STANDARD SUBLEASE
American Industrial Real Estate Association
[LOGO]
1. PARTIES. This Sublease, dated, for reference purposes only, September 16,
1997, is made by and between Packeteer, Inc. a Delaware Corporation (herein
called "Sublessor") and Audio Highway, Inc. (herein called "Sublessee").
2. PREMISES. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property situated in the County
of Santa Clara, State of California, commonly known as 10495 De Anza Boulevard,
Cupertino and described as a portion of a larger building being approximately
5775 square feet as indicated on the attached Exhibit 2.
Said real property, including the land and all improvements thereon, is
hereinafter called the "Premises".
3. TERM
3.1 TERM. The term of this Sublease shall be for 24 months commencing on
December 1, 1997 or upon completion of Tenant Improvements, which ever is
later, and ending on November 30, 1999 unless sooner terminated pursuant to
any provision hereof.
3.2 DELAY IN COMMENCEMENT. Notwithstanding said commencement date, if for
any reason Sublessor cannot deliver possession of the Premises to Sublessee on
said date, Sublessor shall not be subject to any liability therefore, nor shall
such failure affect the validity of this Lease of the obligations of Sublessee
hereunder or extend the term hereof, but in such case Sublessee shall not be
obligated to pay rent until possession of the Premises is tendered to Sublessee;
provided, however, that if Sublessor shall not have delivered possession of the
Premises within sixty (60) days from said commencement date. Sublessee may, at
Sublessee's option, by notice in writing to Sublessor within ten (10) days
thereafter, cancel this Sublease, in which event the parties shall be discharged
from all obligations thereunder. If Sublessee occupies the Premises prior to
said commencement date, such occupancy shall be subject to all provisions
hereof, such occupancy shall not advance the termination date and Sublessee
shall pay rent for such period at the initial monthly rates set forth below.
4. RENT. Sublessee shall pay to Sublessor as rent for the Premises equal
monthly payments of $17,325.00, in advance, on the 1st day of each month of the
term hereof. Sublessee shall pay Sublessor upon the execution hereof $17,325.00
as rent for December 1997.
Rent for any period during the term hereof which is for less than one month
shall be a prorata portion of the monthly installment. Rent shall be payable in
lawful money of the United States to Sublessor at the address stated herein or
to such other persons or at such other places as Sublessor may designate in
writing.
5. SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon execution
hereof $17,902.50 as security for Sublessee's faithful performance of
Sublessee's obligations hereunder. If Sublessee fails to pay rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any
portion of said deposit, Sublessee shall within ten (10) days after written
demand therefore deposit cash with Sublessor in an amount sufficient to restore
said deposit to the full amount hereinabove stated and Sublessee's failure to do
so shall be a material breach of this Sublease. Sublessor shall not be required
to keep said deposit separate from its general accounts. If Sublessee performs
all of Sublessee's obligations hereunder, said deposit, or so much thereof as
has not theretofore been applied by Sublessor, shall be returned, without
payment of interest or other increment for its use to Sublessee (or at
Sublessor's option, to the last assignee, if any, of Sublessee's interest
hereunder) at the expiration of the term hereof, and after Sublessee has vacated
the Premises. No trust relationship is created herein between Sublessor and
Sublessee with respect to said Security Deposit.
6. USE.
6.1 USE. The Premises shall be used and occupied only for general office
and related legal uses and for no other purpose.
6.2 COMPLIANCE WITH LAW.
Sublessee shall, at Sublessee's expense, comply promptly with all
applicable statutes, ordinances, rules, regulations, orders, restrictions of
record, and requirements in effect during the term or any part of the term
hereof regulating the use by Sublessee of the Premises. Sublessee shall not use
or permit the use of the Premises in any manner that will tend to create waste
or a nuisance or, if there shall be more than one tenant of the building
containing the Premises, which shall tend to disturb such other tenants.
6.3 CONDITION OF PREMISES. Except as provided in paragraph 6.2(a)
Sublessee hereby accepts the Premises in their condition existing as of the date
of the execution hereof, subject to all applicable zoning, municipal, county and
state laws, ordinances, and regulations governing and regulating the use of the
Premises, and accepts this Sublease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto. Sublessee acknowledges that
neither Sublessor nor Sublessor's agents have made any representation or
warranty as to the suitability of the Premises for the conduct of Sublessee's
business.
7. MASTER LEASE
7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter referred to as the "Master Lease", a copy of which is attached
hereto marked Exhibit 1, dated August 25, 1997 wherein Eldon R. Hoffman is the
lessor, hereinafter referred to as the "Master Lessor".
7.2 This Sublease is and shall be at all times subject and subordinate to
the Master Lease.
