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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
March 9, 2006
Date of Report (Date of earliest event reported)
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SONUS NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-30229 04-3387074
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
250 APOLLO DRIVE, CHELMSFORD, MASSACHUSETTS 01824
(Address of Principal Executive Offices) (Zip Code)
(978) 614-8100
(Registrant's telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On February 22, 2006, Sonus Networks, Inc. (the "Company") entered into
a Sublease Agreement with Teradyne, Inc. for the leasing of 7 Technology Park
Drive in Westford, Massachusetts. The Sublease became effective on March 9, 2006
upon execution and delivery of a consent to the Sublease by the owner of the
building. The Sublease is for approximately 130,000 square feet of general
office space for a term extending from January 1, 2007 through July 14, 2012.
The Company will pay an annual base rent of $1,235,000, plus operating expenses.
The Company intends to relocate its corporate headquarters from its present
location at 250 Apollo Drive in Billerica, Massachusetts to the building at 7
Technology Park Drive.
A copy of the Sublease Agreement is attached to this Current Report on
Form 8-K as Exhibit 10.1 and is incorporated herein by reference as though fully
set forth herein. The foregoing summary of the Sublease Agreement is qualified
in its entirety by the complete text of Exhibit 10.1 filed herewith.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
10.1 Sublease Agreement between Sonus Networks, Inc. and
Teradyne, Inc. dated as of February 22, 2006.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 9, 2006 SONUS NETWORKS, INC.
By: /s/ Charles J. Gray
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Vice President and General Counsel
EXHIBIT INDEX
10.1 Sublease Agreement between Sonus Networks, Inc. and Teradyne, Inc. dated
as of February 22, 2006
Exhibit 10.1
SUBLEASE AGREEMENT
This SUBLEASE AGREEMENT (this "Sublease") is made as of the 22nd day of
February, 2006 (the "Effective Date"), between Teradyne, Inc., a Massachusetts
corporation, as successor by merger to GenRad, Inc., a Massachusetts corporation
("Sublessor"), having a principal address of 321 Harrison Avenue, Boston,
Massachusetts 02118, and Sonus Networks, Inc., a Delaware corporation
("Sublessee"), having a principal address of 250 Apollo Drive, Chelmsford, MA
01824.
RECITALS:
A. Michelson Farm - Westford Technology Park V and VIII Limited
Partnership, as successor to Arturo J. Gutierrez and John A. Cataldo, as Class A
Trustees, and Marc D. Levy and Howard Stock, as Class B Trustees, as trustees of
Michelson Farm - Westford Technology Park Trust, u/d/t dated October 1, 1984 and
recorded with the Middlesex North Registry of Deeds in Book 2863, Page 235
("Master Lessor"), as landlord, and Sublessor, as tenant, entered into that
certain Lease dated July 26, 1996, as amended by that certain First Amendment to
Lease dated May 20, 1997 (collectively the "Master Lease"), a true and accurate
copy of which is attached hereto as Exhibit A (with economic terms redacted),
covering approximately 130,000 square feet of space comprising the entire
building (the "Building") located at property known as Building 5, 7 Technology
Park Drive, Westford, Massachusetts (the "Premises"), as more particularly
described in the Master Lease and Exhibit F attached hereto.
B. Sublessor desires to sublease the entire Premises (the
"Subleased Premises") upon the terms and conditions set forth in this Sublease.
AGREEMENT:
In consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Sublessor and Sublessee agree as
follows:
1. Sublease.
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1.1 Term. Sublessor demises and subleases to Sublessee and Sublessee hires
and subleases from Sublessor the Subleased Premises, together with all
appurtenances applicable thereto pursuant to the Master Lease for a
term (the "Sublease Term") commencing on January 1, 2007 or the date
Sublessee occupies the Premises for its business purposes if earlier
than January 1, 2007 (the "Sublease Commencement Date") and ending on
July 14, 2012 (the "Termination Date"), unless sooner terminated
pursuant to any provision hereof, and subject to the terms of Paragraph
1.2 below and Section 3.2 of the Master Lease.
Sublessee will be granted early access to the Subleased Premises for
the period commencing on September 1, 2006 and continuing until the
Sublease Commencement Date (the "Early Access Period") for the purpose
of preparing the Subleased Premises for its occupancy. During the Early
Access Period, Sublessee shall be subject to all the terms and
conditions of this Sublease except for those relating to the payment of
Rent; provided, however, that Sublessee shall be obligated to pay for
all utilities consumed during the Early Access Period.
1.2 Delay in Sublease Commencement Date. If for any reason Sublessor cannot
deliver possession of the Subleased Premises to Sublessee free and
clear of all tenants and occupants on the Sublease Commencement Date,
Sublessee may elect to terminate this Sublease as of such date with
such termination constituting Sublessee's sole and exclusive remedy.
Sublessor shall not be subject to any liability therefore.
Page 1
1.3 Use. The Subleased Premises shall be used and occupied only for general
office, light manufacturing and assembly, laboratory, research and
development use and for no other purpose.
