EXHIBIT 10.20
TRIPLE NET SUBLEASE
THIS SUBLEASE (this "Sublease") is dated for reference purposes as of
April 1, 2002 (the "Execution Date") and is made by and between TERAYON
COMMUNICATION SYSTEMS, INC., a Delaware corporation ("Sublessee"); and
HEWLETT-PACKARD COMPANY , a Delaware corporation ("Sublessor").
R E C I T A L S
This Sublease is made with reference to the following facts:
A. Sobrato Interests III, a California limited partnership, as landlord,
and VeriFone, Inc., a California corporation, as tenant, entered into that
certain Lease dated as of September 18, 1996 (the "Master Lease") with respect
to that certain five (5) story steel frame office building located at the
intersection of Tasman and Great America, Santa Clara, California, more commonly
known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. A copy of the Master Lease is attached
hereto as Exhibit "A" and incorporated by reference herein. Sublessor is
currently the tenant under the Master Lease, having acquired the tenant's
interest in the Master Lease pursuant to an Assignment and Assumption of
Tenant's Interest in the Lease. Sobrato Development Companies #961, a California
limited partnership (the "Master Lessor") is the landlord under the Master
Lease.
B. As defined in the Master Lease, the Premises encompasses the entire 5
story steel frame building (consisting of approximately 140,965 square feet),
and the 6.01 acre
-1-
parcel on which the building is located (more particularly described in Exhibit
"A" attached hereto) including on-grade parking for 480 cars, and the
appurtenances.
C. Sublessee wishes to sublease the entire Premises from Sublessor, and
Sublessor wishes to sublease the entire Premises to Sublessee all on the terms
and conditions contained herein.
Accordingly, in consideration of the mutual promises contained herein
and for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Premises: Sublessor hereby subleases to Sublessee, and Sublessee
hereby subleases from Sublessor the Premises. All capitalized terms in this
Sublease (including without limitation, in the Recitals) shall have the meaning
ascribed to them in the Master Lease unless otherwise defined herein.
2. Term
2.1 Term: The term (the "Term") of this Sublease shall be for a
period commencing on the third (3rd) business day after satisfaction of both
conditions precedent contained in Section 10, below (the "Commencement Date").
At the request of either party, the parties shall sign a confirmation of the
Commencement Date. The Term shall end (the "Expiration Date") without notice, on
the first to occur of: (i) October 31, 2009; (ii) the date on which this
Sublease is sooner terminated pursuant to its terms; and (iii) subject to
Section 18.4, below, the date on which Master Lease is terminated pursuant to
its terms.
-2-
2.2 No Option to Extend: Sublessee hereby acknowledges that: (i)
Sublessor does not have any obligation to extend the Term of the Master Lease,
and (ii) Sublessee must vacate the Premises fully and completely on or before
October 31,2009.
2.3 Early Occupancy: If prior to the Commencement Date, Master
Lessor's written consent to this Sublease has been obtained, and if both
conditions precedent contained in Section 10, below, have been fully satisfied,
and if Sublessee has delivered the Letter of Credit to Sublessor in compliance
with the terms of Section 12, below, then Sublessee shall have the right to
occupy the Premises (including the right to install equipment, furniture and
tenant improvements but at all times subject to the requirements of this
Sublease, including without limitation Sublessor and Master Lessor review and
consent of Sublessee's plans and specifications with respect to the tenant
improvements) prior to the Commencement Date on all of the terms and conditions
contained in this Sublease (including, without limitation, Sublessee's insurance
requirements under Section 12C of the Master Lease as incorporated herein)
except that Sublessee shall not be required to pay Base Monthly Rent or
Sublessee Additional Rent for the period from occupancy to the Commencement
Date, and except that Sublessor shall have the right, through June 1, 2002 to
occupy the Premises along with Sublessee in order for Sublessor to complete the
work described on Exhibit "C" attached hereto. In so completing its work,
Sublessor shall not unreasonably interfere with Sublessee's work, provided that
if Sublessor is delayed by reason of its obligation not to unreasonably
interfere, Sublessor shall be afforded such additional time to complete its
work. Sublessor and Sublessee shall reasonably cooperate with each other during
the period through June 1,2002 to allow Sublessor to complete the Exhibit "C"
work. Notwithstanding the foregoing, Sublessee shall have the right to prior to
the Commencement Date to walk through and inspect the Premises with its
contractors prior to
-3-
taking early occupancy under this Section 2.3. The first date prior to the
Commencement Date on which Sublessee takes early occupancy of all or any part of
the Premises (which shall not include any pre-Commencement Date walk through or
inspection of the Premises by Sublessee) under this Section 2.3 is herein called
the "Early Occupancy Date."
3. Rent
3.1 Base Rent: Sublessee shall pay to Sublessor as base monthly rent
("Base Rent" or "Base Monthly Rent") for the Premises the following amounts:
From Commencement Date to the sixty-first (61st) day thereafter $0 (no Base
Rent)
Sixty-second (62nd) day following Commencement Date to 3/31/03 $140,965.00
per month ($1.00/rsf per month NNN)
4/1/03 to 3/31/06 $190,302.75 per month ($1.35/rsf per month NNN
4/1/06 to 10/31/09 $253,737.00 per month ($1.80/rsf per month NNN)
Sublessor and Sublessee agree that for all purposes under this Sublease, the
Premises contains One Hundred Forty Thousand Nine Hundred Sixty Five (140,965)
square feet of rentable area. Base Rent shall be paid in advance on or before
the first (1st) day of each month. Base Rent and Sublessee Additional Rent for
any partial month shall be prorated based on a thirty (30) day
month.
3.2 Payment of First Months Rent: On the first to occur of the
Commencement Date and the Early Occupancy Date, Sublessee shall pay to Sublessor
the sum
-4-
of One Hundred Forty Thousand Nine Hundred Sixty Five Dollars ($140,965.00),
which shall be applied to Base Rent for the first full calendar month following
the sixty-first (61st) day after the Commencement Date. If the sixty-second (
62nd) day after the Commencement Date is not the first day of a calendar month,
then on the Commencement Date, Sublessee shall also pay to Sublessor the Base
Rent for the fractional month running from said 62nd day until the last day of
the calendar month in which said 62nd day falls.
