AGREEMENT OF SUBLEASE
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THIS AGREEMENT OF SUBLEASE is made as of the 26 day of October, 1998, by
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and between AMP Incorporated, a Pennsylvania corporation ('Sublandlord'), having
an office at 470 Friendship Road, Harrisburg, PA, and Sonic Systems, Inc., a
California corporation ('Subtenant'), having an office at 575 North Pastoria
Ave., Sunnyvale, CA 94086.
WITNESS
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WHEREAS, by Agreement of Lease dated March 5, 1997, as amended (the
'Lease') by and between Marie A. Batton, Trustee of the W.F. Batton Trust UTA
dated January 12, 1988, as amended ('Landlord') and Sublandlord, Landlord leased
to Sublandlord certain real property commonly referred to as 5400 Betsy Ross
Drive, Santa Clara, California, consisting of approximately 3.5 acres of land
together with the building (the 'Building') and other improvements constructed
thereon, as more particularly described in the Lease (the 'Premises'). A copy of
the Lease is attached hereto as Exhibit A and made a part hereof; and
WHEREAS, Sublandlord desires to sublease to Subtenant and Subtenant desires
to sublease from Sublandlord a portion of the Premises on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the parties agree as follows:
1. Subleasing of Subpremises. Subject to the written consent of the
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Landlord, Sublandlord hereby subleases to Subtenant and Subtenant hereby
subleases from Sublandlord that portion of the Building containing approximately
7,914 usable square feet, as more particularly shown as the crosshatched area on
the floor plan attached hereto as Exhibit B and made a part hereof (the
'Subpremises'), upon and subject to all of the terms and conditions hereinafter
set forth. Subtenant shall have the right, in common with others, to use: (i)
the parking lot serving the Building for the parking of Subtenant's employees'
cars on a first come, first serve basis, and (ii) Common Areas 1, 4, 6, 7, 8 and
9 as marked on Exhibit B. After obtaining the prior written consent of
Sublandlord and Landlord which shall not be unreasonably withheld, Subtenant
may, at its sole cost and expense, place a sign on the existing (or any
replacement) monument sign at the Premises. At the end of this Sublease,
Subtenant shall remove any such sign and restore the monument sign to its
original condition.
2. Term.
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(a) The term (the 'Term') of this Sublease shall commence on November 1,
1998 (the 'Commencement Date') and shall continue for a period of thirty-four
(34) months, unless sooner terminated as hereinafter provided.
(b) The parties acknowledge that Sublandlord, Subtenant and TekEdge
Corporation ('TekEdge') have entered an agreement (the 'Agreement') whereby,
upon ninety (90) days' written notice to Sublandlord and Subtenant, TekEdge may
claim the right to occupy the Subpremises as of September 1, 2000. The Agreement
is attached hereto as Exhibit C. Provided TekEdge exercises such right and all
the conditions set forth in the Agreement are satisfied, this Sublease shall
terminate effective August 31, 2000.
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3. Base Rent.
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During the Term, Subtenant shall pay to Sublandlord, in lawful money
of the United States which at the time shall be legal tender in payment of all
debts and dues, public and private, an annual fixed rent (the 'Base Rent')
calculated by multiplying the usable square footage of the Subtenant (7,914 SF)
plus Subtenant's proportionate share of Common Areas 1, 4, 6, 7, 8 and 9 (832
SF) - a total rental area of 8,746 square feet (the 'Rental Square Footage') -by
the following amounts per square foot per month, payable in equal monthly
installments:
Monthly Base Rent Rate
Per Rental Square Foot for
Time Period Subpremises
11/1/98-8/31/99 $2.20
9/1/99-8/31/2000 $2.29
9/1/2000-8/31/2001 $2.38
All monthly installments shall be paid in advance on the first (1st) day of each
month during the Term at the office of the Sublandlord, or such other place as
Sublandlord may designate, without any setoff or deduction of any kind
whatsoever. The first payment of Base Rent shall be due on the execution date of
this Sublease.
3A. Rent Adjustment.
(a) The following terms shall have the following meanings with respect to
the provisions of this Section 3A:
(i) 'Subtenant's Pro Rata Share' shall mean that proportion of the
Operating Expenses for any calendar year that equals the Rental Square Footage
divided by the total number of rentable square feet in the Building. The parties
agree that for the Term, Subtenant's Pro Rata Share shall be 14.25%.