1.4 Security Deposit/Deposit Reduction.
1.4.1 Security Deposit. Sublessee shall pay to Sublessor a
Security Deposit in the total amount of $500,000.00 (the
"Security Deposit") as security for Sublessee's performance of
all of the provisions of this Sublease. The Security Deposit
shall be in the form of an irrevocable letter of credit issued by
a bank and in the form attached as Exhibit D. Sublessor may (but
shall not be required to) use the Security Deposit or any portion
thereof to cure any event of default under this Sublease or to
compensate Sublessor for any damage Sublessor incurs as a result
of Sublessee's failure to perform any of its obligations
hereunder. In such event, and upon written notice from Sublessor
to Sublessee specifying the amount of the Security Deposit so
utilized by Sublessor and the particular use of which such amount
was used, Sublessee shall immediately deposit with Sublessor an
amount sufficient to return the Security Deposit to its original
amount. Sublessee's failure to make such payment to Sublessor
within five business (5) days of Sublessor's notice shall
constitute an Event of Default. If Sublessee is not in default
hereunder at the expiration or termination of this Sublease (or
for so long as Sublessee is in possession of the Subleased
Premises), Sublessor shall return to Sublessee within thirty (30)
days the Security Deposit or the balance thereof then held by
Sublessor; provided, however, that in no event shall any such
return be construed as an admission by Sublessor that Sublessee
has performed all of its obligations hereunder. No holder of a
superior interest in or mortgage on the underlying real estate,
nor any purchaser at any judicial or private foreclosure sale of
the real property or any portion thereof, shall be responsible to
Sublessee for such Security Deposit unless such holder or
purchaser shall have actually received the same.
1.4.2 Deposit Reduction. So long as the Sublessee is not then
otherwise in default under this Sublease, Sublessor shall reduce
the Security Deposit in two (2) annual installments each in the
amount of $100,000.00 effective on the following dates: January
1, 2008 and January 1, 2009, respectively. Sublessee shall
furnish Sublessor with a replacement Letter of Credit in the form
called for by this Section 1.4, on the dates specified above and
reduced by the amounts specified above.
1.5 Force Majeure. In the event that Sublessor or Sublessee shall
be delayed, hindered in or prevented from the performance of any action
or obligation required under this Sublease by reason of acts of God,
strikes, lockouts, labor troubles or disputes, failure of power or
utilities, delay in transportation, fire, vandalism, accident, flood,
severe weather, other casualty, government regulations, riot,
insurrection, civil commotion, sabotage, explosion, war, terrorism,
natural or local emergency, acts or omissions of others, including the
parties hereto, or other reasons of a similar or dissimilar nature not
solely the fault of, or under the exclusive control of, Sublessor or
Sublessee (an "Event of Force Majeure"), then performance of such act
or obligation shall be extended for the period equivalent to the period
of such delay. The foregoing shall not apply to any obligation to pay
Rent or other charges pursuant to this Lease.
Page 2
2. Incorporation of the Master Lease.
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2.1 Compliance with Master Lease. Except as expressly otherwise provided in
this Sublease, Sublessee shall timely and fully comply with all of the
provisions of the Master Lease that are to be observed or performed
during the Sublease Term by Sublessor as tenant under the Master Lease
with respect to the Subleased Premises, specifically excluding any
obligation by Sublessor to pay Fixed Rent to Master Lessor pursuant to
Article IV of the Master Lease. Notwithstanding any other provision of
this Sublease, Sublessee shall not, by any act or omission, cause
Sublessor to be in violation of or in default under the Master Lease,
or do or permit any act that is in violation of the Master Lease.
2.2 Incorporation of Master Lease. Insofar as the provisions of the Master
Lease do not conflict with specific provisions of this Sublease, such
provisions (except for the Excluded Provisions listed in Paragraph 3
below) are incorporated by this reference into this Sublease as fully
as if completely restated herein. Subject to the preceding sentence,
Sublessee shall be bound by all the provisions of the Master Lease
pertaining to the Subleased Premises and shall perform all of the
obligations and responsibilities that Sublessor is obligated to perform
pursuant to the Master Lease from and after the Sublease Commencement
Date pertaining to the Subleased Premises. Subject to the first
sentence of this Section 2.2 and except as may be otherwise provided in
this Section 2.2, Sublessor shall be bound by all the provisions of the
Master Lease pertaining to the Subleased Premises and shall perform, or
shall cause Master Lessor to perform, all of the obligations and
responsibilities that Master Lessor is obligated to perform pursuant to
the Master Lease pertaining to the Subleased Premises from and after
the Sublease Commencement Date. For purposes of this Sublease, wherever
in the Master Lease the word "Landlord" is used, it shall mean
Sublessor, wherever in the Master Lease the word "Tenant" is used, it
shall mean Sublessee, and wherever in the Master Lease the words
"Premises" or similar words are used, they shall mean the Subleased
Premises; provided, however, that the word "Landlord" in the Master
Lease shall refer to Master Lessor for purposes of Articles VII, XIV
and XX only, and shall refer to both Master Lessor and Sublessor in
Section 16.1 and Article XVII (subject to Section 10.2 of this Sublease
with respect to Sublessor only). Notwithstanding anything to the
contrary contained herein, if Sublessor is obligated hereunder to
perform or to cause Master Lessor to act or perform under the Master
Lease, any delay or failure by Master Lessor to so act or perform shall
not be a Force Majeure Event hereunder All terms used herein with
initial capital letters that are not specifically defined herein shall
have the same meanings attributed to those terms in the Master Lease,
provided that the same are not in conflict with the terms and
provisions of this Sublease.