3.3 Additional Rent:
(a) This Sublease is a triple net lease and it is the intent of the
parties hereto that Sublessor shall have no costs, expenses or payments
whatsoever in connection with the Premises or the Master Lease (irrespective of
whether or not the amounts are due under provisions of the Master Lease which
are not incorporated herein) except as specifically listed in this Section 3.3,
below. Accordingly, in addition to Base Rent, except as set forth in this
Section 3.3, Sublessee shall pay to Sublessor all rent, costs, expenses,
payments and charges whatsoever, as and when due (or claimed due by Master
Lessor from Sublessor) under the Master Lease (all such amounts are herein
collectively called "Sublessee Additional Rent"), including without limitation:
(1) real estate taxes relating to the Premises (whether or not Section 13 of the
Master Lease is incorporated into this Sublease), (2) insurance premiums
(whether or not Section 12B of the Master Lease is incorporated into this
Sublease), (3) expenses of maintaining the common areas in the Project (whether
or not the relevant Master Lease sections are incorporated into this Sublease).
Notwithstanding anything to the contrary contained herein, Sublessee shall not
be responsible or liable for any Sublessee Additional Rent which: (1) arises
from the negligence or willful misconduct of Sublessor; (2) arises from an
injury to any person in or about the Premises
-5-
which occurred prior to the Commencement Date or, the Early Occupancy Date, if
applicable (provided that liability for any injury to any person in or about the
Premises between the Early Occupancy Date and the Commencement Date shall be
equitably proportioned between Sublessor and Sublessee); (3) arises from a
breach, default or violation (collectively, a "Breach") of the Master Lease by
Sublessor (unless such Breach is a result of a Breach under this Sublease by
Sublessee [including, without limitation, the failure of Sublessee to pay any
sums as and when due hereunder], or by any person or party other than Sublessor,
or its agents, contractors or employees); (4) represents the amount, if any, by
which base monthly rental due under the Master Lease exceeds the Base Rent due
under this Sublease (the "Base Rent Difference"); (5) is a late fee, charge or
interest for which Sublessee is not responsible as further described below in
this Section 3.3; or (6) exceeds the amounts payable by Sublessor under the
Master Lease.
(b) Sublessor shall use commercially reasonable efforts to promptly
notify Sublessee of any amounts of Sublessee Additional Rent which are due or
claimed by Master Lessor to be due, but in no event more than twenty-one (21)
days after Sublessor receives notice of same, and such amounts shall be payable
to Sublessor within ten (10) days of notice to Sublessee. Sublessee shall not be
liable for any late fees, charges or interest on amounts payable under the
Master Lease (other than Base Rent) if Sublessor fails to deliver such notice to
Sublessee five (5) days before the date on which such late fee or charge or
interest is to be initially assessed under the Master Lease.
-6-
(c) If Sublessee has actually paid to Sublessor any payments of
Sublessee Additional Rent for which Master Lessor refunds any amounts to
Sublessor, then Sublessor shall promptly pay to Sublessee the refunded amounts.
(d) Sublessee Additional Rent, Base Rent, and all other charges or sums
due under or by reason of this Sublease are collectively referred to herein as
"Rent" or as "rent." Sublessee's obligations to pay Rent as provided herein, and
Sublessor's obligation to refund overpayments to Sublessee under Section 3.3(c)
hereof, shall survive the termination or expiration of this Sublease.
3.4 Payments of Rent: Rent for any period during the Term hereof
which is for less than one month of the Term shall be a pro rata portion of the
monthly installment based on a 30-day month. Base Rent shall be payable without
notice or demand and all Rent shall be payable without any deduction, offset, or
abatement, in lawful money of the United States of America. Base Rent shall be
paid on the first day of each month from and after the first day of the first
full calendar month following the sixty-first (61st) day after the Commencement
Date (provided that the first fractional and full month' s Base Rent shall be
paid on the Commencement Date) directly to Sublessor at Hewlett-Packard Company,
c/o Cushman & ▇▇▇▇▇▇▇▇▇ of California, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or at such other address as may
be designated in writing by Sublessor.
-7-
4. Master Lease:
4.1 Incorporation of Master Lease: The terms, conditions and
respective obligations of Sublessor and Sublessee to each other under this
Sublease shall be the terms of the Master Lease, except as modified in this
Section 4, or as otherwise set forth in this Sublease, and except that: (a)
wherever in the Master Lease the word "Tenant" appears, for the purposes of this
Sublease, the word "Sublessee" shall be substituted; (b) wherever in the Master
Lease the word "Lease" appears, for the purposes of this Sublease, the word
"Sublease" shall be substituted; and ( c ) wherever in the Master Lease the word
"Landlord" appears, for the purposes of this Sublease, the word "Sublessor"
shall be substituted. Sublessee hereby acknowledges that it has read and is
familiar with the terms of the Master Lease and agrees that this Sublease is
subordinate and subject to the Master Lease, and that any termination of the
Master Lease shall likewise terminate this Sublease, except to the extent that
Master Lessor properly exercises its option under Section 23 of the Master Lease
to create a direct landlord-tenant relationship between Master Lessor and
Sublessee.
4.2 Time Allowances: Consents: With respect to any obligation of
Sublessee to be performed under this Sublease, and unless a time limit is
expressed herein, wherever the Master Lease grants to Sublessor a specified
number of days to perform its obligations under the Master Lease, except as
otherwise provided herein, Sublessee shall have the same number of days to
perform the obligation. including, without limitation, curing any defaults.
4.3 Master Lease Deletions: With respect to the rights and
obligations of Sublessor and Sublessee under this Sublease, all sections of the
Master Lease are included,
-8-
except for the following Sections which are deleted and are not operative as
between Sublessor and Sublessee: Sections 1; 2; 4; 5; 7; 11B; 11C; that portion
of the second sentence of Section 11D beginning with "upon receipt of written
notice..." and ending with "...repair the same promptly, but"; Sections 11E;
12B; 13; the second and third paragraphs of Section 17; Sections 18A; 18E;
subsection (ii) in the second paragraph of Section 19; the first and last
sentences of Section 20; Sections 23; 24; the second paragraph of Section 25;
the clause beginning with "including remediation" and ending with
"responsibility of Landlord" in Section 27(v); 28; 29B; 30; 31; that portion of
the first sentence of Section 32 beginning with "provided, that the holder..."
and ending with "...cure periods) under the terms of the Lease."; that portion
of the third sentence of Section 32 beginning with "provided, only that
Holder..." and ending with "...observed and performed by Tenant."; the second
paragraph of Section 32; Sections 37; 38; 39; 40; 41; 42; 43; 44 and Exhibits B,
C, D and E.
