjustment may be done on 01.01.1998 at the earliest.

4.1.2   The net annual rent of Sfr. 69,230.00 / 4,800.00 is a base rent. Rent
        may not fall below this amount regardless of potential adjustments.

4.2     Utilities

4.2.1   The payments on account towards expenses for heating, electricity used
        for shared rooms and for the burner, water fees, possibly sewage and
        garbage collection fees, expenses for janitorial services which are
        billed by the manager on April 30th, shall amount to Sfr. 500.00
        monthly.

4.2.2   In exchange for participation in covering the cost thereof, Lessee shall
        have the opportunity to use the service elevator.

4.3     Bank Guarantee

        At the time the Lease is entered into, Lessee shall deposit the sum of
        Sfr. 15,000.00 as an irrevocable bank guarantee.

5.      Use of the Leased Premises

5.1     The Leased Premises shall be used for the production and warehousing of
        medical supplies and as an office and training site.

----------

(1)     Bundesamt fur Industrie, Gewerbe und Arbeit (Swiss federal bureau of
        industry, business and work)

<PAGE>

5.2     The Leased Premises must to be handed over in clean condition. The
        carpeted floors shall be shampooed once more before Lessee moves in.

5.3     Maintenance

        Lessee shall maintain the Leased Premises in good and clean condition.
        Repairs under Sfr.1,000.00 annually shall be paid for by Lessee.

        If damage to the Leased Premises is evident, Lessee shall keep its
        extent at a minimum by either taking immediate measures at its expense
        or by informing Lessor without delay.

        Repair work, minor work to prepare the Leased Premises for occupancy, or
        needed alterations to the Leased Premises or to the property shall be
        tolerated by Lessee without claims for damages.

        The following work shall be paid for entirely by Lessee.

        -       Replacement of electrical switches, sockets and fuses, light
                bulbs (as well as, on a pro rata basis, of the lighting fixtures
                belonging to the building), water faucets and door locks.

        -       Unclogging of water lines, sinks, toilets and laundry equipment.

        -       Repair or replacement of washers on radiators and other devices.

5.4     House Rules

        Lessee shall be duly considerate of the other tenants and neighbors in
        every respect. Lessor shall not lease space to tenants causing a
        trade-related nuisance (heavy dust emission, noise).

5.5     Subletting

        Subletting of rooms shall only be permitted with explicit consent of
        Lessor.

5.6     Access to the Leased Premises

        For the purpose of protecting its interests, Lessor shall have the
        right, having made an appointment in writing with the business
        management, to access the Leased Premises with a member of the
        management present.

6.      Insurance

6.1     Lessee shall insure all machinery, equipment, as well as furniture,
        merchandise and all objects located within the leased space, at its own
        expense, adequately against theft, fire, damage caused by explosion and
        water, as well as against risks incidental to the business, particularly
        renter's liability.

<PAGE>

        Lessee shall bear the consequences in case of non-fulfillment of this
        obligation, with no responsibility whatsoever resting with Lessor.

7.      Company Signs and Inscriptions

7.1     Installation and Execution

        Lessor gives, in advance, its consent to the installation of company
        signs beneath the rented frontage window as well as above the main
        entrance.

7.2     Expenses

        Expenses for new signs or changes to signs shall be the responsibility
        of Lessee. In case of necessary removal and re-installation due to a
        change in tenants, Lessee shall pay for this expense.

8.      Changes to the Leased Premises

8.1     Permits

        Changes to the Leased Premises which require permits shall require
        notification of Lessor in advance.

        Lessor shall inform Lessee regarding changes to the Leased Premises.

9.      Yielding of the Leased Premises

9.1     Cleaning

        The Leased Premises must be yielded in a tidy and cleaned condition.

9.2     Damage

        Lessee shall be liable for any damage not due to normal wear and tear.
        Such damage shall have been repaired by Lessee by the time the Lease
        terminates.

9.3     Restoration

        Restorations shall be carried out according to the customs and practices
        of the property and homeowners association of the city of Biel and its
        environs.

9.4     After 5 years, the changes made to the interior do not have to be
        reversed and the Leased Premises do not have to be restored to their
        original condition after the expiration of the Lease.

10.     Structural Alterations

        The one-time structural alterations indicated on the attached list
        and/or sketch (removal and construction of non-supporting partitions,
        the moving of doors, installation of connecting pipes for water supply
        and drainage) which shall be arranged by Lessor and must be completed by
        October 1st, 1994, shall be paid for by Lessor. The attached and signed
        layout constitutes an integral part of this Lease Agreement.

<PAGE>

        Lessor guarantees that the electrical lines within the Leased Premises
        are of sufficient capacity to meet the needs of the machinery and
        devices used by Lessee. Should this not be the case, Lessor shall
        strengthen the electrical grid at its expense.

        Lessor guarantees the completion of such work within 2 -1/2 months after
        Lessee's submission of the definite layout. Should it not do so, Lessor
        shall be required to pay a conventional penalty of Sfr. 1,000.00 per
        day, regardless of fault. It the layout is later altered, no
        conventional penalty whatsoever shall apply.

        a)      Both parties agree that Lessor shall do its best to carry out
                the alterations as quickly as possible after the definite layout
                has been submitted.

11.     Further Options

        Lessee shall have until 03.01.1995 to notify Lessor whether it wants to
        lease, within a period of 3 months, the space in the cellar (approx. 100
        m2 at Sfr. 80.00 per m2 for that year). Lessor guarantees to make this
        space available within the aforementioned time period.

        Lessor shall have the option to lease the space on the first floor as a
        whole or only one half of it. Notification of interest in the retail
        space "LANCIA" must be submitted at least 6 months in advance, and
        notification of interest in the retail space "FIAT" at least 12 months
        in advance. Regarding rent, it shall be agreed that it may not exceed
        the rent indexed by BIGA as of October 1st, 1994 on a basis of Sfr.
        200.00 per m2 for that year.

        Should Lessee find another tenant for the aforementioned space, it shall
        notify Lessee in writing. If Lessee tenant does not exercises its option
        to lease said space within 60 days, Lessor shall have the right to lease
        it to a third parties.

        Lessee is assured that it shall have first option to rent any and all
        spaces that become available. If Lessee does not exercise this option in
        writing within 60 days, Lessor may rent such spaces to third parties.
        However, the rent charged to the third party may not be below that
        offered to Lessee.

        Lessee is assured that, should the building be sold, it shall be given
        first option to lease it. If Lessee does not exercise this option in
        writing within 60 days, Lessor shall have the right to sell the space,
        subject to the right of preemption hereinafter referred to, to third
        parties. However, the sales price may not be below that offered to
        Lessee.

        Lessor shall grant Lessee an unlimited right of preemption for the
        building known as Hauptstrasse 104, Nidau and/or for parts of the
        property resulting from the establishment of individual floors. This
        right of preemption shall exist for the entire term of the Lease.

<PAGE>
12.     Special Provisions

        Lessee specifically acknowledges that it has been notified that Lessor
        shall insist on its right of retention guaranteed by law under Schkg(2)
        283 / OR(3) 257-59 and 268. The deadline for filing a retention request
        is 30 days after written notification.

        Lessee shall be granted the right to have this Lease Agreement noted in
        the public real estate register at its own expense.

Nidau, July 12, 1994                            Nidau, July 12, 1994

Lessee:                                         Lessor:

[signature]                                     [signature]
STAAR SURGICAL AG                               EINFACHE GESELLSCHAFT
                                                CALDIERI & SCHWAB

--------
(2)       Schweizerisches Kassationsgericht (Swiss court of appeal)

(3)       Obligationenrecht (law of contracts)

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