2.3 Time Periods. With respect to any time periods provided in the Master
Lease: (a) In any instance where Master Lessor under the Master Lease
has a certain time period in which to notify Sublessor of some decision
by Master Lessor that Master Lessor will or will not take some action,
Sublessor shall have an additional ten (10) day period after receiving
such notice in which to notify Sublessee; and (b) In any instance where
Sublessor, as tenant under the Master Lease, has a certain time period
in which to notify Master Lessor under the Master Lease of some
decision by Sublessor that Sublessor will or will not take some action,
Sublessee must notify Sublessor at least ten (10) days prior to the end
of the period granted in the Master Lease of any decision by Sublessee
that Sublessee will or will not take some action.
2.4 Subject to Master Lease. This Sublease is expressly subject and
subordinate to the Master Lease, and to the rights of Master Lessor
thereunder, except as may be otherwise expressly agreed in writing by
Master Lessor, and Sublessee shall under no circumstances have any
greater rights than does Sublessor under the Master Lease, and no
provision of this Sublease shall be construed in a manner that would
constitute a breach of the Master Lease. Without limiting the
generality of the foregoing, in the event of the termination or
cancellation of the Master Lease for any reason, this Sublease shall
automatically be deemed terminated effective as of the same day of such
cancellation or termination of the Master Lease, and Sublessor shall
have no liability or obligation to Sublessee as a result thereof
(except that Sublessor shall return to Sublessee any portion of the
Security Deposit which has not been previously used by Sublessor as
provided herein); provided, however, that if the Master Lease
terminates as a result of a default or breach by Sublessee under this
Sublease or the Master Lease, then Sublessee shall be responsible to
Master Lessor for all of the obligations of the Tenant under the Master
Lease in the event of such termination and pay to Master Lessor any and
all damages provided for in the Master Lease in the event of such
termination, but shall not be otherwise liable to Sublessor.
Page 3
2.5 Approval of Master Lease. Sublessee represents that it has read, is
familiar with, and agrees to all of the applicable provisions of the
Master Lease to the extent that such provisions have been incorporated
herein by reference.
2.6 Services; Performance by Master Lessor. Sublessor shall provide, or
shall cause the Master Lessor to provide, the services and obligations,
including without limitation the furnishing of utilities, maintenance,
repairs and replacements, as provided in Sections 6.1, 10.1, 15.1, 16.2
and Article XXI of the Master Lease (collectively, "Services"), and
Sublessor shall otherwise perform, or cause the Master Lessor to
perform, all of the covenants of Master Lessor under the Master Lease.
Notwithstanding anything herein to the contrary, performance by Master
Lessor under the Master Lease shall be deemed accepted by Sublessee as
performance by Sublessor hereunder. Except as otherwise provided in
this Sublease, Sublessor shall not be responsible for any breach of the
Master Lease by Master Lessor or any nonperformance or noncompliance
with any provision thereof by Master Lessor, including without
limitation, the failure of Master Lessor to provide any Services,
except to the extent such breach is a result of Sublessor's gross
negligence or willful misconduct. Sublessor makes no representation
that Master Lessor will provide any or all of the Services.
2.7 Consent of Master Lessor. Wherever Sublessor's consent is required
under this Sublease, the consent of Master Lessor shall also be
required (as and to the extent set forth in the Master Lease). Whenever
Master Lessor's consent is required under the Master Lease, the consent
of Sublessor shall also be required. Whenever Sublessor's consent is
required, such consent shall not be unreasonably withheld, conditioned
or delayed.
2.8 Master Lessor's Representations and Warranties. Sublessor shall have no
liability or obligation to Sublessee based upon any representation or
warranty made by Master Lessor to Sublessor under Article VII of the
Master Lease.
2.9 Sublessor's Representations and Warranties. Sublessor represents and
warrants that: (a) the copy of the Master Lease attached hereto as
Exhibit A is true and complete; (b) the Master Lease evidences the
entire written agreement between the Master Lessor and the Sublessor;
(c) the Master Lease is in full force and effect and Sublessor holds
all the right, title and interest in and to the interests of Tenant
thereunder; (d) to the best of its knowledge as of the date hereof, the
Sublessor is not in default under the Master Lease and no conditions
exist which with the passing of time or the giving of notice would
result in default thereunder; (e) to the best of its knowledge as of
the date hereof, the Master Lessor is not in default under the Master
Lease, Master Landlord is in compliance with all representations and
warranties made under the Master Lease and no conditions exist which
with the passing of time or the giving of notice would resulting
default thereunder; and (f) it has no actual knowledge of any notices
from any governmental agencies of any environmental issues or pending
assessments which would have a material and adverse effect on
Sublessee's intended use of the Subleased Premises. With respect to any
representation or warranty set forth above where it is stated that
Sublessor has "no actual knowledge", such representation or warranty
shall be limited to the actual knowledge of Richard N. Lupien, Manager
Corporate Safety, Health & Real Estate of Sublessor, Sublessor warrants
and represents that Mr. Lupien is the person within Sublessor's
organization most likely to have knowledge of such subject matters. In
the event any environmental issues pre-existing Sublessee's possession
are found on the Subleased Premises or any Hazardous Substances in
excess of levels permitted under applicable law are found on or in the
Subleased Premises and such Hazardous Substances are not present as a
result of an act or omission of Sublessee, Sublessee shall have no
liability or obligation to Sublessor or Master Lessor with respect
thereto.
