This
SUB-SUBLEASE (this “Sub-sublease”) is entered into as
of June 27, 2006 (the “Execution Date”) by and
between TERAYON COMMUNICATION SYSTEMS, INC., a Delaware corporation
(“Sub-sublandlord”), and CITRIX SYSTEMS, INC., a
Delaware corporation (“Sub-subtenant”).
1.1 Premises . Sobrato Development Companies #961, a
California limited partnership (successor-in-interest to Sobrato
Interests III, a California limited partnership (“Original
Sobrato”)) (“Master Landlord”), holds fee simple
title to a parcel of land located at 4988 Great America Parkway,
Santa Clara, California, as more particularly described in
Exhibit A attached hereto, including a five
(5) story building located on such land, which building
contains approximately One Hundred Forty Thousand Nine Hundred
Sixty-Five (140,965) square feet (the “Building,”
together with such land is sometimes collectively referred to
herein as the “Property”). The “Premises,”
as more particularly described in Exhibit B attached
hereto, shall mean the Property together with: (a) all other
buildings, structures and improvements, if any, located on the
Property; and (b) the appurtenances of Master Landlord and all
the estate and rights of Master Landlord in and to the
Property.
1.2 Master Lease . Original Sobrato entered into a Lease,
dated September 18, 1996 (the “Master Lease”),
with VeriFone, Inc., a California corporation,
predecessor-in-interest to Hewlett-Packard Company, a Delaware
corporation (“Sublandlord”), pursuant to which Master
Landlord leased the Premises to Sublandlord.
1.3 Sublease . Sublandlord and Sub-sublandlord entered into
a Triple Net Sublease dated April 1, 2002 (the
“Sublease”), pursuant to which Sublandlord subleases
the Premises to Sub-sublandlord. Sub-subtenant acknowledges its
receipt in April, 2006, from Sub-sublandlord, of a copy of the
Master Lease, the Sublease, and an itemized triple-net
(NNN) expense report including all utility and janitorial
costs, for the Premises for each month of calendar year 2005.
Sub-sublandlord represents that it has provided Sub-subtenant with,
to best of Sub-sublandlord’s knowledge, true, complete and
accurate copies of the Master Lease and Sublease in
Sub-sublandlord’s possession.
1.4 Desire to Sub-sublease . Sub-sublandlord desires to
sub-sublease the Premises to Sub-subtenant, and Sub-subtenant
desires to sub-sublease the Premises from
Sub-sublandlord.
NOW,
THEREFORE , in consideration of the covenants and agreements
of the parties contained in this Sub-sublease, and for other good
and valuable consideration, the receipt and sufficiency of which
are conclusively acknowledged by both parties, Sub-sublandlord and
Sub-subtenant agree as set forth below.
2. DEMISING
OF PREMISES .
Sub-sublandlord hereby sub-subleases the Premises to Sub-subtenant,
and Sub-subtenant hereby sub-subleases the Premises from
Sub-sublandlord, for the Sub-sublease Term (as defined below in
Section 3 ), upon the terms and conditions of this
Sub-sublease.
3.
SUB-SUBLEASE TERM .
Subject to Sections 4, 5 and 6 below, the term
of this Sub-sublease (the “Sub-sublease Term”) shall
commence on or before September 18, 2006 (the “Targeted
Delivery Date”), and shall expire on October 31, 2009
(the “Expiration Date”), unless terminated sooner in
accordance with the terms of this Sub-sublease. On the Targeted
Delivery Date Sub-sublandlord shall deliver sole and exclusive
possession, free of all parties in possession, of all the Premises.
The date on which Sub-sublandlord actually delivers sole and
exclusive possession of all the Premises shall constitute the
commencement date (the “Commencement Date”). Whether or
not the Targeted Delivery Date actually precedes or coincides with
Sub-sublandlord’s delivery of the possession of all of the
Premises, the parties shall confirm the Commencement Date by a
letter agreement substantially in the form of Exhibit C
attached hereto, within five (5) business days after the
Commencement Date occurs, and Base Rent (as defined in
Subsection 7.1 below) shall be due and payable in accordance
with Subsection 7.2 and Sub-subtenant shall continue paying
Additional Rent (as defined in Subsection 7.3
below).