4.4 Master Lease Modification: With respect to the rights and
obligations of Sublessor and Sublessee under this Sublease, the sections of the
Master Lease which are operative as between Sublessor and Sublessee are modified
as follows:
(a) The references to "Landlord" in the following Sections shall mean
both "Sublessor" and "Master Lessor": Sections 3; 9; 10 (provided that under the
second "(ii)" in Section 10, security need be provided to Master Lessor only);
the first two references to Landlord in Section 11D; 12C ( except that the term
"Landlord's lender" shall only mean Master Lessor's lender); Sections 18B; 18C;
18D ( except that the term "Lender" shall only mean Master Lessor's lender);
18F; 20; 27 (provided that, except in the case of emergency, Sublessor shall use
-9-
reasonable efforts to minimize disturbances to Sublessee in the event Sublessor
enters the Premises under Section 27 of the Master Lease as incorporated
herein); 32; and 36.
(b) Section 11A is hereby amended to provide that the term "Tenant
Improvements" shall mean all improvements made to the Premises by any tenant or
occupant thereof, whether before the Term of this Sublease, or during the Term
of this Sublease, except for those Changes which are removed by Sublessor under
Section 11.3 of this Sublease.
(c) Section 29 A is hereby amended by changing both references to
"ten (10) days" to "twelve (12) days". It is the intention of both Sublessor and
Sublessee with respect to the amendment made herein, that Sublessee shall
receive from Sublessor an answer to its properly documented request (together
with funds in the amount of the fees allowed to Master Lessor) for consent with
respect to any proposed sublease or assignment within twelve (12) days after
submission of the request by Sublessee to Sublessor. Sublessor shall deliver any
such request for consent and all accompanying documentation and funds to Master
Lessor within three (3) days of Sublessor's receipt thereof.
(d) Section 8 is hereby amended by deleting the first sentence, and
by changing the reference to "Article 34" to "Article 15 of the Sublease," and
the references in Section 8 to "Commencement Date" shall mean the commencement
date of the Master Lease.
4.5 Damage: Condemnation: Should the Premises, or any other property be
damaged or destroyed by any cause, in whole or in part, or taken in whole or in
part by any governmental authority in condemnation or otherwise, Sublessor shall
have no obligation whatsoever to rebuild, repair or restore any of same. In any
of such events: (i) the Sublease
-10-
shall remain in effect so long as the Master Lease remains in effect, (ii) Rent
shall be abated as between Sublessor and Sublessee in the same manner, if any,
as it is abated under the Master Lease, (iii) this Sublease shall terminate if
and when the Master Lease is terminated; (iv) Sublessor shall have no
obligations except as provided in Section 18.2, below; and (v) within five (5)
business days after Sublessor's receipt of written request from Sublessee,
Sublessor shall deliver notice to Master Lessor exercising Sublessor's right to
terminate the Master Lease or to ▇▇▇▇▇ any rent which is subject to abatement
under the Master Lease by reason of damage, destruction and condemnation. Absent
such written notice from Sublessee, Sublessor shall not exercise any of its
rights to terminate by reason of casualty or condemnation. Except as provided in
Section 18.2, below, Sublessor shall have no obligation or responsibility to
enforce its rights to so terminate the Master Lease, to ▇▇▇▇▇ Rent, or to
enforce any rights or obligations (including enforcement of Master Lessor's
obligations to rebuild), and shall in no event be required to make a claim
against or file a suit against Master Lessor should Master Lessor refuse to
terminate the Master Lease or ▇▇▇▇▇ Rent. As further described in Section 18.2,
below, Sublessee may bring an action in Sublessor's name against Master Lessor
to enforce any such rights, provided that Sublessor shall have no expense or
cost in connection therewith, and Sublessee shall indemnify, defend and hold
Sublessor harmless from and against any and all claims, actions, expenses,
costs, liabilities, or demands which arise from or are in any way connected with
any action or claim against Master Lessor for refusal to terminate the Master
Lease or ▇▇▇▇▇ Rent in connection with a casualty or condemnation. Sublessor
shall deliver to Sublessee any written notices from Master Lessor under Sections
28 or 30 of the Master Lease within three (3) days of receipt.
-11-
4.6 Use: Sublessee may use the Premises only for those uses permitted
under the Master Lease, and in no event for any use prohibited or restricted by
the Master Lease or by law. Sublessee shall not commit or permit to be committed
on the Premises any act or omissions which shall violate any term or condition
of the Master Lease. Notwithstanding the foregoing, and so long as permitted
under the Master Lease, Sublessor expressly consents to the occupancy of a
portion of the Premises by Imedia Semiconductor Corporation, a Delaware
corporation ("Imedia"), a wholly owned subsidiary of Sublessee so long as such
occupancy is in accordance with the terms of this Sublease, and only so long as
Imedia remains a majority owned subsidiary of Sublessee. Sublessee shall be
fully responsible to Sublessor for any breach of this Sublease or the Master
Lease by Imedia, as if such breach were committed by Sublessee.
5. Right to Cure Defaults:
5.1 Sublessor's Rights: If Sublessee fails to pay any sum of money
due hereunder to Sublessor, or fails to perform any other act on its part to be
performed hereunder, then Sublessor may, but shall not be obligated to, after
passage of any applicable notice and cure periods, make such payment or perform
such act. All such sums paid, and all reasonable costs and expenses of
performing any such act, shall be deemed Rent payable by Sublessee to Sublessor
upon demand, together with interest thereon at the rate specified in Section 46D
of the Master Lease ("Interest Rate"), from the date of the expenditure until
repaid.
5.2 Sublessee's Rights: Except in the case of emergency, in which
case no notice shall be required, if Sublessor fails to perform any act on its
part to be performed by Sublessor hereunder, then Sublessee may, but shall not
be obligated to, after ten (10) business
-12-
days following the date of Sublessee's written notice to Sublessor identifying
the failure, and subject to the terms of the Master Lease, perform such act. All
such sums paid, and all reasonable costs and expenses of performing any such
act, shall be payable promptly by Sublessor to Sublessee, together with interest
thereon at the Interest Rate from the date of the expenditure until repaid.