7.3 The terms, conditions and respective obligations of Sublessor and
Sublessee to each other under this Sublease shall be the terms and conditions
of the Master Lease except for those provisions of the Master Lease which are
directly contradicted by this Sublease or excluded below in which event the
terms of this Sublease document shall control over the Master Lease.
Notwithstanding anything to the contrary contained in or incorporated into
this Sublease, Sublandlord shall not be obligated to perform Master Lessor's
obligations under the Master lease. Sublandlord hereby covenants to perform
its obligations as Tenant under the Master Lease and to use commercially
reasonable efforts to cause Master Lessor to perform its obligations under
the Master Lease. Therefore, for the purposes of this Sublease, wherever in
the Master Lease the word "Lessor" is used it shall be deemed to mean the
Sublessor herein and wherever in the Master Lease the word "Lessee" is used
it shall be deemed to mean the Sublessee herein.
7.4 During the term of this Sublease and for all periods subsequent for
obligations which have arisen prior to the termination of this Sublease,
Sublessee does hereby expressly assume and agree to perform and comply with,
for the benefit of Sublessor and Master Lessor, each and every obligation of
Sublessor under the Master Lease EXCEPT for the following paragraphs which
are excluded therefrom: 1.1 through 1.7, 1.9 through 1.12, and Addendum
paragraphs 49, 50, 51, 53, 64, 68, 71 through 77.
7.5 The obligations that Sublessee has assumed under paragraph 7.4 hereof
are hereinafter referred to as the "Sublessee's Assumed Obligations". The
obligations that Sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".
7.6 Sublessee shall hold Sublessor free and harmless of and from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys fees, arising out of Sublessee's failure to comply with or perform
Sublessee's Assumed Obligations.
7.7 Sublessor agrees to maintain the Master Lease during the entire term
of this Sublease, subject, however, to any earlier termination of the Master
Lease without the fault of the Sublessor, and to comply with or perform
Sublessor's Remaining Obligations and to hold Sublessee free and harmless of and
from all liability, judgments, costs, damages, claims or demands arising out of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.
7.8 Sublessor represents to Sublessee that the Master Lease is in full
force and effect and that to the best of its knowledge no default exists on the
part of any party to the Master Lease.
8. ASSIGNMENT OF SUBLEASE AND DEFAULT.
8.3 Sublessor hereby irrevocably authorizes and directs Sublessee, upon
receipt of any written notice from the Master Lessor stating that a default
exists in the performance of Sublessor's obligations under the Master Lease,
to pay to Master Lessor the rents due and to become due under the Sublease.
Sublessor agrees that Sublessee shall have the right to rely upon any such
statement and request from Master Lessor, and that Sublessee shall pay such
rents to Master Lessor without any obligation or right to inquire as to whether
such default exists and notwithstanding any notice from or claim from
Sublessor to the contrary and Sublessor shall have no right or claim against
Sublessee for any such rents so paid by Sublessee.
8.4 No changes or modifications shall be made to this Sublease without the
consent of Master Lessor.
9. CONSENT OF MASTER LESSOR.
9.1 In the event that the Master Lease requires that Sublessor obtain the
consent of Master Lessor to any subletting by Sublessor then, this Sublease
shall not be effective unless, within 10 days of the date hereof, Master Lessor
sign this Sublease thereby giving its consent to this Subletting.
9.2 In the event that the obligations of the Sublessor under the Master
Lease have been guaranteed by third parties then this Sublease, nor the Master
Lessor's consent, shall not be effective unless, within 10 days of the date
hereof, said guarantors sign this Sublease thereby giving guarantors consent to
this Sublease and the terms thereof.
9.3 In the event that Master Lessor does give such consent then:
(a) Such consent will not release Sublessor of its obligations or
alter the primary liability of Sublessor to pay the rent and perform and
comply with all of the obligations of Sublessor to be performed under the
Master Lease.
(b) The acceptance of rent by Master Lessor from Sublessee or any
one else liable under the Master Lease shall not be deemed a waiver by
Master Lessor of any provisions of the Master Lease.
(c) The consent to this Sublease shall not constitute a consent to any
subsequent subletting or assignment.
(f) In the event that Sublessor shall default in its obligations under
the Master Lease, then Master Lessor, at its option and without being obligated
to do so, may require Sublessee to attorn to Master Lessor in which event Master
Lessor shall undertake the obligations of Sublessor under this Sublease from the
time of the exercise of said option to termination of this Sublease but Master
Lessor shall not be liable for any prepaid rents nor any security deposit paid
by Sublessee, nor shall Master Lessor be liable for any other defaults of the
Sublessor under the Sublease.
9.4 The signatures of the Master Lessor and any Guarantors of Sublessor at
the end of this document shall constitute their consent to the terms of this
Sublease.
9.5 Master Lessor acknowledges that, to the best of Master Lessor's
knowledge, no default presently exists under the Master Lease of obligations to
be performed by Sublessor and that the Master Lease is in full force and effect.