4.
CONDITIONS PRECEDENT TO EFFECTIVE SUB-SUBLEASE COMMENCEMENT
DATE. Notwithstanding
the Sub-sublandlord and Sub-subtenant’s full execution of
this Sub-sublease, the Sub-sublease Term shall not commence unless
all of the following eight (8) conditions precedent (the
“Conditions Precedent”) have occurred on or before
June 23, 2006 (the “Conditions Precedent Satisfaction
Date”). If any of the Conditions Precedent fail to occur by
the Conditions Precedent Satisfaction Date (subject to force
majeure as set forth in Subsection 12.3 below), the Targeted
Delivery Date shall be extended one business day for each business
day of delay in the occurrence of all the Conditions Precedent. If
any of the Conditions Precedent fail to occur by June 30,
2006, this Sub-sublease shall terminate, which termination shall
render all terms and conditions hereunder null and void, unless the
Sub-sublandlord and Sub-subtenant mutually agree in writing to
extend such date.
4.1 Execution of this Sub-sublease. Sub-sublandlord and
Sub-subtenant shall fully execute this Sub-sublease.
4.2 Sub-sublandlord’s Replacement Space.
Sub-sublandlord and a third-party landlord shall sign a lease for
replacement space, thereby enabling Sub-sublandlord to deliver to
Sub-subtenant the Premises on or before the Targeted Delivery
Date.
4.3 Landlord Consents. Sub-sublandlord shall obtain the
written consent to this Sub-sublease from: (1) the Master
Landlord, in a form acceptable to Sub-subtenant, in the exercise of
its reasonable discretion (the “Master Landlord
Consent”), and (2) the Sublandlord, in substantially the
form of the attached (the “Sublandlord Consent,”
together with the Master Landlord Consent referred to herein as the
“Landlord Consents”). Each of the Landlord Consents
shall include their respective approvals of the TI Plans, pursuant
to Subsection 4.4 below.
4.4 Approval of Sub-subtenant’s Tenant Improvements.
Master Landlord, Sublandlord and Sub-sublandlord shall deliver
their reasonable written approval of the initial tenant
improvements proposed by Sub-subtenant for the Premises.
Sub-sublandlord acknowledges that Sub-subtenant delivered its TI
Plans on May 12, 2006 to Master Landlord,
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Sublandlord and
Sub-sublandlord. Such written approvals of the TI Plans by the
Master Landlord and Sublandlord shall be set forth in their
respective Landlord Consents.
4.5 Release from Master Lease and Sublease Restoration
Obligations. Upon written approval of the TI Plans by Master
Landlord: (i) Sub-subtenant shall be released from all
restoration obligations otherwise owed by Sublandlord and/or
Sub-sublandlord under the Master Lease or Sublease;
(ii) Sub-sublandlord shall be released from all restoration
obligations under the Sublease; and (iii) Sublandlord shall be
released from all restoration obligations under the Master Lease
and Sublease. If Master Landlord does not approve
Sub-subtenant’s TI Plans and Sub-subtenant enters into the
Definitive Lease (as defined in Subsection 4.7 below), then,
and only then shall Sub-subtenant assume the restoration
obligations of Sublandlord and Sub-sublandlord.
4.6 Sublandlord’s Acceptance of Sub-subtenant’s
Attornment. Sub-sublandlord shall use commercially reasonable
efforts to obtain from Sublandlord an attornment agreement as
contained in the Sublandlord Consent attached hereto or a separate
agreement to the effect that if any default by Sub-sublandlord
under the Sublease causes the Sublease to terminate, Sublandlord
will accept Sub-subtenant’s attornment and honor this
Sub-sublease (unless Sub-subtenant is in breach of this
Sub-sublease).
