Document:

Lease Agreement

 Exhibit 10.7 
  
 [Graphic Omitted] 
  
 LEASE AGREEMENT 
  
 This Agreement of Lease is executed at Hyderabad an this the 5th Day of February 2000. 
  
 BETWEEN 
  
 Sri S.K. Jayachandra S/o S.K. Sastry Aged about 47
years, R/o IJ-7, Erramanzil Colony, Hyderabad—500 082, hereinafter called “LESSOR” (which expression shall unless it be repugnant to the context or meaning thereof mean and include his heirs, executors, administrators and assigns) of
the ONE PART 
  
 AND 
  
 PORTALPLAYER PRIVATE LIMITED, a Company duly registered under the Companies Act, 1956 and
having its Registered Office at Plot No. 249, Prashasan Nagar, Jubilee Hills, Hyderabad represented by its Managing Director Sri. J.A. Chowdary, hereinafter called “LESSEE” (Which expression shall unless it be repugnant to the context or
meaning thereof mean and include its successors, assigns, etc.,) of the OTHER PART: 
  

					
	 LESSOR
	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

  
 Cont...2 

 

 Whereas the Lessor is the sole and absolute owner of an independent residential building Plot No. 242A, Road # 72,
Prashasan Nagar Co-Operative Housing Society, Jubilee Hills, Hyderabad, (hereinafter referred to as “the Premises”), and has agreed to grant lease of the Premises to the Lessee for use and occupation of the same for a period of 11 months
commencing from the date of handing over possession of the building. 
  
 NOW THIS
AGREEMENT WITNESSETH and the Parties hereto agree as follows: 
  

	1.	The lessor confirms having granted to the Lessee the right to occupy and use the Premises and the fixtures and fitting as listed is the Schedule hereto for the term of 11 months
commencing from the date of handing over of the premises. The date of handing over possession of the building will be the date on which both the parties sign the document of handing over & taking over of the building. 

 
 Duration of Lease 
  

	2.	The duration of the Lease hereby granted shall be 11 months as aforesaid, and may be extended for further period of 11 months and similarly further extended upto a maximum term of 5
years from the date commencement of lease. 

  
 Payments

  

	3.	The Lessee shall, during the period of occupation and use of the Premises pay to the Lessor monthly rent of Rs. 15,000 (Rupees fifteen thousand only) only for the first year. The
rent will be enhanced by 7.33% on the rent existing at the end of each 11 calendar months of occupancy. The monthly rent shall be paid regularly on or before the 10th day of each month for that month, in advance after deducting the appropriate income tax at source, by an account payee cheque drawn in favour of the lessor.

  

	4.	The lessor has desired that Lessee should pay at the time of taking over possession of the house, a sum of Rs. 1,00,000 (Rupees on lakh only) as an interest free advance refundable
on the expiry of the lease period or on the termination of the lease. 

  
 Duties and Obligations of Lessor and Lessee: 
  

	5.	It is agreed between the Parties hereto that: 

  

	a)	Lessee shall use the Premises only for purpose of his business. 

  

	b)	the Lessee shall occupy and use the Premises without causing any nuisance or annoyance to other residents in the locality. 

  

					
	 LESSOR
	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

  
 Cont...3 
  

	c)	The Lessee shall use the Premises prudently and without causing any damage to the Premises or any part thereof if notwithstanding the above, any damage is caused to the Premises or
to any part thereof, the Lessee shall at own costs and expenses repair and restore the same to its original condition as nearly as possible. 

  
 The Lessee shall return the Premises and the Schedule Property to the Lessor on the lease hereby granted coming to an end howsoever and whensoever in as
nearly a good condition as possible subject to usual wear and tear. 
  

	d)	The Lessee shall carry out all necessary tenantable repairs to the Premises at own costs with prior consent of Lessor. The Lessee is responsible for insuring the Premises and
Schedule Property against fire, riots and civil disturbances, and acts of god and nature. 

  

	e)	The Lessee may fix or install additional fixtures and fitting in the Premises including air-conditioners, shelves racks, additional water taps, gas connection, electric fittings,
telephones, sanitary and other installations, etc. as may be thought necessary without damaging the Premises on the lease hereby granted coming to an howsoever and whensoever, the Lessee shall be entitled to remove such fixtures and fittings without
causing any damage to the Premises, or if any damage is caused after restoring the same to its original condition as nearly as possible at their cost. 

  

	f)	The Lessee shall not carry out any permanent or structural alternations or additions to the Premises. 

  

	g)	The Lessor shall not be liable for any theft, loss damage or destruction of any assets or properties of the Lessee kept in the Premises, and the Lessee themselves shall take all
reasonable care of the same. 

  

	h)	The Lessee shall upon receiving prior intimations permit the Lessor or his duly authorised agent to enter the Premises to ascertain its conditions as well as the observance of the
terms and conditions herein, at a mutually convenient time. 

  

	i)	Property taxes and Municipal taxes of the premises shall be payable by the Lessor and Lessee agrees to pay as and when due electricity, water and telephone charges for the services
utilised by Lessee. 

  

					
	 LESSOR
	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

  
 Cont...4 
  

	6.	It is further expressly agreed between the parties hereto that: 

  

	a)	The Lessor has agreed to grant Lease to the Lessee relying on the reputation of the Lessee and on the clear assurance given by the Lessee that they will not claim tenancy or any
other similar rights to or in the Premises. Accordingly the lease hereby granted is personal and not transferable: the Lessee shall not purport to transfer to assign the benefit of this Lease to any other person on any basis whatsoever. However, the
Lessee may exercise the option of sub-leasing part of the premises with the mutual written consent of the Lessor. 

  

	b)	The Lessor has granted the present Lease to the Lessee strictly on a temporary basis. In the event that the Lessee fails to pay the monthly rent as agreed upon regularly and in time
or does not set right any violation of other terms and conditions herein notified in writing within two months, the Lessor shall be entitled to terminate this Agreement by giving ninety days notice to the Lessee. 

  
 Termination of lease 
  

	7.	The Lessee or Lessor may at any time even before expire of the agreed term of 11 months terminate the agreement / arrangement therein by giving to the other party three calendar
months written notice of its intention to terminate the arrangement / agreement herein and thereupon the arrangement/agreement herein shall come to an end on expiry of such three months and the Parties shall not object to the same. The notice shall
be sent by registered post acknowledgment due. 