6. Maintenance: Allocation of Cost With Adjacent Building:
6.1 Maintenance: Under Section 11A of the Master Lease, Sublessor Is
required to have in place certain service contracts and to perform certain
maintenance, repair And replacement of the roof, landscaping, HAVC systems,
elevator and parking areas (which Service contracts and maintenance are
collectively called, the "Maintenance"). During the Term Of this Sublease,
Sublessor shall continue to perform the Maintenance, and shall retain the
services of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ to manage and administer Sublessor's performance
of the Maintenance. Sublessor's costs (without ▇▇▇▇-up) in performing the
Maintenance and in retaining ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ during the Term of this
Sublease shall be paid by Sublessee to Sublessor as Rent (in addition to
Sublessee Additional Rent), shall be payable by Sublessee not more often than
once per month, and within ten (10) business days after Sublessee's receipt of
written billing from Sublessor. The cost of retaining ▇▇▇▇▇▇▇ & Wakefield shall
not exceed $42,000 per year for 2002, and thereafter increases, if any, shall be
no more than 3% per annum. At any time on 30 days' notice, Sublessee may require
that Sublessor change the property manager. Sublessor shall not make any capital
replacements in connection with the performance of the Maintenance which cost in
excess of $25,000 without the prior written consent of Sublessee, which consent
shall not be unreasonably withheld. If Sublessee does not reject a
-13-
proposed capital replacement in writing within ten (10) business days of receipt
of Sublessor's proposed expenditure, then Sublessee shall be deemed to have
consented. The manager shall deliver to both the Suplessor and Sublessee monthly
reports regarding the Maintenance. The provisions of this Section 6 shall in no
way limit Sublessee's obligations to maintain, repair or replace all or any
portions of the Premises to the extent required under this Sublease. To the
extent that Master Lessor is performing all or any part of the Maintenance, then
Sublessor shall not be required to do so for so long as the Master Lessor
continues such Maintenance. When Master Lesser is performing all or any part of
the Maintenance, Sublessee shall pay as Rent the costs thereof which are billed
to Sublessor.
6.2 Adjacent Building: Sublessee acknowledges that Master Lessor has
built a second building in the Project. Under Section 11C of the Master Lease,
shared maintenance costs between the second building and the Premises are
allocated by the mutual agreement of Master Lessor and Sublessor; provided that
from and after the date hereof, Sublessor shall not voluntarily agree to any
changes to the allocation of such maintenance costs without the prior written
consent of Sublessee. All such maintenance costs allocated to the Premises are
to be included in Sublessee Additional Rent.
7. Broker: Sublessor and Sublessee each represent to the other that they
have dealt with no real estate brokers other than Cornish & ▇▇▇▇▇ (representing
Sublessee) and ▇▇▇▇▇▇▇ & Wakefield of California, Inc. (representing Sublessor).
Each party agrees to indemnify, defend, and hold the other party harmless from
and against all claims or brokerage commissions, finder's fees or other
compensation made by any agent, broker, salesman or finder other than Cornish &
▇▇▇▇▇ and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇. as a consequence of said party's actions
-14-
or dealings with such other agent, broker, salesman, or finder. Pursuant to the
terms and conditions of a separate agreement, Sublessor shall pay in full its
brokerage commission to ▇▇▇▇▇▇▇ & Wakefield of California, Inc. in connection
with this Sublease. Sublessor agrees to indemnify, defend and hold Sublessee
harmless from and against all claims for a commission by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ in
connection with this Sublease. ▇▇▇▇▇▇▇ & Wakefield shall pay a portion of the
commission to Cornish & ▇▇▇▇▇ under a separate agreement between them, and
neither party hereunder shall be responsible to pay any commission to Cornish &
▇▇▇▇▇.
8. Representations and Warranties:
8.1 By Sublessor: As of the Execution Date, Sublessor represents and
warrants to Sublessee that: (a) the copy of the Master Lease which is attached
hereto as Exhibit A is a true, correct and complete copy thereof; (b) the Master
Lease is in full force and effect and constitutes the entire agreement of Master
Lessor and Sublessor relating to the lease of the Premises; (c) Sublessor has
received no written notice that there currently exists any event of default
under the Master Lease or that there currently exists an event which would
constitute an event of default under the Master Lease but for the giving of any
required notice and passage of any applicable grace or cure period; (d) the
person or persons executing this Sublease for Sublessor are fully authorized to
so act and no other action is required to bind Sublessor to this Sublease; (e)
Sublessor has the right and power to execute and deliver this Sublease and to
perform its obligations hereunder, subject only to Master Lessor's consent and
the provisions of the Master Lease; (f) Sublessor is duly organized and in good
standing in its state of formation and is authorized to conduct business in the
state where the Premises are located; (g) Sublessor holds the entire tenant's
interest in the Premises under the Master Lease free and clear of any
-15-
liens, claims, mortgages, charges or encumbrances, subleases and occupancies of
the Premises which were created by or for Sublessor, other than matters to which
the tenancy of Sublessor, as tenant, under the Master Lease, is or may be
subordinate, and other than matters of public record; (h) Sublessor has not
caused the presence, use, generation, release, discharge, storage, disposal or
transportation of any Hazardous Material at the Premises in violation of the
Master Lease; (i) Sublessor has received no uncured notice that it is not
current on all of its payments under the Master Lease; and 0) VeriFone, Inc.
duly assigned its rights and obligations under the Master Lease and Sublessor
duly assumed such rights and obligations under the Master Lease, pursuant to an
agreement that was valid and binding on Sublessor.
8.2 By Sublessee: Sublessee represents and warrants to Sublessor as
of the Execution Date that: (a) Sublessee has read and reviewed the provisions
of the attached. Master Lease; (b) Sublessee has the right and power to execute
and deliver this Sublease and, subject to receipt of the BOD Consent (as defined
below) to perform its obligations hereunder; (c) the person or persons executing
this Sublease for Sublessee are fully authorized to so act and no other action
is required to bind Sublessee to this Sublease; and (d) Sublessee is duly
organized and in good standing in its state of formation and is authorized to
conduct business in the state where the Premises are located.
8.3 Survival: New Information: Sublessor's and Sublessee's
representations and warranties in this Section 8 shall be true and correct as of
the Execution Date, and shall survive for a period of twelve (12) months after
the expiration of the Term of this Sublease, or any earlier termination hereof.
-16-
If prior to the Commencement Date, information or notices come to the attention
of Sublessor or Sublessee such that anyone or more of the representations or
warranties contained in Section 8 could not be made as of the Commencement Date,
each shall notify the other of such information (the "New Information"). Upon
receiving the New Information, the recipient shall have the right to terminate
this Agreement within ten (10) business days after receipt of the New
Information by delivering written notice of same to the other. Failure to so
deliver such notice shall be deemed a waiver of such recipient's right to so
terminate, and this Sublease and the relevant representation or warranty shall
be deemed to be amended in accordance with the New Information. Neither party
shall be in breach of this Sublease or any of its warranties as a result of any
New Information, and neither party shall have any liability to the other or
otherwise for such New Information, or for any termination of this Sublease as a
result thereof.
9. Possession: Sublessor shall use its good-faith efforts to deliver
possession of the Premises to Sublessee (subject to Sublessor's right to enter
the Premises until June 1, 2002, to perform the work described on Exhibit C, as
described in Section 2.3, above) within three (3) business days after the
satisfaction of both of the conditions precedent contained in Section 10, below.