(ii) 'Operating Expenses' shall:
(A) Mean all operating expenses actually incurred of any kind or
nature with respect to the Building as determined in accordance with generally
accepted accounting principles and shall include, but not be limited to, all
general and special real estate or ad valorem taxes or special assessments
levied against the Building by any governmental or quasi-governmental authority
or any taxes or assessments which shall be levied on the Building in lieu of or
in addition to all or any portion of any such real estate taxes or assessments,
or which shall be levied on the rentals of the Building (other than net income
taxes), or which shall be levied on Sublandlord as a result of the use,
ownership or operation of the Building; the cost of Building supplies; costs
incurred in connection with all energy sources for the common areas of the
Building such as propane, butane, natural gas, steam, electricity, solar energy
and fuel oil; the costs of water and sewer services; janitorial services;
general maintenance and normal repair of the Building, including the heating and
air conditioning systems of the Building; landscaping maintenance; maintenance,
repair, striping and replacement of all parking areas furnished by
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Sublandlord for use by tenants of the Building; the cost of rubbish removal,
service contracts for the elevator, HVAC and alarm systems of the Building; the
cost of such security guard and protection services as may be deemed reasonably
necessary by Sublandlord; insurance in amounts and coverages determined by
Sublandlord, including fire and extended coverage, rental interruption,
sprinkler leakage, plate glass and public liability insurance (but Subtenant
shall have no interest in such insurance or the proceeds thereof); labor costs
incurred in the operation and maintenance of the Building, including wages and
other payments, costs to Sublandlord of Workers' Compensation and disability
insurance, payroll taxes and fringe benefits; professional building management
fees; legal, accounting, inspection and consultation fees incurred in connection
with the Building to the extent required by any governmental authority or any
other inspection or consultation fees required for the normal prudent operation
of the Building and not normally the responsibility of the managing agent; the
cost of any capital improvements to the Building or of any machinery or
equipment installed in the Building which is made or becomes operational, as the
case may be, after the Commencement Date; all other common area costs and
expenses relating to the Building and all other charges properly allocable to
the repair, operation and maintenance of the Building in accordance with
generally accepted accounting principles. If the Building is not fully occupied
during any calendar year, the Operating Expenses for such year shall be adjusted
to reflect the greater of: (a) actual occupancy; or (b) a ninety-five percent
(95%) occupancy of the Building. If Sublandlord selects an accrual accounting
basis for calculating Operating Expenses, Operating Expenses shall be deemed to
have been paid when such expenses have accrued in accordance with generally
accepted accounting principles.
(B) Expressly exclude Sublandlord's income taxes; leasing
commissions; interest on debt or amortization payments on any mortgages or deeds
of trust and rental under any ground or underlying leases or lease; advertising
and promotional expenditures; costs occasioned by the act, omission or violation
of any law by Sublandlord, any other occupant of the Building or their
respective agents, employees, or contractors; costs occasioned by fire or other
casualties for which insurance proceeds are received by Sublandlord or by
exercise of power of eminent domain; costs of any renovation or improvement of
any portion of the Building not made available for Subtenant's use; costs
incurred in connection with negotiations or disputes with any other occupant of
the Building; costs incurred in connection with the presence of any Hazardous
Material (responsibility for such costs are addressed by other provisions of
this Sublease); costs relating to the replacement of the structural elements of
the Building or associated with utilities and services of a type not provided to
Subtenant; any fee, profit or compensation retained by Sublandlord or its
affiliates for management and administration of the Building in excess of the
management fee which would be charged by a professional management service or
operation of comparable projects in the vicinity of the Building; and any other
expense which under generally accepted accounting principles would not be
considered a normal maintenance or operating expense, except as otherwise
specifically provided herein.
(b) It is hereby agreed that during each calendar year of the term hereof,
Subtenant shall pay to Sublandlord Subtenant's Pro Rata Share of the amount of
any Operating Expenses. Beginning with the first calendar year in which this
Sublease commences, the monthly rent to be paid by Subtenant to Sublandlord
shall be increased by an amount equal to 1/12th of Subtenant's Pro Rata Share of
the Operating Expenses for each calendar year, with an adjustment to be made
between the parties at a later date as hereinafter provided. However, in
computing the monthly rental for Subtenant's Pro Rata Share of the Operating
Expenses for any calendar year, there shall be taken into account any prior
increases in the monthly rent attributable to Subtenant's Pro Rata Share of the
estimated increases in such Operating Expenses. As soon as practicable following
the end of each calendar year during the term of this Sublease, Sublandlord
shall submit to Subtenant a statement setting forth the exact amount of the
increase, if any, in Subtenant's Pro Rata Share of the Operating Expenses for
the calendar year just completed over Subtenant's Pro Rata Share of the Base
Operating Expenses, and the difference, if any, between
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Subtenant's actual Pro Rata Share of the Operating Expenses for the calendar
year just completed and the estimated amount of Subtenant's Pro Rata Share of
the Operating Expenses (on which its rent was based) for such year. Prior to the
end of each calendar year during the term hereof, Sublandlord shall submit to
Subtenant a statement setting forth the amount reasonably estimated by
Sublandlord as the increase, if any, in the Base Operating Expenses for the
subsequent year and the amount of the increased monthly rent to be paid by
Subtenant for such subsequent year computed in accordance with the foregoing
provisions. It is to be understood and agreed that all estimating provisions as
referenced above shall be computed on the basis of the Operating Expenses being
adjusted as if the Building were not less than ninety-five percent (95%)
occupied. To the extent that Subtenant's Pro Rata Share of the actual Operating
Expenses for the period covered by such statement is different from the
estimated increases upon which Subtenant paid rent during the calendar year just
completed, Sublandlord shall pay to Subtenant, or Subtenant shall pay to
Sublandlord, as the case may be, the difference within thirty (30) days
following receipt of said statement from Sublandlord. In addition, with respect
to the monthly rent, until Subtenant receives such statement, Subtenant's
monthly rent for the new calendar year shall continue to be paid at the then
current rate, but Subtenant shall commence payment to Sublandlord of the monthly
installments of rent on the basis of the statement beginning on the first day of
the month following the month in which Subtenant receives such statement.