  

	8.	Lessee agreed and understood that in the event of refusal on the party of Lessee to vacate and hand over vacant possession of the premises to the Lessor on expiry of the lease
hereby granted, the Lessor shall be entitled to adopt proceedings to recover possession of the premises from the Lessee, in such event, all costs charges and expenses to be incurred by the Lessor to recover possession of the premises shall be borne
and paid by the Lessee exclusively. 

  
 Stamp Duty and
Registration 
  

	9.	All stamp duty and registration charges, if any, payable on these deeds shall be borne and paid by the Lessee alone. This Deed is executed in duplicate, the original being retained
by the Lessor and the duplicate by the Lessee. 

  

					
	 LESSOR
	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

  
 Cont...5 
  

 IN WITNESS WHEREOF the Parties hereto have signed and delivered these deeds at Hyderabad the day and year first
hereinabove written. 
  
 WITNESSES 
  

			
	 1) [Signature Illegible]
	 	LESSOR [Signature Illegible]
		
	 2) [Signature Illegible]
	 	LESSEE [Signature Illegible]

  

 [Graphic Omitted] 
  
 LEASE AGREEMENT 
  
 This Agreement of Lease is executed at Hyderabad on this the 6th August, 2000. 
  
 BETWEEN 
  
 Sri R.C. Samal S/o R.G. Samal Aged about 56 years, R/o
38, AWHO Colony Sector ‘A’, Goutam Nagar, Gunrock Enclave, Army Officers Quarters, Secunderabad, hereinafter called “LESSOR” (which expression shall unless it be repugnant to the context or meaning thereof mean and include his
heirs, executors, administrators and assigns) of the ONE PART 
  
 AND 
  
 PORTALPLAYER PRIVATE LIMITED, a Company duly registered under the
Companies Act, 1956 and having its Registered Office at Plot No. 249, Prashasan Nagar, Jubilee Hills, Hyderabad represented by its Managing Director Sri. J.A. Chowdary, hereinafter called “LESSEE” (Which expression shall unless it be
repugnant to the context or meaning thereof mean and include its successors, assigns, etc.,) of the OTHER PART: 
  

					
	LESSOR	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

	 	 	 	 	 Cont...2

 Whereas the Lessor is the sole and absolute owner of an independent residential building in Plot No. 243, Road # 72,
Prashasan Nagar, Jubilee Hills, Hyderabad, (hereinafter referred to as “the Premises”), and has agreed to grant lease of the Ground and First Floor ( cellar floor excluded) Premises to the Lessee for use and occupation of the same for a
period of 11 months commencing from 6th August, 2000. 
  
 NOW THIS AGREEMENT OF
LEASE WITNESSETH and the Parties hereto agree as follows: 
  

	1.	The lessor confirms having granted to the Lessee the right to occupy ground and 1st floor and use them and the fixtures and fittings as listed and signed by both parties at the time of handing & taking over of the said premises. The date of handing over possession of the premises
is 6th August, 2000. 

  
 Duration of Lease 
  

	2.	The duration of the Lease hereby granted shall be 11 months unless otherwise renewed for further period by mutual consent and may be extended for further period of 11 months at a
time and similarly further extended upto a maximum term of 5 years from the date of commencement of lease. 

  
 Payments 
  

	3.	The Lessee shall, during the period of occupation and use of the Premises so mentioned above and pay to the Lessor monthly rent of Rs. 15,000 (Rupees fifteen thousand only) only for
the first 11 months. The rent will be enhanced by 7.33% on the rent existing at the end of each 11 months of occupancy. The monthly rent shall be paid regularly on or before the 10th day of each month for that month, in advance, after deducting the appropriate income tax at source, by an account payee cheque drawn in favour of the lessor.

  

	4.	The lessor has desired that Lessee should pay at the time of taking over possession of the premises, a sum of Rs. 1,00,000 (Rupees on lakh only) as an interest free advance
refundable on the expiry of the lease period or on the termination of the lease. The lessor will have right to deduct any amount due to him out of this advance when the premises is vacated by lessee. 

  
 Duties and Obligations of Lessor and Lessee: 
  

	5.	It is agreed between the Parties hereto that: 

  

	a)	Lessee shall use the Premises only for residential purpose as Guest House. However, with prior consent of the lessor, the premises may be used for the purpose of business. The
consent will be in writing. 

  

	b)	The Lessee shall occupy and use the Premises without causing any nuisance or annoyance to other residents in the locality. 

  

					
	LESSOR	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

	 	 	 	 	 Cont...3

					
	 	 	 	 	 Cont...3

  

	c)	The Lessee shall use the Premises prudently and without causing any damage to the Premises or any part thereof. If, notwithstanding the above, any damage is caused to the Premises
or to any part thereof, the Lessee shall at own costs and expenses, repair and restore the same to its original condition to the satisfaction of the lessor, subject to normal wear and tear. 

  
 The Lessee shall return the Premises and the Schedule
Property to the Lessor on the lease hereby granted coming to an end in good condition, subject to usual wear and tear, to the satisfaction of the lessor. 
  

	d)	The Lessee shall carry out all necessary tenantable repairs to the Premises at his own costs with prior consent of Lessor. The Lessee is responsible for insuring the Premises and
Schedule Property against fire, riots and civil disturbances, and acts of god and nature. 

  

	e)	The Lessee may fix or install additional fixtures and fitting in the Premises including air-conditioners, shelves, racks, additional water taps, gas connection, electrical fittings,
telephones, sanitary and other installations, etc., as may be thought necessary without damaging the Premises on the lease hereby granted. The Lessee shall be entitled to remove such fixtures and fittings without causing any damage to the Premises,
or if any damage is caused, after restoring the same to its original condition as nearly as possible at their cost to the satisfaction of lessor. 

  

	f)	The Lessee shall not carry out any permanent or structural alternations or additions to the Premises. If any temporary additions are to be made prior approval of the lessor shall be
obtained in writing 

  

	g)	The Lessor shall not be liable for any theft, loss, damage or destruction of any assets done to properties of the Lessee kept in the Premises, and the Lessee themselves shall take
all reasonable care of the same. 

  

	h)	The owner/Lessor or his authorised representative may enter the Premises to ascertain its conditions as well as the observance of the terms and conditions herein, at mutually
convenient day time. 

  

	i)	Property taxes and Municipal taxes of the premises shall be payable by the Lessor and Lessee shall pay as and when due, electricity and water and telephone charges, for the services
utilised by Lessee. 

  

					
	LESSOR	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

	 	 	 	 	 Cont...4

 6. It is further expressly agreed between the parties hereto that: 
  

	a)	The Lessor has agreed to grant Lease to the Lessee relying on the reputation of the Lessee and on the clear assurance given by the Lessee that they will not claim tenancy or any
other similar rights to or in the Premises. Accordingly, the lease hereby granted is personal and not transferable. The Lessee shall not purport to transfer, to assign the benefit of this Lease to any other person on any basis whatsoever.