4.7 Master Landlord’s Acceptance of Sub-subtenant’s
Attornment. Sub-sublandlord shall use commercially reasonable
efforts to obtain from Master Landlord the Master Landlord Consent
which will provide that if any default by Sublandlord under the
Master Lease causes the Sublease to terminate, Master Landlord will
accept Sub-subtenant’s attornment and honor this Sub-sublease
for the balance of the Sub-sublease Term (unless Sub-subtenant is
in breach of this Sub-sublease).
4.8 Execution of Lease Agreement by and between Master Landlord
and Sub-subtenant . Master Landlord and Sub-subtenant are
contemporaneously negotiating a definitive lease for the Premises
with an effective date on or about November 1, 2009. This
definitive lease for the Premises between Master Landlord and
Sub-subtenant shall have been fully executed (the “Definitive
Lease”).
5. DELIVERY
OF POSSESSION. (a) Sub-sublandlord shall deliver sole and
exclusive possession, free of all parties in possession, of all the
Premises to Sub-subtenant on or before the Targeted Delivery Date.
If Sub-sublandlord does not deliver possession to Sub-subtenant of
the Premises, or any portion thereof, on or before the Targeted
Delivery Date, Sub-sublandlord shall pay Base Rent (as defined in
Subsection 7.1 below) and Additional Rent (as defined in
Subsection 7.3 below) for whatever portion of the Premises
that Sub-sublandlord then occupies for the period of time it
remains in possession of such space after the Targeted Delivery
Date until the date Sub-sublandlord vacates such space.
(b) Notwithstanding
the foregoing, if for any reason (other than Sub-subtenant’s
default under this Sub-sublease) Sub-sublandlord does not deliver
possession of the Premises to Sub-subtenant on or before
October 31, 2006, (the “Vacation Date”),
Sub-subtenant shall have the right to either (i) terminate
this Sub-sublease by providing written notice of the same to
Sub-sublandlord within five (5) days after the Vacation Date
(“Final Termination Right”), or (ii)
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institute legal
or other action of specific performance to require Sub-sublandlord
to vacate the Premises, or any portion thereof, and deliver
possession of the same to Sub-subtenant in the condition required
under this Sub-sublease.
6. EARLY
OCCUPANCY. Following the
Conditions Precedent Satisfaction Date, Sub-subtenant shall have
the right to occupy the fourth (4 th )
and fifth (5 th )
floors of the Building, without paying any Base Rent (as defined in
Subsection 7.1 below), but shall pay its pro rata share
(depending on the amount of space in the Building occupied by
Sub-subtenant) of Additional Rent (as defined in Subsection
7.3 below), for the period from the date Sub-subtenant takes
possession of the fourth (4 th )
and fifth (5 th )
floors of the Building until the Targeted Delivery Date. If, prior
to the Targeted Delivery Date, Sub-sublandlord vacates the first
(1 st
) and second (2
nd ) floors of the Building and delivers the same
to Sub-subtenant for its sole and exclusive occupancy,
Sub-subtenant shall have the right to occupy such floors without
paying Base Rent, but shall pay its pro rata share (depending on
the amount of space in the Building occupied by Sub-subtenant) of
Additional Rent, for the period from the date Sub-subtenant takes
possession of such floors until the Commencement Date.
7.1 Payment; Proration, etc. The parties hereto shall cause
Sublandlord to agree in its Landlord Consent to this Sub-sublease
and shall cause Sublandlord to send its monthly invoices for all
rent under the Sublease to each of Sub-sublandlord and
Sub-subtenant at the addresses under Subsection 12.4 below
(Notices) showing their respective share of the rent then due.
Sub-sublandlord and Sub-subtenant shall pay all rental payments due
hereunder, in accordance with the payment schedule under
Section 3.1 of the Sublease, as evidenced by such invoices,
directly to Sublandlord at 1501 Page Mill Road, MS 1001, Palo Alto,
CA 94304, or at such other address as may be designated in writing
by Sublandlord, on the first day of each and every month of the
Sub-sublease Term (except for the first month’s rent which
shall be due pursuant to Subsection 7.2 below) as base
monthly rent (“Base Rent”) for the Premises.