Moreover, Subtenant shall pay to Sublandlord, or shall receive a credit against
the next installment due hereunder, as the case may be, on the date required for
the first payment of rent as adjusted, the difference, if any, between the
monthly installments of rent so adjusted and the monthly installments of rent
actually paid during the new calendar year. In no event shall any adjustment
hereunder result in a decrease in the Base Rent or additional rent payable
pursuant to any other provision of this Lease (except escalation pursuant to
this Section 3A), it being agreed that the payments under this Section 3A are an
obligation supplemental to Subtenant's obligation to pay the Base Rent.
(c) If Subtenant occupies the Subpremises for less than a full calendar
year during the first or last calendar years of the term hereof, Subtenant's Pro
Rata Share for such partial year shall be calculated by proportionately reducing
the Base Operating Expenses to reflect the number of months in such year during
which Subtenant occupied the Premises (the 'Adjusted Base Operating Expenses').
The Adjusted Base Operating Expenses shall then be compared with the actual
Operating Expenses for said partial year to determine the amount, if any, of any
increases in the actual Operating Expenses for such partial year over the
Adjusted Base Operating Expenses. Subtenant shall pay its Pro Rata Share of any
such increases within thirty (30) days following receipt of notice thereof.
(d) Sublandlord's failure during the Lease term to prepare and deliver any
statement or bills, or Sublandlord's failure to make a demand under this Section
or under any other provision of this Sublease shall not in any way be deemed to
be a waiver of, or cause Sublandlord to forfeit or surrender, its rights to
collect any items of additional rent which may have become due pursuant to this
Section during the term of this Sublease, except as otherwise specifically set
forth in this Sublease. Subtenant's liability for all additional rent due under
this Section 3A shall survive the expiration or earlier termination of this
Sublease.
(e) At its sole cost and expense, Subtenant shall have the right, to be
exercised within ninety (90) days following receipt of Sublandlord's statement,
to have an independent auditor review Sublandlord's actual operating expenses
during regular business hours. Notice of such an audit shall be given in writing
to Sublandlord at least ten (10) days prior to such audit. If the audit reveals
that the actual Operating Expenses due for any given year was less than the
amount paid by Subtenant, Sublandlord agrees to pay such excess to Subtenant.
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4. Additional Rent.
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(a) All amounts payable by Subtenant to Sublandlord pursuant to
this Sublease, including, without limitation, Base Rent and any additional rent
required by the terms hereof, shall be deemed to constitute rent and, in the
event of any non-payment thereof, Sublandlord shall have all of the rights and
remedies provided herein, in the Lease, at law or in equity for non-payment of
rent.
(b) Subtenant's obligation to pay additional rent hereunder
shall be on account of the period from and after the Rent Commencement Date and
shall survive the Expiration Date or sooner termination of the Term.
(c) The items of additional rent as provided in this Agreement
of Sublease shall be billed to Subtenant by Sublandlord (whether or not such
items have been incurred by the time of billing) within thirty (30) days of
incursion by Sublandlord. Subtenant shall have thirty (30) days after receipt of
such statement to reimburse Sublandlord for these costs.
5. Subordination to and Incorporation of Terms of Lease.
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(a) This Sublease is in all respects subject and subordinate to the
terms and conditions of the Lease and to the matters to which the Lease is or
shall be subordinate. Except as otherwise expressly provided in this Sublease,
all terms and conditions of the Lease are incorporated in this Sublease by
reference and made a part hereof as if herein set forth at length, and shall, as
between Sublandlord and Subtenant (as if they were the Landlord and Tenant,
respectively, under the Lease and as if the Subpremises being sublet hereby were
the Lease Premises demised under the Lease), constitute the terms of this
Sublease, except to the extent that they do not relate to the Subpremises or are
inapplicable to, inconsistent with, or modified or eliminated by, the terms of
this Sublease. Sublandlord and Subtenant acknowledge and agree that Subtenant
has reviewed and is familiar with the Lease and Sublandlord hereby represents
that the copy delivered to Subtenant for such purpose and attached hereto as
Exhibit A is a true, correct and complete copy of such Lease and that the Lease
represents the entire agreement between Sublandlord and Landlord with respect to
the lease of the Premises. Sublandlord also represents that (i) there is no
default, or any condition which with the passage of time or the giving of
notice, or both, would constitute a default, on the part of either party to the
Lease, (ii) Sublandlord has not assigned, encumbered or otherwise transferred
any interest of Tenant under the Lease, and (iii) the Commencement Date of the
Lease was September 1, 1997 and the scheduled expiration date of the Lease is
August 31, 2007.