  

	b)	The Lessor has granted the present Lease to the Lessee strictly on a temporary basis. In the event that the Lessee fails to pay the monthly rent as agreed upon regularly and in time
or does not set right any violation of other terms and conditions herein notified in writing within two months, the Lessor shall be entitled to terminate this Agreement by giving thirty days notice to the Lessee. 

  
 Termination of lease 
  

	7.	The Lessee or Lessor may at any time even before expiry of the agreed term of 11 months, terminate the agreement / arrangement herein by giving to the other party Ninety days
written notice of its intention to terminate the agreement / arrangement herein and thereupon the agreement / arrangement herein shall come to an end on expiry of such Ninety days period. The notice shall be sent by registered post acknowledgment
due or by courier service or by special messenger. 

  

	8.	Lessee agreed and understood that in the event of refusal on the part of Lessee to vacate and hand over vacant possession of the premises to the Lessor on expiry of the lease hereby
granted, the Lessor shall be entitled to adopt proceedings to recover possession of the premises from the Lessee. In such event, all costs damages charges and expenses to be incurred by the Lessor to recover possession of the premises shall be borne
and paid by the Lessee exclusively. 

  
 Stamp Duty and
Registration 
  

	9.	All stamp duty and registration charges, payable on these deeds shall be borne and paid by the Lessee alone. This Deed is executed in duplicate, the original being retained by the
Lessor and the duplicate by the Lessee. 

  

					
	LESSOR	 	 	 	 LESSEE

	 [Signature Illegible]
	 	 	 	 [Signature Illegible]

	 	 	 	 	 Cont...5

 IN WITNESS WHEREOF THE parties hereto have signed and delivered these deeds at Hyderabad the day and year first
hereinabove written. 
  
 WITNESSESS 
  

							
			
	 1) [Signature Illegible]
	 	 	 	 LESSOR [Signature Illegible]

			
	 2) [Signature Illegible]
	 	 	 	 LESSEE For PORTALPLAYER PRIVATE LIMITED

	 	 	 	 	 
	 	 	 	 	 [Signature Illegible]

			
	 	 	 	 	 MANAGING DIRECTOR

  
  
  

 [GRAPHIC OMITTED] 
  
 LEASE AGREEMENT 
  
 This Agreement of Lease is executed at Hyderabad on this the 27th Day of August, 1999. 
  
 BETWEEN 
  
 Sri N.Sambasiva Rao, S/o N.Rama Kotaiah, Aged about 42 years, r/o 603, MLA Apartments, Punjagutta, Hyderabad, hereinafter called “LESSOR” (which expression
shall unless it be repugnant to the context or meaning thereof mean and include his heirs, executors, administrators and assigns) of the ONE PART 
  
 AND 
  
 PORTALPLAYER PRIVATE LIMITED, a Company duly registered under the Companies Act, 1956 and having its Registered Office at Plot No.249, Prashasan Nagar, Jubilee Hills, Hyderabad represented by its Director, Sri
Venkatapathi Rayapati, hereinafter called “LESSEE” (which expression shall unless it be repungnant to the context or meaning thereof mean and include its successors, assigns, etc.,) of the OTHER PART: 
  

									
					
	LESSOR	 	 /s/ [signature illegible]
	 	 	 	 LESSEE
	 	 /s/ V.N. Rayapati

  
 Contd...2 
  

 Whereas the Lessor is the sole and absolute owner of an independent residential building Plot No.249, Uma Nivas,
Prashasan Nagar Co-Operative Housing Society, Jubilee Hills, Hyderabad, (hereinafter referred to as “the Premises”), and has agreed to grant lease of the Premises to the Lessee for use and occupation of the same for a period of 5 years
commencing from the 15-8-1999. 
  
 NOW THIS AGREEMENT WITNESSETH and the Parties
hereto agree as follows: 
  

	1.	The lessor confirms having granted to the Lessee the right to occupy and use the Premises and the fixtures and fitting as listed in the Schedule hereto for the term of 5 years
commencing from 15-8-99 and ending on 14-8-2004 on terms and conditions set forth herein 

  
 Duration of Lease 
  

	2.	The duration of the Lease hereby granted shall be 5 years as aforesaid, and may be extended for further period of 5 years on the same terms and conditions. 

 
 Payments 
  

	3.	The Lessee shall, during the period of occupation and use of the Premises pay to the Lessor monthly rent of Rs.15,000 (Rupees fifteen thousands) only for the first year. The rent
will be enhanced by 8% on the rent existing at the end of each 12 calendar months of occupancy. The monthly rent shall be paid regularly on or before the 10th day of each month for that month, in advance after deducting the appropriate income-tax at source, by an account payee cheque drawn in favour of the lessor. 

  

	4.	The lessor has desired that Lessee should pay at the time of taking over possession of the house, a sum of Rs.1,00,000 (Rupees one lakh) as an interest free advance refundable on
the expiry of the lease period or on the termination of the lease. 

  
 Duties and Obligations of Lessor and Lessee: 
  

	5.	It is agreed between the Parties hereto that : 

  

	 	(a)	Lessee shall use the Premises only for purpose of his business. 

  

	 	(b)	The Lessee shall occupy and use the Premises without causing any nuisance or annoyance to the other residents in the locality. 

  
 Contd..3 
  

									
					
	Lessor	 	 /s/ [signature illegible]
	 	 	 	 Lessee
	 	 /s/ V.N. Rayapati

  

	 	(c)	The Lessee shall use the Premises prudently and without causing any damage to the Premises or any part thereof if notwithstanding the above, any damage is caused to the Premises or
to any part thereof, the Lessee shall at own costs and expenses repair and restore the same to its original condition as nearly as possible. 

  
 The Lessee shall return the Premises and the Schedule Property to the Lessor on the lease hereby granted coming to an end howsoever and
whensoever in as nearly a good condition as possible subject to usual wear and tear. 
  

	 	(d)	The Lessee shall carry out all necessary tenantable repairs to the Premises at own costs with prior consent of Lessor. The Lessee is responsible for insuring the Premises and
Schedule Property against fire, riots and civil disturbances, and acts of god and nature. 