9.6 In the event that Sublessor defaults under its obligations to be
performed under the Master Lease by Sublessor, Master Lessor agrees to deliver
to Sublessee a copy of any such notice of default. Sublessee shall have the
right to cure any default of Sublessor described in any notice of default within
ten days after service of such notice of default on Sublessee. If such default
is cured by Sublessee then Sublessee shall have the right of reimbursement and
offset from and against Sublessor.
10. BROKERS FEE.
10.1 Upon execution hereof by all parties, Sublessor shall pay to CPS, a
licensed real estate broker, (herein called "Broker"), a fee as set forth in a
separate agreement between Sublessor and Broker.
11. ATTORNEY'S FEES. If any party named herein brings an action to enforce the
terms hereof or to declare rights hereunder, the prevailing party in any such
action, on trial and appeal, shall be entitled to his reasonable attorney's
fees to be paid by the losing party as fixed by the Court.
12. ADDITIONAL PROVISIONS. (If there are no additional provisions draw a line
from this point to the next printed word after the space left here. If there
are additional provisions place the same here.)
See Addendum paragraphs 13 through 21.
IF THIS SUBLEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE OR THE
TRANSACTION RELATING THERETO.
Executed at Packeteer, Inc.
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on By /s/ Craig Elliot
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address By /s/ Jeff Harmon
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- ------------------------------------- "Sublessor" (Corporate Seal)
Executed at Audio Highway, Inc.
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on By /s/ N.M. Schulhof
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address By
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- ------------------------------------- "Sublessee" (Corporate Seal)
Executed at Eldon R. Hoffman
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on By /s/ Eldon R. Hoffman
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address By 10-10-97
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- ------------------------------------- "Master Lessor" (Corporate Seal)
Executed at
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on
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address
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- ------------------------------------- "Guarantors"
Form 401 778
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are
utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION, 345 So. Figueroa St., M-1, Los Angeles, CA 90071.
(213) 687-8777.
XXXXXX American Industrial Real Estate Association. All Rights Reserved. No
part of these works may be reproduced in any form without permission in
writing.
ADDENDUM TO SUBLEASE
This Addendum is attached to and made a part of the Sublease dated September 16,
1997 by and between Packeteer, Inc. ("Sublessor") and Audio Highway, Inc.
("Sublessee") for the Premises at 10495 De Anza Boulevard, Cupertino,
California.
13. RENT: The full service monthly Base Rent shall be:
MONTHS RENT/MO./FULL SERVICE
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01-12 $17,325.00
13-24 $17,902.50
14. OPERATING EXPENSE INCREASE: Sublessee shall pay to Sublessor during the
term hereof, in addition to the Base Rent, Sublessee's Share, as
hereinafter defined, of the amount by which all Operating Expenses, as
hereinafter defined, for each Comparison Year exceeds the amount of all
Operating Expenses for the Base Year, such excess being hereinafter
referred to as the "Operating Expense Increase," in accordance with the
following provisions:
(a) "Sublessee's Share" is defined, for purposes of this Lease, as 21.4%
determined by dividing the approximate square footage of the Premises
by the total approximate square footage of the rentable space
contained in the Office Building. It is understood and agreed that
the square footage figures set forth in the Basic Lease provisions are
approximations which Sublessor and Sublessee agree are reasonable and
shall not be subject to revision except in connection with an actual
change in the size of the Premises.
(b) "Base Year" is defined as the first twelve (12) months of the lease
term.
(c) "Comparison Year" is defined as each twelve (12) month period during
the term of this Lease subsequent to the Base Year; provided, however,
Sublessee shall have no obligation to pay a share of the Operating
Expense Increase applicable to the first twelve (12) months of the
Lease Term (other than such as are mandated by a governmental
authority, as to which government mandated expenses Sublessee shall
pay Sublessee's Share, notwithstanding they occur during the first
twelve (12) months).
(d) "Operating Expenses" is defined, for the purposes of this Sublease to
include all costs incurred by Sublandlord in connection with the
operation, repair, replacement, and maintenance of the Premises and
any other expense reasonably characterized as an operating expense and
payable by Sublandlord as Tenant under the Master Lease;
(e) Sublessee's Share of Operating Expense Increase shall be payable by
Sublessee within ten (10) days after a reasonably detailed statement
of actual expenses is presented to Sublessee by Sublessor.
15. SUBLESSOR'S OBLIGATIONS. Sublessor agrees to furnish the Premises during
reasonable hours of generally recognized business days, to be determined by
Sublessor, water, gas and electricity suitable for the intended use of the
Premises, heat and air conditioning required in Sublessor's judgment for
the comfortable use and occupancy of the Premises, scavenger, 5 day per
week janitorial service, maintain and keep lighted the common stairs,
entries and toilet rooms in the Building.