(b) In the event of a default by Sublandlord, as Tenant under the
Lease, resulting in the termination, reentry or dispossession thereunder,
Landlord may, at its option, and Sublandlord shall use reasonable efforts to
cause Landlord to, take over all of the right, title and interest of Sublandlord
under this Sublease and Subtenant hereunder shall, at the option of the
Landlord, attorn to and recognize Landlord as Sublandlord hereunder except that
Landlord shall not (i) be liable for any previous act or omission of Sublandlord
under this Sublease, (ii) be subject to any offset, not expressly provided for
in this Sublease, which theretofore accrued to Subtenant against Sublandlord, or
(iii) be bound by any previous modification of this Sublease or by any previous
prepayment of more than one month's rent, and shall, promptly upon Landlord's
request, execute and deliver all instruments necessary or appropriate to confirm
such attornment and recognition. Subtenant hereby waives all rights under any
present or future law to elect, by reason of the termination of such Lease, to
terminate this Sublease or surrender possession of the Subpremises.
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6. Care, Surrender and Restoration of the Subpremises.
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(a) Without limiting any other provision of this Sublease or the
Lease, Subtenant shall take good care of the Subpremises, suffer no waste or
injury thereto and shall comply with all those laws, orders and regulations
applicable to the Subpremises, the Building and Subtenant's use or manner of use
thereof, which are imposed on Sublandlord, as Tenant under the Lease, in
connection with the Subpremises and the Building.
(b) Sublandlord shall be responsible to maintain common areas,
building-wide systems and the roof membrane of the Building. In the event one of
the foregoing require repair, Sublandlord shall be responsible for such repair,
provided that Subtenant notifies Sublandlord as soon as practicable. Sublandlord
agrees to such repair request respond within a reasonable time. Notwithstanding
the foregoing, Subtenant covenants and agrees that it will repair promptly at
its own expense any damage to the Subpremises arising out of or from its
occupancy of the Subpremises.
(c) Upon the Expiration Date or sooner termination of the Term,
Subtenant shall quit and surrender the Subpremises to Sublandlord, broom clean,
in good order and condition, ordinary wear and tear and damage by fire and other
casualty excepted, and Subtenant shall remove all of its property. If the
Expiration Date or sooner termination of the Term of this Sublease falls on a
Sunday, this Sublease shall expire at noon on the preceding Saturday unless it
be a legal holiday, in which case it shall expire at noon on the preceding
business day. Subtenant shall observe and perform the covenants herein stated
and Subtenant's obligations hereunder shall survive the Expiration Date or
sooner termination of the Term.
7. Use. Subtenant shall use and occupy the Subpremises for office,
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storage and distribution purposes, other related legal uses, and for no other
purpose. Subtenant shall have access to the Subpremises seven days a week, 24
hours a day and shall comply with Sublandlord's security systems relating to the
Building.
8. Subtenant's Obligations. Except as otherwise specifically provided
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herein, all acts to be performed and all of the terms and conditions to be
observed by and inuring to the benefit of, Sublandlord, as Tenant under the
Lease of the Premises, shall be performed, and observed by, and shall inure to
the benefit of, Subtenant, and Subtenant's obligations shall run to Sublandlord
as appropriate or required by the respective interests of Sublandlord and
Landlord. Subtenant shall indemnify Sublandlord against, and hold Sublandlord
harmless from, all liabilities, obligations, damages, penalties, claims, costs,
expenses and liabilities (including, but not limited to, reasonable attorneys'
fees and disbursements) paid, suffered or incurred by Sublandlord as a result of
the nonperformance or non-observance by Subtenant, Subtenant's agents,
contractors, employees, invitees or licensees of any such terms and conditions
contained in the Lease. In furtherance of the foregoing, Subtenant shall not (i)
do or permit to be done anything prohibited to Sublandlord as Tenant under the
Lease, or (ii) take any action or do or permit anything which would result in
any additional cost or other liability to Sublandlord under the Lease and/or
this Sublease. In the event of any inconsistency between the Lease and this
Sublease, such inconsistency (i) if it relates to obligations of, or
restrictions on, Subtenant, shall be resolved in favor of that obligation which
is more onerous to Subtenant or that restriction which is more restrictive of
Subtenant, as the case may be, or (ii) if it relates to any other matter, the
Lease shall govern.