  

	 	(e)	The Lessee may fix or install additional fixtures and fitting in the Premises including air-conditioners, shelves racks, additional water taps, gas connection, electric fittings,
telephones, sanitary and other installations, etc. as may be thought necessary, without damaging the Premises on the
lease hereby granted coming to an end howsoever and whensoever, the Lessee shall be entitled to remove such fixtures and fittings without causing any damage to the Premises, or if any damage is caused after restoring the same to its original
condition as nearly as possible at their cost. 

  

	 	(f)	The Lessee shall not carry out any permanent or structural alternations or additions to the Premises. 

  

	 	(g)	The Lessor shall not be liable for any theft, loss, damage or destruction of any assets or properties of the Lessee kept in the Premises, and the Lessee themselves shall take all
reasonable care of the same. 

  

	 	(h)	The Lessee shall upon receiving prior intimations permit the Lessor or his duly authorized agent to enter the Premises to ascertain its condition as well as the observance of the
terms and conditions herein, at a mutually convenient time. 

  

	 	(i)	Property taxes and Municipal taxes of the premises shall be payable by the Lessor and Lessee agrees to pay as and when due electricity, water and telephone charges for the services
utilised by Lessee. 

  
 Contd...4 
  

									
					
	Lessor	 	 /s/ [signature illegible]
	 	 	 	 Lessee
	 	 /s/ V.N. Rayapati

  

	6.	It is further expressly agreed between the parties hereto that : 

  

	 	(a)	The Lessor has agreed to grant Lease to the Lessee relying on the reputation of the Lessee and on the clear assurance given by the Lessee that they will not claim tenancy or any
other similar rights to or in the Premises. Accordingly the lease hereby granted is personal and not transferable; the Lessee shall not purport to transfer to assign the benefit of this Lease to any other person on any basis whatsoever. However, the
Lessee may exercise the option of sub-leasing part of the premises with the mutual written consent of the Lessor. 

  

	 	(b)	The Lessor has granted the present Lease to the Lessee strictly on a temporary basis. In the event that the Lessee fails to pay the monthly rent as agreed upon regularly and in time
or does not set right any violation of other terms and conditions herein notified in writing within two months, the Lessor shall be entitled to terminate this Agreement by giving ninety days notice to the Lessee. 

  
 Termination of lease 
  

	7.	The Lessee or Lessor may at any time even before expire of the agreed term of 5 years terminate the agreement/arrangement therein by giving to the other Party twelve calendar months
written notice of its intention to terminate the arrangement/agreement herein and thereupon the arrangement/agreement herein shall come to an end on expire of such twelve months and the Parties shall not object to the same. The notice shall be sent
by registered post acknowledgment due. 

  

	8.	Lessee agreed and understood that in the event of refusal on the party of the Lessee to vacate and hand over vacant possession of the premises to the Lessor on expiry of the lease
hereby granted, the Lessor shall be entitled to adopt proceedings to recover possession of the premises from the Lessee, in such event, all costs charges and expenses to be incurred by the Lessor to recover possession of the premises shall be borne
and paid by the Lessee exclusively. 

  
 Stamp Duty and
Registration 
  

	9.	All stamp duty and registration charges, if any, payable on these deeds shall be borne and paid by the Lessee alone. This Deed is executed in duplicate, the original being retained
by the Lessor and the duplicate by the Lessee. 

  

									
					
	Lessor	 	 /s/ [signature illegible]
	 	 	 	 Lessee
	 	 /s/ V.N. Rayapati

  

 IN WITNESS WHEREOF the Parties hereto have signed and delivered these deeds are Hyderabad the day and year first
hereinabove written. 
  
 WITNESSES 
  

									
					
	 1)
	 	 /s/ [signature illegible]
	 	 	 	 LESSOR
	 	 /s/ [signature illegible]

					
	 2)
	 	 /s/ [signature illegible]
	 	 	 	 LESSEE
	 	 /s/ V.N. Rayapati

					
	Lessor	 	 	 	 	 	 Lessee
	 	 

  

 [Graphic Omitted] 
  
 LEASE AGREEMENT 
  
 This Agreement of Lease is executed at Hyderabad on this the 1st May, 2001. 
  
 BETWEEN 
  
 Sri R.C. Samal S/o R.G. Samal Aged about 56 years, R/o
38, AWHO Colony Sector ‘A’, Goutam Nagar, Gunrock Enclave, Army Officer’s Quarters, Secunderabad, hereinafter called “LESSOR” (which expression shall unless it be repugnant to the context or meaning thereof mean and include
his heirs, executors, administrators and assigns) of the ONE PART 
  
 AND 
  
 PORTALPLAYER PRIVATE LIMITED, a Company duly registered
under the Companies Act, 1956 and having its Registered Office at Plot No. 249, Prashasan Nagar, Jubilee Hills, Hyderabad represented by its Managing Director Sri. J.A. Chowdary, hereinafter called “LESSEE” (Which expression shall unless
it be repugnant to the context or meaning thereof mean and include its successors, assigns, etc.,) of the OTHER PART: 
  

					
	 LESSOR [Signature Illegible]
	 	 	 	 LESSEE [Signature Illegible]

  
 Cont...2 

 

 Whereas the Lessor is the sole and absolute owner of an independent residential building in Plot No. 243, Road # 72,
Prashasan Nagar, Jubilee Hills, Hyderabad, (hereinafter referred to as “the Premises”), and has agreed to grant lease of the Cellar Premises (drawing enclosed) to the Lessee for use and occupation of the same for a period of 11 months
commencing from 1st May, 2001. 
  
 NOW THIS AGREEMENT WITNESSETH and the Parties hereto agree as follows: 
  

	1.	The lessor confirms having granted to the Lessee the right to occupy Cellar and use the fixtures and fittings to be listed and signed by both parties at the time of handing &
taking over of the said premises. 

  
 Duration of Lease

  

	2.	The duration of the Lease hereby granted shall be 11 months unless otherwise renewed for further period by mutual consent and may be extended for further period of 11 months and at
a time and similarly further extended upto a maximum term of 5 years from the date of handing over of the Cellar premises. 

  
 Payments 
  

	3.	The Lessee shall, during the period of occupation and use of the Cellar Premises so mentioned above pay to the Lessor monthly rent of Rs. 15,000 (Rupees fifteen thousand only) only
for the first 11 months. The rent will be enhanced by 7.33% on the rent existing at the end of each 11 calendar months of occupancy. The monthly rent shall be paid regularly on or before the 10th day of each month for that month, in advance after deducting the appropriate income tax at source, by an account payee cheque drawn in favour of the lessor.

  

	4.	The lessor has desired that Lessee should pay at the time of taking over possession of Cellar Premises, a sum of Rs.1,00,000 (Rupees on lakh only) as an interest free advance
refundable on the expiry of the lease period or on the termination of the lease. The lessor will have right to deduct any amount due to him out of his advance when the premises is vacated by lessee. 