Page 4
2.10 Sublessor's Covenants. Sublessor covenants to perform all of the terms
and obligations required of it under the Master Lease with respect to
the payment of all Rents when due to Master Lessor. Sublessor shall use
reasonable efforts to enforce on behalf of Sublessee its rights under
the Master Lease. Sublessor further agrees not to consent to any
termination, amendment, revision or alteration of the Master Lease
without the prior written consent of Sublessee.
3. Inapplicability of Certain Provisions of Master Lease. The following
Paragraphs or provisions of the Master Lease (the "Excluded
Provisions") are NOT incorporated into this Sublease and do not form a
part of this Sublease except to the extent that they contain defined
terms or standards which are used or referenced herein: (a) any
provisions that are superseded by or in direct conflict with the
provisions hereof; (b) any provisions relating to Master Lessor's or
Sublessor's obligations regarding the initial construction or the
payment of an improvement allowance; and (c) Articles IV and IX (except
Section 9.3) and Sections 8.2, 26.1, 26.5 and Exhibits B-1, B-2, D-l,
D-2, K, L, M, P and Q of the Master Lease.
4. Rent.
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4.1 Base Sublease Rent.
4.1.1 Commencing on the Sublease Commencement Date, Sublessee shall
pay to Sublessor for the Subleased Premises rent in the
following amount (the "Base Sublease Rent"):
Annual Base Rent: $1,235,000 payable monthly at $102,916.67
All Base Sublease Rent and other payments shall be sent to:
Teradyne, Inc., 321 Harrison Avenue, Boston, Massachusetts,
02118, Attn: Real Estate Department or such other address(es)
from time to time designated in writing by Sublessor to
Sublessee.
4.1.2 Monthly installments of Base Sublease Rent will be due and
payable on or before the frst day of each succeeding calendar
month during the Sublease Term beginning on the Base Rent
Commencement Date to the address set forth in Paragraph 4.1.1
above; provided, however, that, if the Sublease Term commences
or ends on other than the first and last day, respectively, of
a calendar month, the Base Sublease Rent for the fractional
calendar month will be prorated on a per diem basis.
4.1.3 Sublessee shall transfer the telephone service, and all other
services and utilities separately metered and billed to the
Subleased Premises into its own name effective as of the
Sublease Commencement Date.
4.2 No Setoff. Sublessee agrees that Base Sublease Rent shall be payable
without any setoff or deduction, and without notice or demand.
Page 5
4.3 Late Charges and Interest. Sublessee acknowledges that late payment by
Sublessee of Rent (as defined below) will cause Sublessor to incur
costs not contemplated by this Sublease, the exact amount of which will
be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and any late charges,
fees or interest that Master Lessor may impose on Sublessor. If
Sublessor does not receive any Rent within five (5) business days of
the date on which it is due, then Sublessee shall pay to Sublessor (i)
an amount equal to $500.00, to cover the administrative expenses of
handling such late payment and (ii) interest on the overdue payment at
the rate equal to the prime commercial rate from time to time
established by the Bank of America, plus four percent (4%) per year
from such due date. The parties hereby agree that such administrative
payment and interest represent a fair and reasonable estimate of the
costs Sublessor will incur by reason of such late payment. Acceptance
of such administrative payment and interest by Sublessor shall in no
event constitute a waiver of Sublessee's default or breach with respect
to such overdue Rent nor prevent the exercise of any of the other
rights and remedies of Sublessor hereunder or under the Master Lease.
5. Additional Rent.
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5.1 Operating Expenses and Tax Expenses. Beginning on the Sublease
Commencement Date and continuing throughout the Sublease Term,
Sublessee covenants and agrees to pay to Sublessor, without notice or
demand and without abatement, deduction, or setoff, as additional and
supplemental rent during the Sublease Term the Operating and
Maintenance Costs and Real Estate Taxes and Utilities that are set
forth under Article V of the Master Lease (collectively, the
"Expenses") pursuant to the terms and conditions identified therein.
Sublessor shall promptly provide Sublessee with all documentation
furnished to Sublessor by Master Lessor with respect to the Expenses.
Base Sublease Rent, Expenses and all other amounts payable by Sublessee
to Sublessor hereunder are sometimes herein referred to collectively as
"Rent." Sublessee shall not be required to pay any charges imposed by
Master Lessor arising out of the failure of Sublessor to comply with
any term or obligation of the Master Lease prior to the date of this
Sublease, nor any failure of Sublessor to pay Rent to Master Lessor
when the same is due under the Master Lease as long as Sublessee is not
in default of its payment obligations under this Sublease, nor any
failure of Sublessor to comply with any covenant on the part of Tenant
for which it is responsible pursuant to the terms hereof or perform its
obligations set forth herein as Tenant under the Master Lease as long
as such failure does not result from the failure of Sublessee to comply
or perform as applicable under this Sublease, nor any failure of
Sublessor to comply with its obligations under this Sublease.
6. Insurance.
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6.1 Additional Insureds, Evidence of Insurance. Sublessee shall have the
option either to reimburse Master Lessor and/or Sublessor for the cost
of insurance as provided in Article XV of the Master Lease or to carry
in its own name all of the insurance policies and coverages required to
be carried by Sublessor under the Master Lease and shall name Master
Lessor and Sublessor and any other parties required pursuant to the
Master Lease as additional insureds on all such policies (except for
Sublessee's Workers' Compensation insurance). Prior to the earlier to
occur of Sublease Commencement Date or Sublessee's entry to or
occupancy of the Subleased Premises, and at least thirty (30) days
prior to each insurance policy's expiration date, Sublessee shall
deliver to Sublessor evidence satisfactory to Sublessor of maintenance
of insurance coverage with respect to the Subleased Premises as
required under the Master Lease. Without limiting the foregoing, the
insurance and indemnity provisions of the Master Lease are incorporated
herein by reference, it being the intention of the parties, and
Sublessee hereby agreeing, that Sublessee shall be bound by such
indemnity provisions as the tenant under the Master Lease and that all
such indemnity provisions shall be for the benefit of Master Lessor, as
the indemnified party thereunder.