9. Landlord's Obligations. Anything contained in this Sublease or in
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the Lease to the contrary notwithstanding, Landlord shall have no responsibility
to Subtenant for, and shall not be required to provide, any of the services or
make any of the repairs or restorations that Landlord has agreed to make or
provide, or cause to be made or provided, under the Lease, and Subtenant shall
rely upon, and look solely to, Sublandlord for the provision or making thereof.
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Except as may result from a default of Sublandlord from its obligations
specified in the preceding sentence, Subtenant shall not make any claim against
Sublandlord for any damage which may arise, nor shall Subtenant's obligations
hereunder be impaired or abated by reason of (i) the failure of Landlord to
keep, observe or perform its obligations pursuant to the Lease, or (ii) the acts
or omissions of Landlord and each of its agents, contractors, servants,
employees, invitees or licensees.
10. Covenants with respect to the Lease. Subtenant covenants and agrees
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that Subtenant shall not do anything that would constitute a default under the
Lease or omit to do anything that Subtenant is obligated to do under the terms
of this Sublease as to cause there to be a default under the Lease.
11. Broker. Sublandlord and Subtenant represent and warrant to each
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other that they have not dealt with any broker in connection with this Sublease
other than Cushman & Wakefield of California, Inc. by Sublandlord and Wayne
Mascia Associates by Subtenant. Sublandlord shall be responsible for the
brokerage commissions of Cushman & Wakefield of California, Inc., pursuant to
the terms of a brokerage agreement, and Cushman & Wakefield shall be responsible
for any payment to Wayne Mascia Associates. Subtenant shall indemnify
Sublandlord against, and hold Sublandlord harmless from, any claim on, or
liability to, any other broker or any other party with whom Subtenant shall have
dealt in connection with this transaction and Sublease.
12. [INTENTIONALLY OMITTED]
13. Indemnification.
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13.1 Indemnification of Sublandlord and Subtenant.
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(a) Subtenant shall indemnify, defend with competent and
experienced counsel and hold harmless Sublandlord, its subsidiaries and
affiliates and their respective officers, directors, shareholders and employees,
from and against any and all damages, liabilities, actions, causes of action,
suits, claims, demands, losses, costs and expenses (including without limitation
reasonable attorneys' fees and disbursements and court costs) to the extent
arising from or in connection with the negligence or willful misconduct of
Subtenant, its agents, employees, representatives or contractors, except to the
extent covered by insurance required to be carried by Sublandlord hereunder.
(b) Sublandlord shall indemnify, defend with competent and
experienced counsel and hold harmless Subtenant from and against any and all
damages, liabilities, actions, causes of action, suits, claims, demands, losses,
costs and expenses (including without limitation reasonable attorneys' fees and
disbursements and court costs) to the extent arising from or in connection with
the negligence or willful misconduct of Sublandlord, its agents, employees,
representatives or contractors, except to the extent covered by insurance
required to be carried by Subtenant hereunder.
(c) The party seeking indemnification under this Section (the
'Indemnified Party') shall provide prompt written notice of any third party
claim to the party from whom indemnification is sought (the 'Indemnifying
Party'). The Indemnifying Party shall have the right to assume exclusive control
of the defense of such claim or, at the option of the Indemnifying Party, to
settle the same. The Indemnified Party agrees to cooperate reasonably with the
Indemnifying Party in connection with the performance of the Indemnifying
Party's obligations under this Section.
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(d) Notwithstanding anything to the contrary contained in this
Sublease, neither party hereto shall be liable to the other for any indirect,
special, consequential or incidental damages (including without limitation loss
of profits, loss of use or loss of goodwill) regardless of (A) the negligence
(either sole or concurrent) of either party or (B) whether either party has been
informed of the possibility of such damages. It is expressly understood and
agreed that damages payable by either party to Landlord shall be deemed to
constitute direct damages of such party.
13.2 Indemnification by Subtenant of Sublandlord and Landlord.
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Subtenant agrees to defend, save harmless and indemnify Sublandlord, its
subsidiaries and affiliates and their respective officers, directors,
shareholders and employees, and Landlord to the same extent as Sublandlord is
required to do so under the provisions of the Lease; provided, however, that all
references therein, to (i) 'Lessee' shall be replaced with 'Subtenant' and (ii)
'Premises' shall be replaced with 'Subpremises'.
13.3 Survival. The provisions of this Section shall survive the
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expiration or earlier termination of this Sublease.
14. Quiet Enjoyment. As long as Subtenant pays all of the Base Rent and
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Additional Rent due hereunder and otherwise performs and observes all of the
obligations, terms and conditions contained herein and in the Lease as herein
incorporated, Subtenant shall peaceably and quietly have, hold and enjoy the
Subpremises, subject to Section 15 below.