  
 Duties and Obligations of Lessor and Lessee: 
  

	5.	It is agreed between the Parties hereto that: 

  

	a)	Lessee shall use the Cellar Premises only for business purpose. 

  

	b)	the Lessee shall occupy and use the Cellar Premises without causing any nuisance or annoyance to other residents in the locality. 

  

					
	 LESSOR [Signature Illegible]
	 	 	 	 LESSEE [Signature Illegible]

  
 Cont...3 
  

	c)	The Lessee shall use the Cellar Premises prudently and without causing any damage to the Premises or any part thereof. If notwithstanding the above, any damage is caused to the
Premises or to any part thereof, the Lessee shall at own costs and expenses repair and restore the same to its original condition to the satisfaction of the lessor, subject to normal wear and tear. 

  
 The Lessee shall return the Premises and the Schedule
Property to the Lessor on the lease hereby granted coming to an end in good condition, subject to usual wear and tear, to the satisfaction of the lessor. 
  

	d)	The Lessee shall carry out all necessary tenantable repairs to the Premises at own costs with prior consent of Lessor. The Lessee is responsible for insuring the Premises and
Schedule Property for a sum of Rs. 40 lakhs against fire, riots and civil disturbances, and acts of god and nature. 

  

	e)	The Lessee may fix or install additional fixtures and fitting in the Cellar Premises including air-conditioners, shelves racks, additional water taps, gas connection, electric
fittings, telephones, sanitary and other installations, etc., as may be thought necessary without damaging the Premises on the lease hereby granted. The lessee shall be entitled to remove such fixtures and fittings without causing any damage to the
Premises, or if any damage is caused after restoring the same to its original condition as nearly as possible at their cost to the satisfaction of lessor. 

  

	f)	The Lessee shall not carry out any permanent or structural alternations or additions to the Premises. If any temporary additions are to be made prior approval of the lessor shall be
obtained in writing. 

  

	g)	The Lessor shall not be liable for any theft, loss damage or destruction of any assets or the properties of the Lessee kept in the Cellar Premises, and the Lessee themselves shall
take all reasonable care of the same. 

  

	h)	The Owner/Lessor or his authorised representative may enter the Premises at mutually convenient day time to ascertain its conditions as well as the observance of the terms and
conditions herein. 

  

	i)	Property taxes and Municipal taxes of the premises shall be payable by the Lessor and Lessee agrees to pay as and when due, Electricity and water charges, for the services utilised
by Lessee. 

  

					
	 LESSOR [Signature Illegible]
	 	 	 	 LESSEE [Signature Illegible]

  
 Cont...4 
  

	6.	It is further expressly agreed between the parties hereto that: 

  

	a)	The Lessor has agreed to grant Lease to the Lessee relying on the reputation of the Lessee and on the clear assurance given by the Lessee that they will not claim tenancy or any
other similar rights to or in the Premises. Accordingly the lease hereby granted is personal and not transferable. The Lessee shall not purport to transfer to assign the benefit of this Lease to any other person on any basis whatsoever.

  

	b)	The Lessor has granted the present Lease to the Lessee strictly on a temporary basis. In the event that the Lessee fails to pay the monthly rent as agreed upon regularly and in time
or does not set right any violation of other terms and conditions herein notified in writing within two months, the Lessor shall be entitled to terminate this Agreement by giving ninety days notice to the Lessee. 

  
 Termination of lease 
  

	7.	The Lessee or Lessor may at any time even before expire of the agreed term of 11 months terminate the agreement / arrangement herein by giving to the other party Ninety days written
notice of its intention to terminate the arrangement / agreement herein and thereupon the arrangement / agreement herein shall come to an end on expiry of such Ninety days period. The notice shall be sent by registered post acknowledgment due or by
courier service or by special messenger. 

  

	8.	Lessee agreed and understood that in the event of refusal on the part of Lessee to vacate and hand over vacant possession of the premises to the Lessor on expiry of the lease hereby
granted, the Lesser shall be entitled to adopt proceedings to recover possession of the premises from the Lessee. In such event, all costs damages charges and expenses to be incurred by the Lessor to recover possession of the premises shall be borne
and paid by the Lessee exclusively. 

  
 Stamp Duty and
Registration 
  

	9.	All stamp duty and registration charges, payable on these deeds shall be borne and paid by the Lessee alone. This Deed is executed in duplicate, the original being retained by the
Lessor and the duplicate by the Lessee. 

  

					
	 LESSOR [Signature Illegible]
	 	 	 	 LESSEE [Signature Illegible]

  
 Cont...5 
  

 IN WITNESS WHEREOF the Parties hereto have signed and delivered these deeds at Hyderabad the day and year first
hereinabove written. 
  
 WITNESSESS 
  

			
	 1) [Signature Illegible]
	  	LESSOR [Signature Illegible]
		
	 2) [Signature Illegible]
	  	LESSEE [Signature Illegible]

  

 [Graphic Omitted] 
  
 CELLAR FLOOR WITH SITE PLAN 
  

					
	 LESSOR [Signature Illegible]
	 	 	 	LESSEE [Signature Illegible]

  

 [GRAPHIC OMITTED] 
  
 LEASE AGREEMENT 
  
 This Agreement of Lease is executed at Hyderabad on this the Fifteenth Day of August 2004. 
  
 BETWEEN 
  
 Sri N. Sambasiva Rao S/ o N. Rama Kotaiah, Aged about 47 years, R/ o K 4/2, Kundanbagh Officers’ Apartments, Begumpet, Hyderabad,
hereinafter called “LESSOR” which expression shall unless it be repugnant to the context or meaning thereof mean and include his heirs, executors, administrators and assigns of the ONE PART 
  
 AND 
  
 Pinexe Systems PRIVATE LIMITED, a Company duly registered under the Companies Act, 1956 and having its Registered Office at Plot No. 249,
Prashasan Nagar, Jubilee Hills, Hyderabad represented by its Managing Director Sri. J.A. Chowdary hereinafter called “LESSEE” which expression shall unless it be repugnant to the context or meaning thereof mean and include its successors,
assigns, etc. of the OTHER PART: 
  

			
	 [Signature Illegible]
	  	[Signature Illegible]
		
	 LESSOR
	  	LESSEE

  
 Cont...2                   

 Whereas the Lessor is the sole and absolute owner of an independent residential building in Plot No. 249, Road # 72,
Prashasan Nagar Co-Operative Housing Society, Jubilee Hills, Hyderabad, hereinafter referred to as “the Premises”, and has agreed to grant lease of the Premises to the Lessee for use and occupation of the same for a period of
ONE YEAR commencing from the Fifteenth Day of August 2004. 
  