Page 6
6.2 Waiver of Subrogation. Each party, notwithstanding any provisions of
this Sublease to the contrary, hereby waives any rights of recovery
against the other for injury or loss to property due to hazards covered
by insurance or required to be covered by insurance hereunder or under
the Master Lease. Any insurance carried by either party with respect to
the Subleased Premises and property therein or occurrences thereon
shall include a clause or endorsement to the effect that any such
waiver shall not adversely affect or impair said policies or prejudice
the right of the insured to recover thereon.
7. Condition of the Subleased Premises.
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Sublessee acknowledges and agrees that it has had the opportunity to
inspect and familiarize itself with the Subleased Premises and has done
so. Sublessee's taking possession of the Subleased Premises shall be
conclusive evidence by Sublessee that the Subleased Premises were in
good order and satisfactory condition when Sublessee took possession.
Sublessor shall deliver all building systems in good operating order
and condition and shall fix any leaks in the Subleased Premises and
replace or repair any of the ceiling tiles that have been stained,
damaged or removed due to any water leakage. Subject to the above,
Sublessee hereby accepts the Subleased Premises in their current "AS
IS, WHERE IS" condition, without any obligation on the part of
Sublessor to prepare or construct the Subleased Premises for
Sublessee's occupancy. Sublessee acknowledges that neither Sublessor
nor Sublessor's agents have made any representation or warranty as to
the condition of the Subleased Premises or the suitability of the
Subleased Premises for the conduct of Sublessee's business.
8. Indemnification and Waiver.
--------------------------
8.1 By Sublessee. To the maximum extent permitted by law, Sublessee hereby
assumes all risk of damage to property or injury to persons in, upon or
about the Subleased Premises from any cause whatsoever and agrees that
Sublessor, its affiliates, shareholders, directors, offcers, and
employees (the "Sublessor Parties") shall not be liable for, and are
hereby released from, any responsibility for any damage either to
person or property or resulting from the loss of use thereof, which
damage is sustained by Sublessee or by other persons claiming through
Sublessee except to the extent caused by the negligence or willful
misconduct of Sublessor, any of the Sublessor Parties or any of their
respective agents, employees, contractors, invitees, successors or
assigns. Sublessee shall indemnify and defend the Sublessor Parties and
hold the Sublessor Parties harmless from and against any and all
claims, losses, costs, actions, damages, liability, obligation and
expense (including, without limitation, court costs, reasonable
attorneys' fees and other costs of litigation) incurred by or asserted
against any of the Sublessor Parties arising from (i) any occurrence
in, on, or at the Subleased Premises, (ii) any acts, omission, conduct
or negligence in or about the Building by Sublessee or Sublessee's
agents, employees, contractors, invitees, sublessees, successors, or
assigns or (iii) the failure of Sublessee to perform any act,
obligation, or covenant of Sublessee under this Sublease or Sublessor
under the Master Lease that Sublessee is obligated to perform under
this Sublease. The obligations set forth in this Paragraph shall
survive the expiration or sooner termination of this Sublease.
Notwithstanding the above, Sublessee shall not be responsible for or
indemnify Sublessor for any such claims to the extent caused by the
negligence or willful misconduct of Sublessor, any of the Sublessor
Parties or any of their respective agents, employees, contractors,
invitees, successors or assigns.
8.2 By Sublessor. Sublessor shall indemnify and defend the Sublessee and
hold the Sublessee harmless from and against any and all claims,
losses, costs, actions, damages, liability, obligation and expense
(including, without limitation, court costs, reasonable attorneys' fees
and other costs of litigation) incurred by or asserted against
Sublessee to the extent arising from the failure of Sublessor to
perform any act, obligation, or covenant of Sublessor under this
Sublease or under the Master Lease that Sublessor is obligated to
perform under this Sublease. The obligations set forth in this
Paragraph shall survive the expiration or sooner termination of this
Sublease. Notwithstanding the above, Sublessor shall not be responsible
for or indemnify Sublessee for any such claims caused by the negligence
or willful misconduct of Sublessee.
Page 7
8.3 Notice of Dispute. If notice of any action, claim, proceeding or
investigation (each, a "Dispute") is received by any Sublessor Party or
Sublessee (each, as applicable, an "Indemnifed Party") in respect of
which indemnity may be sought against Sublessor or Sublessee (each, as
applicable, an "Indemnifying Party") hereunder, such Indemnifed Party
will promptly notify the Indemnifying Party in writing of the
commencement thereof, provided that the omission to so notify any
Indemnifying Party will not relieve such Indemnifying Party from any
liability to such Indemnified Party hereunder, except to the extent
that such Indemnifying Party is actually and materially prejudiced by
such failure.