If Sublessor is unable to deliver possession on or before the~ third business
day after satisfaction of said conditions, then this Sublease shall terminate,
and shall be of no force or effect, and neither party shall have liability to
the other by reason of the failure to deliver possession. On such termination,
Sublessor shall promptly return to Sublessee any payments made to Sublessor
prior to the termination, including, but not limited to, first month's rent and
the Letter of Credit (as defined below).
-17-
10. Condition Precedent: This Sublease and Sublessor's and Sublessee's
obligations hereunder are conditioned upon and subject to receipt of: (a) the
written consent of Master Lessor to this Sublease on or before April 15, 2002,
in a form reasonably acceptable to both Sublessor and Sublessee; and (b)
Sublessee obtaining approval of this Sublease by Sublessee's Board of Directors
on or before April 15, 2002 (the "BOD Consent"). If such consents of Master
Lessor and Sublessee's Board of Directors are not obtained on or before April
15, 2002, this Sublease shall be void and of no force or effect, and neither the
Sublessor nor Sublessee shall have any rights or obligations hereunder.
Sublessor shall have no obligation to take any action (other than delivery of
this Sublease to Master Lessor for. consent) or to expend any sums in order to
obtain Master Lessor's consent (other than the fees permitted to Master Lessor
under the Master Lease for its review and consent to this Sublease), and shall
have no liability for failure of Master Lessor to provide consent. Sublessee
shall provide such financial or other information as may be reasonably requested
by Master Lessor in connection with Master Lessor's consideration of this
Sublease for its consent.
11. Delivery of Premises/ As-Is:
11.1 No Warranties: Except as provided in Section 8.1(h), above and
in Section 11.2, below, Sublessor has made no representations or warranties of
any kind, whether express or implied, as to the condition of the Premises, the
Building, the Equipment (as defined in Section 14, below) or any other property,
or the suitability of the Premises, the Building, or the Equipment or any other
property tor Sublessee's activities. Sublessee acknowledges that prior to
signing this Sublease, it has had the opportunity to inspect and research the
Building, the Premises, and the Equipment and to contact the Master Lessor in
order to independently satisfy
-18-
itself as to the condition of same, including without limitation, the presence
or absence of Hazardous Materials, provided however, except as set forth in
Section 8.3, above, under no circumstances shall Sublessee's opportunity to or
actual inspections of the Building, the Premises and Equipment negate, vitiate,
modify or limit Sublessor's or Sublessee's representations or indemnification
obligations set forth in this Sublease. Except as specifically provided in
Section 11.2, below, and except for any Changes listed on Exhibit C attached
hereto which are to be removed by Sublessor under Section 11.3, below, and for
any work listed on Exhibit C, as between Sublessor and Sublessee, Sublessee
enters and agrees to use the Premises and the Equipment at its own risk, "as
is", and subject to any defects (whether patent or latent, known or unknown).
Except as expressly set forth in Section 8.1, above, and except for any third
party warranties which may be assigned to Sublessee under Section 11.5, below,
Sublessee waives and disclaims all warranties with respect to the Premises and
the Building, and the Equipment, whether express or implied, and assumes the
risk that its inspections of the Premises and inquiry of the Master Lessor did
not reveal adverse or unexpected conditions. As used in this Sublease, the term
"Hazardous Materials" or "Hazardous Substances" means any and all substances,
chemicals, wastes, sewage, materials or emissions which are now or hereafter
regulated, controlled, prohibited or otherwise affected by any local, state or
federal statute, ordinance, code, rule, regulation, order, decree, permit or
other law now or hereafter in effect including, without limitation, (a) any
substance defined as a "hazardous substance", "hazardous material", "hazardous
waste", "toxic substance", or "air pollutant" in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended ("CERCLA"), 42 U.S.C.
Section 9601, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., as amended, the Resource Conservation and Recovery
..Act, as amended ("RCRA"), 42 U.S.C. Section
-19-
6901, et seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251, et seq., or the Clean Air Act, as amended, 42 U.S.C. Section 7401,
et seq.; and (b) any substance the presence of which on any part of the
Premises, the Building, the Equipment, or any other property causes or threatens
to cause a nuisance upon any part of the Premises, the Building, the Equipment,
or any other property or to adjacent properties or poses or threatens to pose a
hazard to the health or safety of human beings.
11.2 Building Systems: The heating, ventilating and air
conditioning, mechanical, elevator, plumbing, and electrical systems
(collectively, the "Building Systems") located in the Premises shall be
delivered to Sublessee in good working condition on the earlier of the Early
Occupancy Date or the Commencement Date, provided however, that Sublessor shall
be responsible and liable for any damage caused to the Building Systems caused
by Sublessor, its employees, agents, contractors, and invitees during the period
required for Sublessor to complete the work listed on Exhibit "C", and Sublessee
shall be responsible and liable for the Building Systems as set forth in this
Sublease.
11.3 Changes: Pursuant to Section 8 of the Master Lease, the
Premises may be required to be restored to the condition in which it existed as
of the commencement date of the Master Lease. Attached hereto as Exhibit "D" is
a list of the changes (collectively, the "Changes") that are currently known to
have been made to the Premises since the Master Lease commencement date.
Sublessee shall be responsible for surrendering the Premises to Sublessor on
expiration or termination of this Sublease in the condition required under the
Master Lease, except that Sublessor shall be responsible for removing those
Changes which are listed on Exhibit "C", and except that Sublessor shall be
responsible for the cost of Errors to the extent
-20-
provided in this Section 11.3, below. Sublessee shall be responsible for
removing and restoring all of the Changes except for those listed on Exhibit
"C", and except for the cost of Errors over the aggregate amount of $25,000 as
provided in this Section 11.3, below. Notwithstanding anything to the contrary
contained herein, if after the Commencement Date it is determined that there
were Changes in addition to or different from those listed on Exhibit "D", or if
any of the Changes were constructed in violation of laws (collectively, the
"Errors"), then to the extent that the aggregate additional costs of removal and
restoration of the Errors exceeds $25,000, Sublessor shall be responsible, at
Sublessor's election, to restore the Errors on surrender of the Sublease, or to
pay to Sublessee on surrender of this Sublease the reasonable costs associated
with any restoration of the Premises due to such Errors. Sublessor's obligations
with respect to the Errors, and Sublessee's obligations to restore the Premises
as required by this Sublease shall survive the termination or expiration of this
Sublease.
11.4 Hazardous Materials Disclosure: Sublessee acknowledges that it
has received a copy of the Phase I Environmental Assessment Report for the
Premises prepared by E2C, Inc., dated March 2, 1996. Sublessee and its experts
have had ample opportunity to review the report and Sublessee has satisfied
itself as to the environmental conditions of the Premises and the Building and
the suitability of such conditions for Sublessee's use. Notwithstanding anything
to the contrary contained herein, and except as provided in Section 8.3, above,
the terms of this Section 11.4 shall not negate, vitiate, modify or limit in any
way Sublessor's representation in Section 8.1 (h), above, or the indemnification
responsibility of Sublessor under Section 19.1, below.