 NOW THIS AGREEMENT WITNESSETH and the Parties hereto agree as follows: 
  

	1.	The Lessor confirms having granted to the Lessee the right to occupy and use the Premises and the fixtures and fittings as listed in the Schedule hereto for a term of ONE YEAR
ending on 14th August 2005 on terms and conditions set forth herein. 

  
 Duration of Lease 
  

	2.	The duration of the Lease hereby granted shall be ONE YEAR as aforesaid and may be extended further for a period of ONE YEAR on the same terms and
conditions with an Annual Increase that may be mutually agreed. 

  
 Payments 
  

	3.	The Lessee shall, during the period of occupation and use of the Premises pay to the Lessor monthly rent of Rs 23098/- (Rupees Twenty Three Thousand Ninety Eight Only) upto
the 14th of August 2005. 

  

	4.	The sum of Rs. 1, 00, 000 (Rupees One Lakh Only) paid in August 1999 as Interest Free Advance is refundable on the expiry of the lease period or
on the termination of the lease. 

  

	5.	Duties and Obligations of Lessor and Lessee: 

  
 It is agreed between the Parties hereto that: 
  

	 	a)	Lessee shall use the Premises only for purposes of his business. 

  

	 	b)	The Lessee shall use the Premises without causing any nuisance or annoyance to other residents in the locality. 

  

	 	c)	The Lessee shall use the Premises prudently and without causing any damage to the Premises or any part thereof. If notwithstanding the above, any damage is caused to the Premises or
to any part thereof, the Lessee shall at own costs and expenses repair and restore the same to its original condition as nearly as possible. 

  
 The Lessee shall return the Premises and the Schedule Property to the Lessor on the lease hereby granted coming to an end howsoever and whensoever in good
condition subject to usual wear and tear. 
  

	 	d)	The Lessee shall carry out all necessary tenantable repairs to the Premises at own costs with prior consent of Lessor. The Lessee is responsible for insuring the Premises and
Schedule Property against fire, riots and civil disturbances and acts of god and nature. 

  

	 	e)	The Lessee may fix or install additional fixtures and fittings in the Premises including air-conditioners, shelves, racks, additional water taps, gas connection, electric fittings,
telephones, sanitary and other installations, etc. as may be thought necessary without damaging the Premises on the lease hereby granted. The Lessee shall be entitled to remove such fixtures and fittings without causing any damage to the Premises,
or if any damage is caused after restoring the same to its original condition as nearly as possible at their cost to the satisfaction of the Lessor. 

  

	 	f)	The Lessee shall not carry out any permanent or structural alterations or additions to the Premises. If any temporary additions are to be made prior approval of the Lessor shall be
obtained in writing. 

  

			
	 [Signature Illegible]
	  	[Signature Illegible]
		
	 LESSOR
	  	LESSEE

	 	g)	The Lessor shall not be liable for any theft; loss, damage or destruction of any assets or     properties of the Lessee kept in the Premises, and the Lessee
themselves shall take all reasonable care of the same. 

  

	 	h)	The Lessee shall upon receiving prior intimations permit the Lessor or his duly authorized agent to enter the Premises to ascertain its condition as well as the observance of the
terms and conditions herein, at a mutually convenient time. 

  

	 	i)	Property taxes and Municipal taxes of the premises shall be payable by the Lessor and Lessee agrees to pay as and when due electricity and water charges for the services utilized by
Lessee. 

  

	6.	It is further expressly agreed between the parties hereto that: 

  

	(a)	The Lessor has agreed to grant Lease to the Lessee relying on the reputation of the Lessee and on the clear assurance given by the Lessee that they will not claim tenancy or any
other similar rights to or in the Premises. Accordingly the lease hereby granted is personal and not transferable. The Lessee shall not purport to transfer to assign the benefit of this Lease to any other person on any basis whatsoever. However the
Lessee may exercise the option of sub- leasing part of the Premises with the mutual written consent of the Lessor. 

  

	(b)	The Lessor has granted the present Lease to the Lessee strictly on a temporary basis. In the event that the Lessee fails to pay the monthly rent as agreed upon regularly and in time
or does not set right any violation of the other terms and conditions herein notified in writing within two months, the Lessor shall be entitled to terminate this Agreement by giving Ninety Days notice to the Lessee.

  
 Termination of lease 
  

	7.	The Lessee or Lessor may at any time even before expiry of the agreed term of Lease/ renewed Lease terminate the agreement / arrangement herein by giving to the other party
Ninety Days written notice of its intention to terminate the arrangement / agreement herein and thereupon the arrangement/agreement herein shall come to an end on expiry of such Ninety days Period. The notice shall be
sent by registered post acknowledgement due or by courier service or by Special Messenger to the address of the Lessee/ Lessor mentioned supra. 

  

	8.	Lessee agreed and understood that in the event of refusal on the part of Lessee to vacate and hand over vacant possession of the premises to the Lessor on expiry of the lease hereby
granted, the Lessor shall be entitled to adopt proceedings to recover possession of the premises from the Lessee. In such event, all costs, damages, charges and expenses to be incurred by the Lessor to recover possession of the premises shall be
borne and paid by the Lessee exclusively. 

  
 Stamp Duty and
Registration 
  

	9.	All stamp duty and registration charges payable on these deeds shall be borne and paid by the Lessee alone. This Deed is executed in duplicate, the original being retained by the
Lessor and the duplicate by the Lessee. 

  
 SCHEDULE TO THE PROPERTY 
  
 EAST: Road 

 
 WEST: Plot # 231 
  
 NORTH: Plot # 248 
  
 SOUTH: Plot # 250 
  
 IN WITNESS WHEREOF, the Parties hereto have signed and delivered these deeds at Hyderabad the day and year first hereinabove written. 
  