8.4 Defense; Cooperation. Each Indemnifying Party shall assume and have the
right to control the defense and/or settlement of any Dispute with the
assistance of counsel of its choice, provided that any such settlement
shall impose no cost or liability on the Indemnifed Party. The
Indemnified Party shall have the right to employ separate counsel
("Secondary Counsel") to represent the Indemnifed Party. So long as the
Indemnifying Party is using diligent and reasonable efforts to defend
and/or settle the Dispute, the cost of the Secondary Counsel shall be
borne by the Indemnified Party. The Indemnifying Party and the
Indemnifed Party shall share information and cooperate with each other
as reasonably requested in connection with any Dispute.
9. Default.
-------
9.1 Default and Enforcement. The rights of Sublessor and Sublessee to
enforce the provisions of this Sublease, default under this Sublease,
and termination of this Sublease shall be governed by the applicable
default and remedy provisions of the Master Lease as if Sublessor and
Sublessee were landlord and tenant thereunder, respectively, except as
specified in Paragraphs 9.2 and 9.3, hereunder.
9.2 Cure Periods. The parties acknowledge that a failure to perform by
Sublessee under this Sublease may place Sublessor in default of its
obligations under the Master Lease. Therefore, the parties agree that
the period afforded Sublessee to cure a monetary default under this
Sublease shall be three (3) days less than that provided to Sublessor
under the Master Lease, if any, and the period afforded Sublessee to
cure a non-monetary default under this Sublease shall be fve (5) days
less than that provided to Sublessor under the Master Lease, if any or
1/2 the period specifed in the Master Lease if the cure period in the
Master Lease is five (5) or less days.
9.3 Notices. To the extent that the Master Lease requires notice to be
given by Master Lessor to Sublessor, Sublessor shall transmit such
notice to Sublessee promptly after notice is received by Sublessor.
Whenever Sublessor has an obligation to perform any act or to give any
notice to Master Lessor under the Master Lease and such obligation is
assumed by Sublessee in this Sublease, then Sublessee shall perform
such act or give such notice at least three (3) days before the due
date specifed in the Master Lease.
10. Assignment and Sublease.
-----------------------
Page 8
10.1 Assignment. Sublessee shall not assign this Sublease or sublease all or
any portion of the Subleased Premises without Master Lessor's and
Sublessor's prior written consent which shall not be unreasonably
withheld conditioned or delayed subject, however, to the terms and
conditions set forth in Article XVII of the Master Lease, and provided
that an assignment or sublet under this Sublease shall be permitted
without such consent if such assignment or sublease meets the
requirements of Section 17.3 of the Master Lease. Sublessee shall
promptly reimburse Master Lessor and Sublessor for all reasonable legal
and other expenses incurred by Master Lessor or Sublessor in connection
with any request by Sublessee for consent to assignment or subletting,
regardless of whether such consent is ultimately granted, including,
without limitation, any and all costs charged to Sublessor by Master
Lessor in connection with such proposed transaction. No permitted
assignment or sublease shall release Sublessee from liability under
this Sublease or any liability assumed by Sublessee under the Master
Lease. The consent of Sublessor to any one assignment or sublease shall
not be deemed to be Sublessor's consent to any other or further
assignment or sublease. Any assignee or sublessee will comply with all
of the provisions of the Master Lease assumed by Sublessor hereunder
and Master Lessor and Sublessor may enforce such provisions directly
against any assignee or sublessee. Sublessee understands that any and
all assignments or subleases hereunder shall be subject to the payment
to Sublessor, as additional rent, of all amounts required to be paid to
Master Lessor as set forth in Article XVII of the Master Lease.
10.2 Transfer Premium. If there is any assignment of this Sublease by
Sublessee for consideration, or a subletting of the whole of the
Subleased Premises by Sublessee at a rent, which exceeds the rent
payable hereunder by Sublessee, or if there is a subletting of a
portion of the Subleased Premises by Sublessee at a rent in excess of
the subleased portion's pro rata share of the rent payable hereunder by
Sublessee, then Sublessee shall pay to Sublessor, as additional rent,
forthwith upon Sublessee's receipt thereof, in the case of any such
assignment or subletting, fifty percent (50%) of such excess rent (as
defined below) net of any reasonable and customary expenses or costs
incurred by Sublessee in connection therewith. For the purposes of this
subsection, the term "rent" shall mean all fxed rent, additional rent
or other payments and/or consideration payable by one party to another
for the use and occupancy of all or a portion of the Subleased Premises
including, without limitation, key money, or bonus money paid by the
assignee or subtenant to Sublessee in connection with such transaction
and any payment in excess of fair market value for services rendered by
Sublessee to the assignee or subtenant or for assets, fxtures,
inventory, equipment or furniture transferred by Sublessee to the
assignee or subtenant in connection with any such transaction, but
shall exclude any separate payments by Sublessee for reasonable
attorney's fees, tenant improvements and broker's commissions in
connection with such assignment or subletting.
11. Alterations.
-----------
11.1 Approvals. Sublessee shall not have the right to make any improvements
or alterations to the Subleased Premises without first obtaining the
written consent of Sublessor and Master Lessor, the standard and
requirements for which shall be governed by the Master Lease.