-21-
11.5 Assignment of Warranties: If Sublessor holds any written third
party warranties ( other than from Master Lessor) regarding the Premises or the
Equipment, then Sublessor shall assign them, without recourse or warranty, to
the extent permitted by law or the warranty, to Sublessee, provided that no such
assignment shall deprive Sublessor of the right to also enforce the warranty.
12. Letter of Credit: On or before the Commencement Date, to secure
Sublessee's performance under this Sublease, Sublessee shall deliver to
Sublessor an irrevocable, clean, unconditional sight letter of credit (the
"Letter of Credit") in favor of Sublessor as beneficiary, in the amount of Three
Hundred Seventeen Thousand One Hundred Seventy-One Dollars and Twenty-Five Cents
($317, 171.25). The Letter of Credit shall be issued by an FDIC insured bank of
national standing which is federally insured, which is approved in advance in
writing by Sublessor, and which has an office where presentation and payment can
be made in either San Mateo or Santa ▇▇▇▇▇ County, California. The Letter of
Credit: (i) shall have an expiration date of no earlier than April 1, 2003 (and
the final Letter of Credit or renewal of Letter of Credit shall expire no
earlier than December 9,2009); (ii) shall contain no conditions for payment
other than presentation of the Letter of Credit by Sublessor at the issuing
bank's office in San Francisco, California, together with a statement from
Sublessor and the amount to be drawn stating that either (1) Sublessee is in
default under this Sublease, or (2) the Letter of Credit expires in 30 days or
less and has not been renewed; (iii) shall be automatically renewed for
successive one year periods unless, at least thirty (30) days prior to any such
date of expiration, the issuing bank gives written notice to Sublessor that the
Letter of Credit will not be renewed, in which case the Sublessor shall have the
right to draw on the Letter of Credit in full; and (iv) shall
-22-
permit partial draws. If Sublessee does not deliver the Letter of Credit to
Sublessor on or before the Commencement Date (or prior to early occupancy under
Section 2.3, above), this Sublease shall be null and void and Sublessee shall
have no right to occupy the Premises. Sublessor shall have the right to draw on
the Letter of Credit: (a) on the occurrence of any default of Sublessee under
this Sublease; or (b) if the Letter of Credit is not renewed, and there are less
than thirty (30) days remaining before its expiration. In the event of a draw
resulting from a Sublessee default, Sublessor shall have the right to draw all
or any portion of the Letter of Credit, and shall have the right, but not the
obligation, to apply any sums so drawn to cure any Sublessee default and pay
itself any damages arising from any Sublessee default and to apply amounts drawn
to any present or future amounts due under this Sublease. In the event of a draw
by reason of imminent expiration of the Letter of Credit, Sublessor shall have
the right to draw the full amount of the Letter of Credit, and to apply the
amounts drawn to any present or future amounts due under this Sublease. The
amounts drawn, to the extent not applied to defaults, shall be promptly returned
to Sublessee upon Sublessee's delivery to Sublessor of a Letter of Credit
meeting the requirements of this Section 12, which Letter of Credit shall not
expire until the earlier of (1) one (I) year from the date of delivery to
Sublessor; or (2) forty (40) days after the Expiration Date. If Sublessor is
holding any amounts drawn under a Letter of Credit on expiration or termination
of this Sublease, Sublessor shall return to Sublessee all amounts remaining
after cure of all defaults under this Sublease in compliance with applicable
laws.
13. Assignment or Subletting Consideration:
13.1 Master Lessor Approval: In addition to the portions to Section
29 of the Master Lease which are incorporated herein, any assignment, sublease,
hypothecation, transfer or permission for a third party to use all or any
portion of the Premises is subject to
-23-
Master Lessor's consent and to Master Lessor's right to terminate the Master
Lease as to the portion (or all) of the Premises subject to such request, all as
provided in Section 29 of the Master Lease. If Master Lessor terminates the
Master Lease as to the portion (or all) of the Premises in connection with a
request to sublease or assign, then this Sublease shall terminate in like
manner, concurrent with the Master Lease termination. If Master Lessor withholds
its consent to a sublease, assignment or other transfer, then the sublease,
assignment or other transfer shall not be permitted, and Sublessor shall have no
liability or responsibility for Master Lessor's refusal to consent. No
assignment or subletting shall relieve Sublessee of any obligation under this
Sublease. Any assignment or subletting which conflicts with the provisions of
this Sublease or of the Master Lease shall be void.
13.2 Bonus Rent: In connection with any sublease or assignment,
Sublessee shall pay to Sublessor any and all amounts due to or claimed due by
Master Lessor under Section 29B of the Master Lease as and when due under the
Master Lease. Sublessee shall provide to Sublessor any and all information
regarding the sublease or assignment which is necessary or desirable to
determine the amounts due to Master Lessor under Section 29B.
13.3 Effect of Default: In the event of Sublessee's default (beyond
any applicable notice and cure periods), Sublessee hereby assigns all rents due
from any assignment or subletting to Sublessor as security for performance of
its obligations under this Sublease and Sublessor may collect such rents at any
time after default without requiring any written notice from Sublessee. The
termination of this Sublease due to Sublessee's default shall not automatically
terminate any assignment or sublease then in existence; at the election of
Sublessor, such assignment or sublease shall survive the termination of this
Sublease and, upon
-24-
such election, the assignee or subtenant shall attorn to Sublessor and Sublessor
shall undertake the obligations of the Sublessee under the sublease or
assignment; provided the Sublessor shall not be liable for prepaid rent,
security deposits or other defaults of the Sublessee to the subtenant or
assignee, or any acts or omissions of Sublessee, its agents, employees,
contractors or invitees.
14. Furniture: Equipment: The Premises shall be delivered to Sublessee
with the property and equipment listed on Exhibit B attached hereto (together,
the "Equipment"). On the Commencement Date, Sublessor shall transfer all of its
right, title and interest in the Equipment, free and clear of all liens and
encumbrances, to Sublessee under the ▇▇▇▇ of Sale attached hereto as Exhibit
"B-1." Sublessee acknowledges that: (1) the Equipment is transferred to
Sublessee on an "as-is" basis, as provided in Section 11, above; (2) that
Sublessor shall have no obligation to repair or replace the Equipment; (3) it
shall be Sublessee's sole responsibility and obligation to maintain repair and
replace the Equipment; and (4) the Equipment does not include any software for
operation of the security system, whether or not software is necessary to
operate it, and Sublessee shall be solely responsible for paying for any
software costs or licensing fees for software to be used in connection with the
security system. On expiration of the Term of this Sublease or on any other
termination hereof, Sublessee shall be solely responsible for removal of all
Equipment from the Premises and restoration in connection therewith in
accordance with the terms of the Master Lease.