 WITNESSESS 
  

			
	1)    [Signature Illegible]	  	[Signature Illegible]
		
	 	  	LESSOR
		
	 2)    [Signature Illegible]
	  	[Signature Illegible]
		
	 	  	LESSEE

 [Graphic Omitted] 
  
  
  
 LEASE DEED 
  
 This Deed of Lease is
executed at Hyderabad on this the Twenty Sixth Day of November 2004 
  
 BETWEEN 
  
 Sri C. Umamaheswara Rao S/o C. Ananda Rao Aged about 55
years, R/o PJ-36, Panjagutta Officers’ Colony, Panjagutta, Hyderabad, hereinafter called “LESSOR” which expression shall unless it be repugnant to the context or meaning thereof mean and include his heirs, executors, administrators
and assigns of the ONE PART 
  
 AND 
  
 PINEXE SYSTEMS PRIVATE LIMITED, a Company duly registered under the Companies Act, 1956 and
having its Registered Office at Plot # 249, Prashasan Nagar, Jubilee Hills, Hyderabad- 500 034 represented by its Managing Director Sri. J.A. Chowdary hereinafter called “LESSEE” which expression shall unless it be repugnant to the context
or meaning thereof mean and include its successors, assigns of the OTHER PART: 
  
  
  
  
  
  

			
	 /s/
 LESSOR
	  	 /s/
 LESSEE
 Cont...2

 Whereas the Lessor is the sole and absolute owner of an independent residential building in Plot #241, Road # 72,
Prashasan Nagar Co-Operative Housing Society, Jubilee Hills, Hyderabad, hereinafter referred to as “the Premises”, and has agreed to grant lease of the Premises to the Lessee for use and occupation of the same for a period of 12 months
commencing from the 1st day of December 2004 or from the actual date of giving possession of the premises.

  
 NOW THIS AGREEMENT WITNESSETH and the Parties hereto agrees as follows:

  

	1.	The Lessor hereby grants to the Lessee the right to occupy and use the Premises and the fixtures and fittings as listed in the Schedule hereto for the term of 12 months commencing
from the 1st day of December 2004 or any subsequent date on which possession of the premises is handed over by the
Lessor. 

  
 Duration of Lease 
  

	2.	The duration of the Lease hereby granted shall be for 12 months as aforesaid, and may be extended for a further period of 12 months by mutual consent. 

  

	3.	The rent for the premises shall commence from the date of handing over possession of the premises by the Lessor to the Lessee and the lease period of 12 months also commences from
the same date. 

  

	4.	The taking over of possession shall be communicated by the Lessee to the Lessor in writing. 

  
 Payments 
  

	5.	The Lessee shall, during the period of occupation and use of the Premises pay to the Lessor monthly rent of RS.26,282 (Rupees Twenty Six Thousand Two Hundred Eighty Two Only) for
the first 12 months of the Lease. 

  
 Thereafter,
the rent will be enhanced by 8% on the rent existing at the end of the 12 months of occupancy. The monthly rent shall be paid regularly on or before the 10th day of each month for that month, in advance after deducting the appropriate income tax/ other statutory deductions at source, by an account payee Cheque drawn in favor of the Lessor. 
  

	6.	The Lessee has agreed to pay Rs 2, 58, 000/- (Rupees Two Lakhs Fifty Eight Thousand Only) as an interest free rent deposit. The Lessor has agreed that a sum of Rs 1, 29, 000/-
(Rupees One Lakh Twenty Nine Thousand Only) may be deducted by the Lessee from the monthly rents at Rs21, 500/- (Rupees Twenty One Thousand Five Hundred Only) per month from March 2005 up to August 2005. The balance advance of Rs 1, 29, 000/-
(Rupees One Lakh Twenty-Nine Thousand Only) is to be adjusted against the Notice period for vacation of the premises and further unadjusted amount is refundable by Lessor on the expiry of the lease period or on the termination of the lease by
Account Payee Cheque or Bank draft drawn in favour of Lessee immediately on handing over of the premises by the Lessee to Lessor. 

  
 Duties and Obligations of Lessor and Lessee: 
  

	7.	It is agreed between the Parties hereto that: 

  

	a)	Lessee shall use the Premises only for purposes of his business. 

  

	b)	The Lessee shall occupy and use the Premises without causing any nuisance or annoyance to other residents in the locality. 

	c)	The Lessee shall use the Premises prudently and without causing any damage to the Premises or any part thereof. If notwithstanding the above, any damage is caused to the Premises or
to any part thereof, the Lessee shall at its own cost and expenses repair and restore the same to its original conditions as nearly as possible. 

  

The Lessee shall return the Premises and the Schedule Property to the Lessor on the lease hereby granted coming to an end however and whensoever in as
nearly a good condition as possible subject to usual wear and tear. 
  

	d)	The Lessee shall carry out all necessary tenantable repairs to the Premises at its own cost with the prior consent of the Lessor. The Lessee is responsible for insuring the Premises
and Schedule Property against fire, riots and civil disturbances, and acts of god and nature. 

  

	e)	The Lessee may fix or install additional fixtures and fittings in the Premises including air- conditioners, shelves racks, additional water taps, gas connection, electric fittings,
telephones, sanitary and other installations, etc. as may be thought necessary without damaging the Premises. On the lease hereby granted coming to an end howsoever and whensoever, the Lessee shall be entitled to remove such fixtures and fittings
without causing any damage to the Premises, or if any damage is caused after restoring the same to its original condition as nearly as possible at their cost. 

  

			
	 /s/
 LESSOR
	  	 /s/
 LESSEE
 Cont...3

	f)	The Lessee shall not carry out any permanent or structural alternations or additions to the Premises. 

  

	g)	The Lessor shall at his cost provide an Electrical Transformer of adequate capacity to meet the power requirements of the Lessee. 

  

	h)	The Lessor shall not be liable for any theft; loss damage or destruction of any assets or properties of the Lessee kept in the Premises, and the Lessee themselves shall take all
reasonable care of the same. 

  

	i)	The Lessee shall upon receiving prior intimations permit the Lessor or his duly authorized agent to enter the Premises to ascertain its condition as well as the observance of the
terms and conditions herein, at a mutually convenient time. 

  

	j)	Property taxes and Municipal taxes of the premises shall be payable by the Lessor and Lessee agrees to pay as and when due electricity, water and telephone charges for the services
utilized by Lessee. 

  

	8.	It is further expressly agreed between the parties hereto that: 

  

	a)	The Lessor has agreed to grant Lease to the Lessee relying on the reputation of the Lessee and on the clear assurance given by the Lessee that they will not claim tenancy or any
other similar rights to or in the Premises. Accordingly the lease hereby granted is personal and not transferable: the Lessee shall not purport to transfer / to assign the benefit of this Lease to any other person on any basis whatsoever except with
the mutual written consent of the Lessor. 

  

	b)	The Lessor has granted the present Lease to the Lessee strictly on the terms and conditions mentioned herein. In the event that the Lessee fails to pay the monthly rent as agreed
upon regularly and in time or does not set right any violation of other terms and conditions herein notified in writing within two months, the Lessor shall be entitled to terminate this Agreement by giving Ninety Days notice to the Lessee.