Sublessor's consent shall be granted so long as Master Lessor has
consented to any such alterations, and in any event if the plans and
specifcations submitted to Sublessee for review comply with the
standards and requirements applicable thereto in the Master Lease,
Sublessor shall within 10 business days of submission provide its
consent or detailed statement of modifcations required thereto for
Sublessor's approval. If such consent is granted by both Sublessor and
Master Lessor, Sublessee shall perform all improvements or alterations
in accordance with the terms of the Master Lease and in compliance with
all Laws. Sublessor and Master Lessor shall notify Sublessee at the
time of approval whether such improvement or alteration may or may not
remain in the Subleased Premises at the expiration or earlier
termination of this Sublease. Any alterations, improvements or work
done by or on behalf of Sublessee to the Subleased Premises shall be
effected in conformance with all applicable laws, ordinances, rules,
regulations, orders, certificates of occupancy, conditional use or
other permits, variances, covenants and restrictions of record, the
reasonable recommendations of Master Lessor's and/or Sublessor'
engineers or other consultants, and requirements of any fire insurance
underwriters, rating bureaus or government agencies, now in effect or
which may hereafter come into effect during the Sublease Term relating
in any manner to the Subleased Premises or the occupation and use by
Sublessee thereof (collectively, "Laws") and performed in a frst class
workman-like manner and shall be subject to all of the terms and
conditions of this Sublease and the Master Lease.
Page 9
11.2 Sublessee Improvements. Subject to Master Lessor's approval, Sublessor
hereby approves the preliminary plans attached hereto as Exhibit E for
certain improvements to be installed in the Sublease Premises by
Sublessee ("Sublessee Improvements"). Sublessor and Sublessee shall
submit to Master Lessor, for approval as part of the Consent of Master
Lessor (as defned below), the Sublessee Improvements.
11.3 Subject to applicable laws and to Article 11 of the Master Lease,
Sublessee shall have the right at its own cost to install one or more
back-up generators in locations shown on the plans and specifcations
submitted to Sublessor. In addition, Sublessee, at no additional cost,
shall have the use of any existing generators and UPS equipment
currently serving the Building. Sublessee shall at its own cost and
expense maintain such back-up generators and remove same upon
expiration or earlier termination of this Sublease.
11.4 Subject to applicable laws and to Article 11 of the Master Lease,
Sublessee shall have the right at its own cost to install one or more
satellite dishes either on the roof of the building in locations shown
on the plans and specifcations submitted to Sublessor or at ground
level. Sublessee shall at its own cost and expense maintain such
satellite dish(es) and remove same upon expiration or earlier
termination of this Sublease.
12. Access by Sublessor. Sublessor may enter the Subleased Premises at
reasonable times to examine the Subleased Premises, to make any repairs
or replacements Sublessor may deem necessary or appropriate or to
comply with its obligations set forth in the Master Lease. Sublessor's
entry into the Subleased Premises shall be upon reasonable prior notice
to Sublessee (except in cases of emergency where no notice is
required).
13. Signage; Sublessor's Work. Subject to the prior written consent of
Master Lessor, if required by the Master Lease, Sublessee shall have
the signage rights granted Sublessor pursuant to the terms and
conditions of the Master Lease; provided Sublessee shall pay all
applicable costs and expenses relating thereto and that all such signs
comply with all applicable requirements of the Master Lease and all
applicable Laws. Sublessee shall remove any GenRad exterior signage on
the Subleased Premised. Sublessor shall reimburse Sublessee for the
reasonable cost of such removal. Upon receipt of an invoice from
Sublessee for such cost, Sublessor shall promptly pay the same to
Sublessee.
Prior to the commencement of the Early Access Period, Sublessor shall,
at its sole cost, complete the work described on Exhibit G attached
hereto and made a part hereof.
Page 10
14. Holdover in Subleased Premises. If Sublessee fails to surrender the
Subleased Premises in the condition required in this Sublease on the
Termination Date (or earlier pursuant to the terms of this Sublease),
Sublessee shall pay rent for the Subleased Premises at a monthly rate
equal to the total holdover rent payable by Sublessor pursuant to
Article XXII of the Master Lease (the "Holdover Percentage"), along
with any and all other holdover rent or charges due under the Master
Lease. During such holdover period, Sublessee shall be subject to every
other applicable term, covenant and agreement contained herein. Nothing
contained in this Paragraph 14 shall be construed as consent by
Sublessor or Master Lessor to any holding over by Sublessee, and
Sublessor expressly reserves the right to require Sublessee to
surrender possession of the Subleased Premises to Sublessor as provided
in this Sublease. Nothing set forth in this Paragraph 14 shall negate
Sublessee's obligation to vacate the Subleased Premises on the
Termination Date (or earlier pursuant to the terms of this Sublease),
and Sublessee's failure to do so shall entitle Sublessor to exercise
all of the rights and remedies set forth in the Master Lease and the
Sublease.
15. Miscellaneous.
-------------
15.1 Waiver. Waiver of one breach of a term, condition, or covenant of this
Sublease by either party hereto shall be limited to the particular
instance and shall not be deemed to waive future breaches of the same
or other terms, conditions, or covenants.
15.2 Joint and Several. If Sublessee consists of more than one person or
entity, the obligations of such parties under this Sublease shall be
joint and several.
15.3 Entire Agreement; Amendments. This Sublease, including the exhibits and
addenda, if any, embodies the entire agreement between the parties with
relation to the transaction contemplated hereby, and this Sublease
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements, letters of intent, and understandings, if any,
between Sublessor and Sublessee, or displayed by Sublessor's brokers or
agents or Sublessor with respect to the subject matter of this Sublease
or the Subleased Premises. There are no representations between
Sublessor and Sublessee other than those contained in this Sublease.
Any amendment or modification of this Sublease must be in writing and
signed by Sublessor and Sublessee.