Sublessor shall not be liable for, and Sublessee shall not be entitled to,
any abatement or reduction of rent by reason of Sublessor's failure to
furnish any of the foregoing when such failure is caused by accidents,
breakage, repairs, strikes, lockouts or other labor disturbances or labor
disputes of any character, or by any other cause similar or dissimilar,
beyond the reasonable control of Sublessor, except to the extent Sublessor
realizes abatement or reduction of its rent. Sublessor shall not be liable
under any circumstances for loss of or injury to property, however
occurring, throughout in connection with or incidental to failure to
furnish any of the foregoing.
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(a) Sublessee will not, without the prior written consent of Sublessor,
use any apparatus or device in the Premises, which would substantially
increase the amount of electricity or water usually furnished or
supplied for use of the premises as general office space; nor connect
with electric current, except through existing electrical outlets in
the Premises, or water pipes, any apparatus or device, for the
purposes of using electric current or water.
(b) If Sublessee shall require water or electric current in excess of that
usually furnished or supplied for use of the Premises as general
office space, Sublessee shall first procure the consent of Sublessor
for the use thereof, which consent Sublessor may refuse and Sublessor
may cause a water meter or electric current meter to be installed in
the Premises, so as to measure the amount of water and electric
current consumed for any such other use. The cost of such meters and
of installation, maintenance and repair thereof shall be paid for by
Sublessee and Sublessee agrees to pay Sublessor promptly upon demand
by Sublessor for all such water and electric current consumed as shown
by said meters, at the rates charged for such services by the City in
which the Building is located or the local public utility, as the case
may be, furnishing the same, plus any additional expense incurred in
keeping account of the water and electric current so consumed.
Sublessor acknowledges Sublessee will operate two (2) servers on a
24-hour basis, and that such operation is not in excess of general
office use.
(c) Wherever heat generating machines or equipment are used in the
Premises which affect the temperature otherwise maintained by the air
conditioning system, with the prior written consent of Sublessee,
which consent will not be unreasonably withheld, Sublessor reserves
the right to install supplementary air conditioning units in the
Premises and the cost thereof, including the cost of installation,
operation and maintenance thereof, shall be paid by Sublessee to
Sublessor upon demand by Sublessor. Sublessee shall be responsible
for the installation and cost of Sublessee's operating equipment and
ancillary equipment required to support it.
17. PARKING. Sublessee shall have the right to 18 unassigned parking spaces at
no charge to Sublessee.
18. IMPROVEMENTS. Sublessor shall, at Sublessor's sole expense, complete
improvements indicated per Exhibit 2 and in keeping with building
standards. Ceilings shall be open and premises shall be carpeted with new
gray carpet to complement existing first floor carpet.
19. SIGNAGE. Sublessee shall have the right, subject to Sublessor's approval,
to place the company name or names on its entry door in accordance with
building standards and, subject to Sublessor's approval, a sign at walkway
entrance to Premises from driveway/parking area.
20. OPTION TO EXTEND TERM. Subject to availability of Sublease Premises at the
sole discretion of Sublessor, and provided Sublessee is not in material
default of its obligations under this sublease, Sublessor grants to
Sublessee the option to extend the initial term of the sublease for one (1)
year ending November 30, 2000. The option to extend shall be exercised
within thirty (30) working days of Sublessor's notification to Sublessee in
writing not later than six months prior to the end of the then existing
term, that Sublease premises are available for Sublease for the extended
term.
The base monthly rent payable during such extended term shall be $18,480.00
per month.
21. HOLDING OVER. Any holding over by Sublessee after expiration or other
termination of the term of this Sublease shall not constitute a renewal or
extension of the Sublease or give Sublessee any rights in or to the
Subleased Premises except as expressly provided in this Sublease. Any
holding over after the expiration or other termination of the term of this
Sublease shall be construed to be a tenancy from month to month, on the
same terms and conditions herein specified insofar as applicable except
that the monthly Basic Rent shall be increased to an amount equal to two
hundred percent (200%) of the monthly Basic Rent required during the last
month of the Sublease term.
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22. ALTERATIONS. In addition to compliance with all the terms of the Master
Lease, any alterations made by Sublessee must be approved in writing in
advance by Sublessor, and Sublessee may, at Sublessor's option, be required
to remove any such alterations at the end of the Sublease term.
Sublessor: Sublessee:
Packeteer, Inc. Audio Highway, Inc.
a Delaware Corporation
By: /s/ Craig Elliot /s/ Jeff Harmon By: /s/ N.M. Schulhof
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Its: CEO COO/CFO Its: President
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Date: 10/5/97 10-5-97 Date: 10/2/97
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Master Lessor:
Eldon R. Hoffman
By: /s/ Eldon R. Hoffman
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Its:
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Date: 10-10-97
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