15. Termination of Lease. If for any reason the term of the Lease is
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terminated prior to the Expiration Date of this Sublease, this Sublease shall
thereupon terminate, and neither Sublandlord nor Landlord shall be liable to
Subtenant by reason thereof. Notwithstanding the foregoing, if the termination
of the Lease does not result in the termination of this Sublease by reason of
Subtenant's attornment to, and recognition of, Landlord as landlord hereunder in
accordance with the provisions of Section 5(b) hereof, Sublandlord shall not be
liable to Subtenant hereunder for damages or otherwise, and Sublandlord's
obligation to Subtenant shall be limited to returning to Subtenant a portion of
any rent paid in advance by Subtenant, if any, prorated as of the date of such
termination.
16. Modification of Lease. For the purposes of this Sublease, in all
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provisions of the Lease requiring the approval, consent or notification of the
Landlord, Subtenant shall be required to obtain the approval or consent of, or
give notice to both Landlord and Sublandlord.
17. Consents. Sublandlord's refusal to consent to or approve any matter
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or thing, whenever Sublandlord's consent or approval is required under this
Sublease or under the Lease, as incorporated herein, shall be deemed reasonable
if Landlord has refused or failed to give its consent or approval to such matter
or thing.
18. Condition of the Subpremises; Subtenant's Changes.
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(a) Subtenant represents it has made a thorough examination of the
Subpremises and it is familiar with the condition thereof. Subtenant
acknowledges that it enters into this Sublease without any representation or
warranties by Sublandlord except as set forth in this Lease, or anyone acting or
purporting to act on behalf of Sublandlord, as to the present or future
conditions of the Subpremises or the appurtenances thereto or any improvements
therein or of the Building. Sublandlord represents that upon commencement of
this Sublease, the roof, HVAC systems, electric and plumbing systems, the
parking lot and the lighting systems will be in good working conditions.
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(b) Notwithstanding anything to the contrary contained in the Lease,
Subtenant shall not make any changes to the Subpremises whatsoever, including,
without limitation, structural or non-structural changes, without the prior
written consent of Sublandlord and Landlord. All permitted alterations or
additions shall be constructed in accordance with the requirements of the Lease.
19. Assignment and Subletting. Subtenant, for itself, its successors and
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assigns, expressly covenants that it shall not assign, whether by operation of
law or otherwise, or pledge or otherwise encumber this Sublease, or sublet all
or any part of the Subpremises. Any purported assignment, pledge, encumbrance or
sublease by Subtenant shall be void and of no force or effect and shall
constitute a default by Subtenant hereunder. Subject to complying with the
provisions of the Lease, Sublandlord reserves the right to transfer and assign
its interest in and to this Sublease to any entity or person who shall succeed
to Sublandlord's interest in and to the Lease.
20. Insurance.
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(a) Subtenant agrees to maintain in responsible companies qualified
to do business, and in good standing, in California (i) public liability
insurance covering the Subpremises insuring Landlord and Sublandlord as well as
Subtenant (to the extent of Subtenant's negligence) with limits which shall be
equal to those required to be maintained by Sublandlord under the Lease, and
naming Sublandlord and Landlord as additional insureds, (ii) Worker's
Compensation Insurance with statutory limits covering all of Subtenant's
employees working in the Subpremises, and (iii) Commercial All-Risk Property
Insurance written on an all risk of loss form, and on a replacement cost basis,
covering Subtenant's personal property and leasehold improvements. Subtenant
shall deposit promptly with Sublandlord certificates for such insurance, and all
renewals thereof, bearing the endorsement that the policies will not be canceled
until after thirty (30) days written notice to both Sublandlord and Landlord.
Subtenant shall pay all premiums and charges for such insurance, and if
Subtenant shall fail to obtain such insurance, Sublandlord may, but shall not be
obligated to, obtain the same, in which event the amount of the premium paid
shall be paid by Subtenant to Sublandlord upon Sublandlord's demand therefor,
shall be deemed Additional Rent and shall be collectible by Sublandlord in the
same manner and with the same remedies as though said sums were Additional Rent
reserved hereunder.
(b) Subtenant acknowledges that Sublandlord will not carry any
insurance in favor of Subtenant, and that neither Landlord nor Sublandlord will
carry insurance on Subtenant's furniture and/or furnishings or any fixtures or
equipment, improvements or appurtenances of Subtenant in or about the
Subpremises.