  
 Termination of lease 
  

	9.	The Lessee or Lessor may at any time before expiry of the agreed term of 12 months terminate the agreement / arrangement herein by giving to the other party Three Months
written notice of its intention to terminate the arrangement / agreement herein and thereupon the arrangement / agreement herein shall come to an end on expiry of such Three Months Notice period and the Parties shall not object to the same.
The notice shall be sent by registered post acknowledgment due or by courier service or by special messenger. 

  

	10.	Lessee agreed and understood that in the event of refusal on the part of Lessee to vacate and hand over vacant possession of the premises to the Lessor on expiry of the lease hereby
granted, the Lessor shall be entitled to adopt proceedings to recover possession of the premises from the Lessee, and in such event, all costs, charges and expenses to be incurred by the Lessor to recover possession of the premises shall be borne
and paid by the Lessee exclusively. 

  
 Stamp Duty and
Registration 
  

	11.	All stamp duty and registration charges, if any, payable on these deeds shall be borne and paid by the Lessee alone. This Deed is executed in duplicate, the original being retained
by the Lessor and the duplicate by the Lessee. 

  
 IN WITNESS
WHEREOF the Parties hereto have signed and delivered these deeds at Hyderabad on the day and year first hereinabove written. 
  
 WITNESSES 
  
  
  

			
	 1) illegible
	  	 /s/ illegible
 LESSOR

  
  
  
  

			
	 2) illegible
	  	 /s/ illegible
 LESSEE2005 Executive Compensation Plan

 Exhibit 10.1 
 2005 EXECUTIVE COMPENSATION PLAN 
  
 On March 15, 2005, the Board of Directors of Nektar Therapeutics (the “Company”), approved the following guidelines for the 2005 Executive Compensation Plan (the “Plan”). 
  
 COMPENSATION PHILOSOPHY 
  
 The primary goals of the Plan are to help drive the attainment of key
business objectives while enabling the Company to attract, retain and reward capable executives who can contribute to the Company’s continued success. Equity participation and a strong alignment to stockholders’ interests are key elements
of the Company’s compensation philosophy. Four key goals form the basis for compensation decisions for all executives: 
  

	 	1.	To attract and retain the most highly qualified management and employee team; 

  

	 	2.	To emphasize sustained performance by aligning rewards with stockholder interests, especially through the use of equity participation programs; 

  

	 	3.	To pay competitively compared to similar drug delivery and biopharmaceutical companies and to provide appropriate reward opportunities for achieving high levels of performance with
regards to business objectives and to similar organizations in the marketplace; and 

  

	 	4.	To motivate executives and employees to achieve the Company’s annual and long-term business goals. 

  
 To meet these goals, the Organization and Compensation Committee of the Board of Directors (the “Committee”) has adopted a mix of
compensation elements, including salary, stock options and incentives (variable compensation program.). 
  
 BASE SALARY 
  
 The Committee recognizes the importance of maintaining compensation practices and levels of compensation competitive with drug delivery and biopharmaceutical companies in comparable stages of development. Base salary
represents the fixed component of the Plan. The philosophy regarding base salaries is conservative, maintaining salaries approximately at the competitive industry median. Base salary levels are established based on an annual review of marketplace
competitiveness and on the basis of individual performance. In this context base salaries for executives were increased for fiscal 2005 to a level consistent with the industry median. 

 BONUSES (VARIABLE COMPENSATION) 
  
 Bonus awards are another component of the Plan. Bonuses, if any, are linked
to the achievement of specified corporate goals. Corporate performance goals on which 2005 bonuses are based center upon four broad categories: 
  

	 	1.	building product pipeline; 

  

	 	2.	building a long term business; 

  

	 	3.	organizational capabilities and infrastructure; and 

  

	 	4.	financial performance. 

  
 For executive officers, the target bonus is set at 20%, 25% or 30% of total target cash compensation (total target cash compensation is the
executive’s salary plus the target bonus as set forth by the organization and compensation committee), depending upon position levels. Actual bonuses paid may range from 0% to 150% of the target bonus percentage of total target cash
compensation. 
  
 STOCK OPTIONS 

 
 The option plans offered by the Company have been established to provide
all the executive officers with an opportunity to share, along with stockholders, in the Company’s long-term performance. The Committee strongly believes that a goal of the Plan should be to provide key employees who have significant
responsibility for driving the Company’s success with an opportunity to increase their ownership and potentially gain financially from stock price increases. The interests of stockholders, executives and employees are thereby closely aligned.
Executives and other employees receive stock options at time of hire and are further eligible to receive stock options annually based on performance. All grants must be exercised according to the provisions of the relevant stock option plans. All
outstanding options currently expire ten years from the date of grant. 
  
 As the base salaries for the executive officers are in the mid-range for comparable companies, the Committee has used stock options as a primary incentive to attract and retain executive officers. Option amounts are based on an
employee’s level within the Company’s salary structure and the individual’s performance. After considering the criteria relating to awarding stock options, the Committee determined that all executive officers, including the Chief
Executive Officer, would receive option grants in fiscal 2005. The options that have been and may be granted to executive officers in fiscal 2005 vest monthly over five years commencing upon the date of grant. 
  
 Section 162(m) of the Code limits deduction for federal income tax purposes
of no more than $1 million of compensation paid to certain Named Executive Officers in a taxable year. Compensation above $1 million may be deducted if it is “performance-based compensation” within the meaning of the Code. The organization
and compensation committee has determined that stock awards granted under the Equity Incentive Plan with an exercise price at least equal to the fair market value of the common stock on the date of grant shall be treated as performance-based
compensation. 

 CHIEF EXECUTIVE OFFICER AND EXECUTIVE
CHAIRMAN COMPENSATION 
  
 The
Committee recommends to the Board of Directors the appropriate compensation for the Chief Executive Officer and Executive Chairman analyzing the same factors and criteria upon which other comparable officers’ compensation is based. The
independent members of the Board of Directors ultimately determine the compensation of the Chief Executive Officer and Executive Chairman. Under the Plan, the total compensation mix for senior executives, including the Company’s Chief Executive
Officer and Executive Chairman, emphasizes longer-term rewards in the form of stock options. 
  
 Target bonuses for the Chief Executive Officer and Chairman are set at 33 1/3% of
total target cash compensation (total target cash compensation is the executive’s salary plus the target bonus as set forth by the organization and compensation committee). Actual bonuses paid may range from 0% to 150% of the target bonus
percentage of total target cash compensation.

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