Sub-sublandlord
shall be responsible to pay Sublandlord directly all rents owed
under Section 3.1 of the Sublease less the following rents which
shall be paid by Sub-subtenant directly to Sublandlord:
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Duration
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Price/SF/Month/NNN
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From Early Occupancy Date to the Commencement
Date
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$0 (no Base
Rent)
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Months 1-12 following the Commencement
Date
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$1.25
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$1.2875
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Months 25 – Expiration Date
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$1.33
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Fixed rent for
partial months at the beginning or end of the Sub-sublease Term
shall be prorated based on the number of days in such month within
the Sub-sublease Term divided by thirty (30).
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7.2 First Month’s Rent. Sub-subtenant shall pay to
Sublandlord an amount equal to the first month’s payable rent
no later than five (5) business days after the Commencement
Date. If Sub-subtenant subsequently exercises its Final Termination
Right, then such rent shall be returned to
Sub-subtenant.
7.3 Additional Rent. The parties hereto shall cause
Sublandlord to agree in its Landlord Consent and cause Sublandlord
to send its monthly invoices for Additional Rent (as defined in
this Subsection 7.3 ) directly to Sub-subtenant. During the
term of this Sub-sublease and pursuant to Section 6
above, Sub-subtenant shall pay directly to Sublandlord an amount
equal to all payments of additional rent required to be made by
Sublandlord pursuant to the Sublease, including without limitation
operating costs and Maintenance (as defined in Section 6.1 of
the Sublease) costs (“Additional Rent”). Sub-subtenant
shall pay each such item of Additional Rent at the same time as
Sub-sublandlord is required to make the corresponding payment under
Section 3.3 of the Sublease. Additional Rent for any partial month
shall be prorated as set forth in Subsection 7.1
above.
7.4 Other Payments Relating to the Premises . Sub-subtenant
shall pay any and all other payments due in accordance with the
Sublease and Master Lease with respect to the Premises during the
Sub-sublease Term, but excluding any payments owed by Sublandlord
or Sub-sublandlord for the period prior to the Commencement Date
and excluding any liabilities of Sublandlord under the Sublease
arising prior to the Commencement Date. Sub-subtenant shall make
all such payments at the same time as Sub-sublandlord is required
to make the corresponding payment under the Sublease, but in no
event shall Sub-subtenant be required to make any such payment
earlier than ten (10) business days after receipt of an
invoice from Master Landlord, Sublandlord or Sub-sublandlord. Any
such other payments for any partial month shall be prorated as set
forth in Subsection 7.1 above.
Anything
in this Sub-sublease to the contrary notwithstanding, Sub-subtenant
shall not be required to make a payment under Subsections
7.1 and 7.3 of this Sub-sublease to more than one of the
following parties: Sub-sublandlord, Sublandlord or Master
Landlord.
7.5 Other Payments to Sub-sublandlord . Upon
Sub-subtenant’s receipt of confirmation of each of the
following deliverables set out below
(“Sub-sublandlord’s Deliverables”), Sub-subtenant
shall cause to be paid to Sub-sublandlord a one time payment of
three hundred thousand dollars ($300,000.00), of which one hundred
fifty thousand dollars ($150,000.00) is to be made thirty
(30) days following Sub-subtenant’s receipt of
confirmation of Sub-sublandlord’s Deliverables.
Sub-sublandlord’s Deliverables constitute:
(a)
an executed Sub-sublease agreement between Sub-subtenant and
Sub-sublandlord with Sublandlord’s consent; and
(b)
an executed lease agreement between Sub-sublandlord and Master
Landlord.
The balance of
one hundred fifty thousand dollars ($150,000.00) is to be made
thirty (30) days following the Commencement Date.
8. CONDITION
OF PREMISES .
Sub-subtenant shall take possession of the Premises in its
“AS IS” condition, subject to the requirements of this
Section 8 .
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8.1 Good Working Condition. Sub-sublandlord shall deliver
the Premises to Sub-subtenant with lighting and /or ballasts
replaced or repaired that reasonably require replacement or repair,
and any damaged or soiled ceiling tiles replaced. Sub-sublandlord
warrants that the HVAC system is in good working order as of the
Commencement Date, and that, to the best of Sub-sublandlord’s
knowledge, Sub-sublandlord has not received any written notice of
any violation of any statute, code, regulation, ordinance or rule
of any governmental agency as of the Commencement Date.