15. Holding Over: Any holding over after the termination or Expiration
Date with Sublessor's consent, shall be construed to be a tenancy at sufferance,
terminable at will by Sublessor, and Sublessee shall pay Base Monthly Rent to
Sublessor at a rate equal to one hundred thirty-three percent (133%) of the Base
Monthly Rent due in the month preceding the
-25-
termination or Expiration Date plus all other amounts payable by Sublessee under
this Sublease. Any holding over shall otherwise be on the terms and conditions
herein specified. Sublessee shall indemnify, defend, and hold Sublessor harmless
from all loss or liability (including, without limitation, any loss or liability
resulted from any claim against Sublessor made by any succeeding tenant or by
Master Lessor) resulting from Sublessee's failure to timely surrender the
Premises to Sublessor and losses to Sublessor or Master Lessor due to lost
opportunities to lease the Premises to succeeding tenants.
16. Surrender: At the end of the Sublease Term, or on any termination of
this Sublease, Sublessee shall be required to surrender the Premises to
Sublessor, at Sublessee's sole cost in the same configuration and same
condition. as is required under the Master Lease, including without limitation,
Section 8 thereof, provided that Sublessor shall remove the Changes listed on
Exhibit "C", and Sublessor shall be responsible for removing, or for paying the
cost of removing any Errors in accordance with Section 11.3, above. Without
limiting the foregoing, it is understood and agreed by Sublessor and Sublessee
that if any Alterations or improvements (irrespective of whether installed
before or after the Commencement Date of this Sublease) are required by Master
Lessor to be removed or if any conditions are required by Master Lessor to be
restored in order to return the Premises to its condition as of the commencement
date of the Master Lease (including without limitation, restoration of the 29
private offices, and the reversal of all of the Changes listed on Exhibit D
attached hereto except for those listed on Exhibit C and except for Errors),
then all such responsibility and cost shall be born by Sublessee. Sublessee may
be relieved of-any of the foregoing surrender requirements only by way of a
release by Master Lessor of all Sublessor's obligations under the Master
-26-
Lease regarding condition of the Premises on surrender, in form and substance
reasonably acceptable to Sublessor.
17. Parking: Sublessee shall have the right to such parking privileges
as are held by Sublessor under the Master Lease. In this regard, Sublessee
acknowledges: (1) that it has reviewed the Declaration of Reciprocal Easement (
dated October 10, 1997, recorded October 23, 1997 as Instrument Number 13905495,
Official Records Santa ▇▇▇▇▇ County) and the amendment thereto (recorded
December 29, 1999 as Instrument Number 15104394, Official Records Santa ▇▇▇▇▇
County), and agrees that its subtenancy under this Sublease is subject to the
terms and conditions of said instruments; and (2) pursuant to the March 22, 2002
letter from Master Lessor, that there are no longer 480 on-grade parking spaces
available to Sublessor under the Master Lease, that 38 exclusive spaces for
Sublessor are now located in the parking garage adjacent to the building
currently occupied by Brio, and that the tenant of the building currently
occupied by Brio has the right to use 27 exclusive parking spaces in the
on-grade parking area.
18. Covenant to Perform Under the Master Lease:
18.1 Sublessor covenants that so long as Sublessee is not in default
under this Sublease beyond any applicable notice and cure period, Sublessor
shall pay, as when due, all sums due and payable under the Master Lease and
shall not otherwise cause a default under the Master Lease.
18.2 At the request of Sublessee, Sublessor shall reasonably
cooperate with Sublessee in enforcing any of the rights of the tenant under the
Master Lease or of the obligations of Master Lessor under the Master Lease
(irrespective of whether or not the relevant
-27-
portions of the Master Lease are incorporated in this Sublease), provided that
Sublessor's cooperation shall be at no cost or expense to Sublessor, and further
provided that Sublessor shall have no liability or responsibility whatsoever for
failure to enforce such rights or obligations, for failure of Master Lessor to
fulfill its obligations under the Master Lease or to initiate any enforcement
action or activity. Sublessee may bring an action in Sublessor's name against
Master Lessor to enforce any such rights, provided that Sublessor shall have no
expense or cost in connection therewith, and Sublessee shall indemnify, defend
and hold Sublessor harmless from and against any and all claims, actions,
expenses, liabilities, costs or demands which arise from or are in any way
connected with any such action or claim brought in Sublessor's name against
Master Lessor. In addition to or as an alternative to such an action, Sublessee
may approach the Master Lessor face to face, by telephone, or by delivery of
notices or demands directly.
18.3 Sublessee covenants that it will not in any way cause any
default under the Master Lease.
18.4 Sublessor covenants that it shall not amend, modify or change
the Master Lease (unless required to do so under the Master Lease) or terminate
the Master Lease without the prior written consent of Sublessee.
18.5 Sublessee covenants that it understands and agrees that this
Sublease is at all time subordinate and subject to the terms of the Master
Lease, and that it has reviewed the entire Master Lease which is attached
hereto.
-28-
18.6 Sublessor covenants not to pledge or otherwise use its interest
in this Sublease as collateral for any obligation.
19. Indemnity:
19.1 Sublessor Indemnity: Sublessor shall indemnify, defend and hold
Sublessee harmless from and against any and all claims, actions, expenses,
costs, or demands which arise from or are in any way connected with (a) any
misrepresentations by Sublessor in Section 8.1 of this Sublease; (b) Sublessor's
negligent or willful misconduct on or about the Premises from the commencement
date of the Master Lease until the termination or expiration of this Sublease;
(c) any breach by Sublessor of its covenant contained in Section 18.1, above;
(d) Sublessor's breach of this Sublease; or (e) any injury to any person in or
about the Premises which occurred after the commencement date of the Master
Lease, and before the Commencement Date or, the Early Occupancy Date, if
applicable (provided that liability for any injury to any person in or about the
Premises between the Early Occupancy Date and the Commencement Date shall be
equitably proportioned between Sublessor and Sublessee).