21. Waiver of Subrogation.
---------------------
(a) Anything in Section 20 of this Sublease to the contrary
notwithstanding, Sublandlord and Subtenant shall each endeavor to secure an
appropriate clause in, or an endorsement upon, any fire or extended coverage
insurance policy obtained by it and covering the Subpremises or the personal
property, fixtures and equipment located therein or thereon, pursuant to which
the respective insurance companies waive subrogation or permit the insured,
prior to any loss, to agree with a third party to waive any claim it might have
against such third party. The waiver of subrogation or permission for waiver of
any claim herein before referred to shall extend to the agents of each party and
its employees. If, and to the extent that such waiver or permission can be
obtained only upon payment of an additional charge, then, except as provided
herein, the party benefiting from the waiver or permission shall pay such charge
upon demand, or shall be deemed to have agreed that the party obtaining the
insurance coverage in
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question shall be free of any further obligations under the provisions hereof
relating to such waiver or permission.
(b) Subject to the provisions of this Section 21, and insofar as may
be permitted by the terms of the insurance policies carried by it, each party
hereby releases the other with respect to any claim (including a claim for
negligence) which it might otherwise have against the other party for loss,
damage or destruction with respect to its property by fire or other casualty.
22. End of Term. If Subtenant shall remain in possession of the
-----------
Subpremises or any part thereof after the expiration or prior termination of the
Term hereof, the parties agree that no such holding over by Tenant shall operate
to extend or renew this Sublease, and that any such holding over shall be
construed as a tenancy-at-will as per Section 17 of the Lease when such holding
over shall have commenced, and such tenancy shall otherwise be subject to all
the terms, conditions, covenants and agreements of this Sublease. Subtenant
further agrees to pay to Sublandlord any additional amounts payable by
Sublandlord to Landlord under the Lease by reason of any such holding over by
Subtenant
23. Default.
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(a) In the event that Subtenant shall default in the payment of
Annual Fixed Rent, Additional Rent or any other charge payable hereunder, or
shall default in the performance or observance of any of the terms, conditions
and covenants of this Sublease, Sublandlord, in addition to and not in
limitation of any rights otherwise available to it, shall have the same rights
and remedies with respect to such default as are provided to Landlord under the
Lease with respect to defaults by Sublandlord as Tenant thereunder, with the
same force and effect as though all such provisions relating to any such default
or defaults were set forth herein in their entirety, and Subtenant shall have
all of the obligations of the Tenant under the Lease with respect to such
default or defaults.
(b) In the event of a default by Subtenant in the performance of any
of its non-monetary obligations hereunder, Sublandlord may, at its option, and
without waiving any other remedies for such default herein or at law or by
incorporation by reference of the Lease provided, at any time thereafter, give
written notice to Subtenant that if such default is not cured, or the cure not
commenced, within twenty (20) days after receipt of such notice by Subtenant,
and if so commenced is not thereafter pursued diligently to completion,
Sublandlord may cure such default for the account of Subtenant, and any amount
paid or incurred by Sublandlord in so doing shall be deemed paid or incurred for
the account of Subtenant and Subtenant agrees promptly to reimburse Sublandlord
therefor and save Sublandlord harmless therefrom; provided, however, that
Sublandlord may cure any such default as aforesaid prior to the expiration of
any waiting period if reasonably necessary to protect Sublandlord's interest
under the Lease or to prevent injury or damage to persons or property.
24. Destruction, Fire and other Casualty. If the whole or any part of the
------------------------------------
Subpremises or the Building shall be damaged by fire or other casualty and the
Lease is not terminated on account thereof by either Sublandlord or Landlord in
accordance with the terms thereof, this Sublease shall remain in full force and
effect and Base Rent and Additional Rent shall not abate except to the extent
Base Rent and Additional Rent for the Subpremises shall abate under the terms of
the Lease.
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25. Notices.
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(a) Whenever, by the terms of this Sublease, notice demand or other
communication shall or may be given to either party, the same shall be in
writing and address as follows:
If to Sublandlord: Real Estate Manager
Building 81-06
AMP Incorporated
P.O. Box 3608
Harrisburg, PA 17105-3608
Legal Department
AMP Incorporated
Building 176-41
P.O. Box 3608
Harrisburg, PA 17105-3608
If to Landlord: Marie A. Batton, Trustee
1190 East Meadow Drive
Palo Alto, CA 94303
Copy to: David L. Fletcher
Attorney at Law
6262 N. Swan Road, Suite 185
Tucson, AZ 85718
If to Subtenant: Sreekanth Ravi
Sonic Systems, Inc.
5400 Betsy Ross Drive
Santa Clara, CA 95054
or to such other address or addresses as shall from time to time be designated
by written notice by either party to the other as herein provided. All notices
shall be sent by registered or certified mail, postage prepaid and return
receipt requested, or by Federal Express or other comparable courier providing
proof of delivery, and shall be deemed duly given and received (i) if mailed, on
the third business day following the mailing thereof, or (ii) if sent by
courier, the date of its receipt (or, if such day is not a business day, the
next succeeding business day).