Sub-sublandlord has provided Sub-subtenant with any recent
inspections, maintenance records or reports on the Premises,
including documents relating to HVAC (mechanical), electrical, and
plumbing systems, and the roof. Sub-subtenant, at its sole cost and
expense, hereby confirms that it has ample time to undertake its
own inspections of any of the Building’s systems and other
portions of the Premises.
8.2 Existing Furniture and Partitions.
(a) Sub-subtenant shall have the right to use the existing
office furniture located on the Premises, including all conference
room furniture, and furniture systems and partitions (collectively,
the “Furniture”), during the term of this Sub-sublease
at no additional cost to Sub-subtenant. Sub-subtenant shall be
solely responsible for all costs associated with the maintenance,
repair, modification and relocation of the Furniture located on or
brought onto the Premises. At the end of the Sub-sublease Term, all
items included herein shall become the sole property of
Sub-subtenant. On the Expiration Date, Sub-sublandlord shall
transfer all of its right, title and interest in the Furniture,
free and clear of all liens and encumbrances, to Sub-subtenant
under the Bill of Sale attached hereto as Exhibit D .
An inventory of the Furniture, agreed to by the parties hereto, as
of the Execution Date is attached hereto as
Schedule 8.2 .
(b)
Upon Sub-subtenant’s request, submitted to Sub-sublandlord
within fifteen (15) days after the expiration of the Final
Termination Right, Sub-sublandlord shall give to Sub-subtenant a
date on which Sub-sublandlord shall reset, reconnect and electrify
all or a portion of the cubicle partitions on both the fourth
(4 th
) and fifth (5
th ) floors of the Building, in the same
configuration as existed during Sub-sublandlord’s occupancy
of such floors. Alternatively, at Sub-subtenant’s option,
Sub-sublandlord and Sub-subtenant shall estimate and agree to the
cost of resetting, reconnecting and electrifying all or a portion
of the cubicle partitions and Sub-sublandlord shall pay the costs
for the same to Sub-subtenant.
8.3 Voice and Data Systems. Sub-subtenant shall have the
right to use the existing voice and data network wiring installed
on the Premises at no cost to Sub-subtenant. Prior to the Targeted
Delivery Date, Sub-sublandlord shall remove the complete phone
system, including all handsets, phone sets, switches and voice
mail, from the Premises.
8.4 Removal of Sub-sublandlord’s Signage.
Sub-sublandlord, at its sole cost and expense, shall remove all
personal signage on the Premises within five (5) business days
after Sub-sublandlord has provided Sub-subtenant the date on which
the last portion of the Premises is ready for occupancy by
Sub-subtenant and after the Commencement Date.
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9.
SUBLEASING COVENANTS .
9.1 Incorporation of Sublease . The Sublease is hereby
incorporated by reference into this Sub-sublease, except to the
extent the Sublease is inconsistent with the express terms of this
Sub-sublease, and, as incorporated, becomes an agreement between
Sub-sublandlord and Sub-subtenant. Wherever this Sub-sublease
conflicts with an incorporated term of the Sublease, this
Sub-sublease shall govern, but wherever reasonably possible, such a
conflict shall be resolved by making Sub-subtenant’s
obligations under both documents coterminous and exactly the same.
Notwithstanding the early termination of the Sublease or the Master
Lease for any reason whatsoever, the parties hereto shall be bound
by the provisions of the Sublease incorporated herein by this
Subsection 9.1 . Notwithstanding the foregoing,
Sub-subtenant shall not be subject to, or have any obligations
under Sections 7 (“Broker”) and 12 (“Letter
of Credit”) of the Sublease.
9.2 Defined Terms . Except as otherwise provided in
Subsection 9.1 above, each reference to
“Sublessor” in the Sublease shall be deemed replaced by
a reference to “Sub-sublandlord.” Except as otherwise
provided in Subsection 9.1 above, each reference to
“Sublessee”
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