19.2 Sublessee Indemnity: Sublessee shall indemnify, defend and hold
Sublessor harmless from and against any and all claims, actions, expenses,
costs, or demands which arise from or are in any way connected with (a) any act
or omission of Sublessee, its employees, officers, directors, invitees or
permittees which in any way violates any term or provision of this Sublease or
the Master Lease (including without limitation the placement of Hazardous
Materials by Sublessee at the Premises in violation of the Master Lease); (b)
any misrepresentation by Sublessee in Section 8.2 of this Sublease; (c) any
breach by Sublessee of its covenant contained in Section 18.3, above; or (d) any
injury to any person in or about the
-29-
Premises which occurs after the Commencement Date (provided that liability for
any injury to any person in or about the Premises between the Early Occupancy
Date and the Commencement Date shall be equitably proportioned between Sublessor
and Sublessee).
20. Quiet Enjoyment: Subject to the terms and conditions of the Master
Lease, upon Sublessee's faithful and timely performance of all of the terms and
covenants of this Sublease, Sublessee shall quietly have and hold the Premises
for the Term of this Sublease on the terms and conditions contained in this
Sublease.
21. Transfer of Sublessor's Interest: Sublessor agrees that it shall
remain liable under this Sublease irrespective of the transfer (including, but
not limited to a sale or assignment) of all or any of its interest hereunder.
22. Miscellaneous:
22.1 Notice from Master Lessor: Sublessor and Sublessee shall each
promptly deliver to the other copies of any notices or documents (including,
without limitation, any bills or invoices from Master Lessor for the payment of
Sublessee Additional Rent) received by them from Master Lessor or any other
person or entity relating to the Premises. Other than the payment of Base Rent,
and other than as a result of Sublessee's default under this Sublease or its
violation of any term or provision of the Master Lease, Sublessee shall not be
responsible for the payment of any other sums due Master Lessor unless and until
Sublessor or Master Lessor has provided Sublessee notice of such sums being due
and payable.
22.2 Entire Sublease; Amendment: This Sublease (which includes all
exhibits hereto) embodies the entire Sublease and understanding between the
parties relating to
-30-
the subject matter hereof, and all prior negotiations, agreements and
understandings, oral or written, are hereby revoked, cancelled and rescinded and
are all merged herein and superseded hereby. Any amendment to this Sublease,
including, without limitation, any oral modification supported by new
consideration, must be reduced to writing and signed by both parties in order to
be effective.
22.3 Counterparts: Waiver: This Sublease may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument. Any waiver of the
performance of any covenant, condition or promise by either party, in order to
be effective, must be in a writing signed by the party who has allegedly waived
the covenant, condition or promise in question.
22.4 Severability: Should any part, term or provision of this
Sublease or any document required herein to be executed or delivered be declared
invalid, void or unenforceable, all remaining parts, terms and provisions hereof
shall remain in full force and effect and shall in no way be invalidated,
impaired or affected thereby.
22.5 Interpretation: The neuter gender includes the feminine and
masculine, and vice-versa, and the singular number includes the plural. The word
"person" includes, in addition to any natural person, a corporation,
partnership, firm, trust, association, governmental body or other entity.
Whether expressly stated or not in this Sublease, any indemnification, release,
waiver, hold harmless, covenant to protect or covenant to defend made in this
Sublease by one party in favor of the other party shall benefit not only such
other party but each and all of its officers, directors, agents, employees,
successors and assigns. The captions of the sections of this Sublease are for
convenience and reference only, and the words
-31-
contained therein shall in no way be held to explain, modify, or aid in the
interpretation, construction or meaning of the provisions of this Sublease.
22.6 Attorneys' Fees: In the event that any suit in law or equity,
arbitration or other formal proceeding is instituted by either party to enforce
or interpret any part of this Sublease, or to recover damages for breach
thereof, the prevailing party shall be entitled to recover costs of suit
incurred therein, and to also recover as an element of such ▇▇▇▇▇ (or as
damages, only if not allowed as costs), a reasonable attorney fee to be fixed by
the presiding tribunal. A party not entitled to recover costs shall not recover
attorney fees. No sum of attorney fees shall be included in any computation of
the amount of judgment or award for purposes of determining whether a party is
entitled to recover costs of attorney fees.
22.7 Construction: The parties hereto agree that each party and its
counselor advisor have reviewed and revised this Sublease and that any rule
of-construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Sublease or any
amendments or exhibits hereto.
22.8 Notice: Any notice, demand, request, consent, approval, or
communication that either party desires or is required IO give to the other
party or any other person shall be in writing and served personally, sent by
certified first-class mail, return receipt requested or sent by a commercial
overnight courier service (e.g. FedEx). Any notice, demand, request, consent,
approval or communication that either party desires or is required to give to
the other party shall be addressed to the other party at the address set forth
below:
-32-
If to Sublessee:
Terayon Communication Systems, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Facilities Department
With a copy to:
Terayon Communication Systems, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal Department
If to Sublessor:
Hewlett-Packard Company
1501 Page Mill Road
MS 1001
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-33-
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Either party may change its address by notifying the other party of the change
of~address. Notices shall be effective when received or refused, as evidenced by
return receipt or courier's receipt slip.
22.9 Limitation of Liability: No personal liability or personal
responsibility is assumed by, or shall at any time be asserted or enforceable
against, Sublessor's or Sublessee's respective directors, officers, employees,
consultants or advisors on account of this Sublease or on account of any
covenant, undertaking or agreement of Sublessor or Sublessee contained in this
Sublease.
22.10 Consent of Master Lessor: Whenever the Master Lease requires
the consent of Master Lessor, Sublessor shall use its reasonable efforts to
assist Sublessee in obtaining Master Lessor's consent (provided that all such
assistance shall be at no cost, expense or liability to Sublessor, provided that
Sublessor shall pay the $1,000 fee to Master Lessor regarding the approval of
this Sublease).
22.11 Signage: Provided that Master Lessor has provided its consent,
and provided that all signs comply with all applicable laws, Sublessee shall
have the right to
-34-
place signs at the Premises in accordance with Section 20 of the Master Lease,
as modified herein.
22.12 Owner's Policy: In the event Sublessor is entitled to any
proceeds arising from the Owner's Policy during the Term of this Sublease, such
proceeds shall be divided equally between Sublessor and Sublessee, provided that
to the extent any proceeds are reimbursement of expenses, such proceeds shall be
retained by the party incurring the expense.
22.13 Conflict: In the event of any conflict between the terms and
conditions of this Sublease and the Master Lease, then as between Sublessor and
Sublessee the terms and conditions of this Sublease shall control.
IN WITNESS WHEREOF, the parties have executed this Sublease as of the
day and year first above written.
SUBLESSEE: TERAYON COMMUNICATIONS SYSTEMS, INC.,
a Delaware corporation
By:
-35-
SUBLESSOR: HEWLETT PACKARD COMPANY,
a Delaware corporation
BY:______________________________
______________________________
______________________________
-36-