(b) Each party hereunder shall promptly furnish the other with
copies of all notices, requests, demands or other communications which relate to
the Subpremises or the use or occupancy thereof after receipt of the same from
Landlord or others.
25. Sublease Conditional Upon Certain Consents. Sublandlord and Subtenant
------------------------------------------
each acknowledge and agree that this Sublease is subject to Sublandlord's
obtaining the unconditional consent of Landlord in accordance with the terms of
the Lease, and that if such consent shall not
11
be obtained, or condition waived, within fifteen (15) days of the date hereof,
then this Sublease shall be deemed canceled and terminated and neither of the
parties hereto shall have any liability to the other.
26. Security Deposit. Subtenant shall deposit with Sublandlord, upon the
----------------
completion, execution and delivery of this Sublease, the sum of Twenty Thousand
Eight Hundred Fifteen Dollars ($20,815.00) to be held by Sublandlord, without
obligation to pay interest thereon, as security for Subtenant's covenant to pay
the rental herein reserved and for the keeping and performance of all other
covenants and obligations required to be kept or performed by Subtenant under
the terms and provisions of the Sublease. In the event of any default on the
part of Subtenant in the payment of said rental, or in the keeping of
performance of any of the other covenants required to be kept or performed by
Subtenant, Sublandlord shall have the right, but not the obligation, to apply
said security deposit, or any portion thereof, to cure such default. In the
event the security is reduced by reason of such application, then within five
(5) days after written notice thereof from Sublandlord, Subtenant shall deposit
with Sublandlord such sum as may be necessary to restore the security deposit to
the original amount. In the absence of any default on the part of the Subtenant,
Sublandlord shall repay the said security deposit without deduction to Subtenant
promptly upon the termination of this Lease, but if the security deposit has
been reduced to cure any default on the part of Subtenant, and has not been
restored to its original amount, the remainder of the security deposit if any,
shall be promptly paid to Subtenant upon termination of this Lease.
27. Subtenant Authority. Subtenant is a duly organized and validly
-------------------
existing corporation in good standing under the laws of the California and is
duly and legally qualified to do business as a corporation and has powers
adequate for the execution, delivery and performance of its obligations under
the Sublease and for carrying on the business now conducted or proposed to be
conducted by it. Subtenant has taken all necessary corporate action required to
make the Sublease the legal, valid and binding obligations they purport to be.
The Sublease is in full force and effect and is a legal, valid and binding
obligation of the Subtenant and, subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting the enforcement
of creditors' rights generally, and general equitable principles, is enforceable
in accordance with its terms.
28. Miscellaneous.
-------------
(a) This Sublease may not be extended, renewed, terminated, or
otherwise modified except by an instrument in writing signed by the party
against whom enforcement of any such modification is sought.
(b) It is understood and agreed that all understandings and
agreements heretofore had between the parties hereto are merged in this
Sublease, which alone fully and completely expresses their agreement, and that
the same is entered into after full investigation, neither party relying upon
any statement, representation or warranty made by the other not embodied in this
Sublease.
(c) The paragraph headings appearing herein are for purposes of
convenience only and are not deemed to be a part of this Sublease.
(d) The provisions of this Sublease shall be governed by and
construed in accordance with the laws of the California.
(e) No delay or omission on the part of either party to this Sublease
in requiring performance by the other party or in exercising any right hereunder
shall operate as a waiver of any provision hereof or of any right hereunder, and
the waiver, omission or delay in
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requiring performance or exercising any right hereunder on any one occasion
shall not be construed as a bar to or waiver of such performance or right on any
future occasion.
(f) Any and all rights and remedies which either party may have under
this Sublease, at law or in equity, shall be cumulative and shall not be deemed
inconsistent with each other, and any two or more of all such rights and
remedies may be exercised at the same time insofar as permitted by law.
(g) If any term or provision of this Sublease or the application
thereof to any person or circumstance shall to any extent be held invalid or
unenforceable, the remainder of this Sublease or the application of such term or
provision to other persons or circumstances shall not be affected thereby, and
each term and provision of this Sublease shall be valid and enforceable to the
fullest extent permitted by law. Section headings and the organization of this
Sublease are for descriptive purposes only and shall not control or after the
meaning of this Sublease.
(h) This Sublease shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
IN WITNESS WHEREOF, this Agreement of Sublease has been duly executed as of the
day and year first above written.
SUBLANDLORD:
AMP Incorporated
By: /s/ Robert Ripp
-------------------------------
R. Ripp
Chairman & CEO
SUBTENANT:
Sonic Systems, Inc.
By: /s/ Sreekanth Ravi
-------------------------------
Name: Sreekanth Ravi
-------------------------------
Title: President/CEO
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5400 Betsy Ross Drive (Santa Clara, CA) Agreement Of Sublease - AMP Inc. and Sonic Systems Inc.
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