15.4 Survival of Indemnities and Covenants. Any and all indemnities of
Sublessee and any and all covenants of Sublessee not fully performed on
the date of the expiration or termination of this Sublease shall
survive for a period of one (1) year following such expiration or
termination. Without limiting the generality of the foregoing,
Sublessee's obligation to pay Rent, taxes and monetary amounts required
to be paid hereunder shall survive the termination of this Sublease,
and be payable as to costs incurred during the Sublease Term, even if
invoices are received after the Termination Date.
15.5 Sublessor's Default. It is the express understanding and agreement of
the parties and it is a condition of Sublessor's agreement to execute
this Sublease, that Sublessor shall not be in default under this
Sublease unless Sublessor fails to perform obligations required of
Sublessor as set forth in this Sublease and the Master Lease. This
Sublease and the obligations of Sublessee and Sublessor hereunder shall
not be affected or impaired because such party is unable to fulfill any
of its obligations hereunder or is delayed in doing so, if such
inability or delay is caused by reason of a Force Majeure Event, and
the time for such party's performance shall be extended for the period
of any such delay; provided, however, that the foregoing shall not
apply to any obligation to pay Rent or other charges pursuant to this
Sublease.
15.6 Independent Obligations. The obligation of Sublessee to pay Rent
hereunder and the obligation of Sublessee to perform Sublessee's other
covenants and duties hereunder constitute independent unconditional
obligations to be performed at all times provided for hereunder. Except
as expressly provided in this Sublease, Sublessee waives and
relinquishes all rights that Sublessee might have to claim any nature
of lien against or withhold, abate or deduct from, or offset against
Rent.
Page 11
15.7 Prevailing Party. If any action at law or in equity is brought to
enforce or interpret the provisions of this Sublease, the prevailing
party shall be entitled to reimbursement of the reasonable attorneys'
fees and disbursements and court costs incurred by said prevailing
party in connection with such action.
15.8 Confidentiality. Sublessee and Sublessor shall not disclose the terms
or conditions of this Sublease and shall keep them strictly
confdential, except for disclosures to the parties' lenders, attorneys
and accountants, and except for disclosures required to comply with
applicable laws and rules of the Securities and Exchange Commission or
any exchange upon which Sublessee's or Sublessor's shares may be
traded. Except for a Notice of Amendment to Notice of Lease to refect
the Sublessee's tenancy, Sublessee shall not record this Sublease or a
memorandum or short form hereof.
15.9 Notices. All notices given pursuant to this Sublease shall be given in
accordance with the terms of the Master Lease to the following
addresses:
To Sublessor: Teradyne, Inc.
321 Harrison Avenue
Boston, Massachusetts
Attention: Real Estate Department
To Sublessee: Prior to January 1, 2007
Sonus Networks, Inc.
250 Apollo Drive
Chelmsford, MA 01824
Following January 1, 2007
Sonus Networks, Inc.
7 Technology Park Drive
Westford, MA 01886
15.10 Successors and Assigns. This Sublease shall inure to the benefit of,
and be binding upon, the parties hereto and their respective successors
and permitted assigns.
15.11 Multiple Counterparts. This Sublease may be executed in multiple
counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.
15.12 Surrender of Subleased Premises. Upon the Termination Date or upon
earlier termination of the Sublease as provided herein, Sublessee shall
surrender the Subleased Premises in the condition required in the
Master Lease, except that Sublessor shall be responsible for any
alterations made by or for Sublessor prior to the Sublease Commencement
Date (except in the event that Sublessee (i) exercises any right it
might have to extend the term of the Master Lease or (ii) enters into a
direct lease with the Master Lessor). Sublessor represents that it is
aware of no alterations to the Premises as of the date of this Sublease
which Sublessor is required under Section 11.1 of the Master Lease to
re-adapt at the expiration or termination of the Lease Term. Without
limiting the foregoing, prior to the expiration of the Sublease Term,
Sublessee shall, at its sole cost and expense, (a) remove the
alterations relating to the Work (as such term is defined in the
Consent of Master Lessor (as defned below), (b) remove Sublessee's
trade fixtures, furniture, equipment, signage, cabling installed by
Sublessee and other personal property from the Subleased Premises, and
(c) repair any damage resulting from such removal. Sublessee's removal
shall be completed in compliance with all applicable Laws, and
Sublessee shall surrender the Subleased Premises in broom clean
condition.
Page 12
15.13 Conditions. This Sublease shall not be effective unless and until it
has been signed by Sublessee and Sublessor, and Master Lessor's form of
consent to this Sublease has been executed and delivered by Master
Lessor ("Consent of Master Lessor"). Following execution by Master
Lessor, the Consent of Master Lessor shall be attached hereto as
Exhibit B. If Master Lessor does not consent to this Sublease, this
Sublease will not become effective and shall be void without recourse,
and neither party shall have any obligation or liability to the other
arising from this Sublease.
15.14 Sublessee's Exercise of Right During Damage or Destruction.
Notwithstanding the foregoing, Sublessee acknowledges and agrees that
if the Master Lease gives Sublessor any right to terminate the Master
Lease, including, without limitation, in the event of the partial or
total damage, destruction, or condemnation of the Subleased Premises or
the Building or Property of which the Premises are a part, then such
right shall be vested in the Sublessee hereunder. Sublessee agrees to
notify Sublessor of its election.
15.15 OFAC Certifcation and Indemnity. Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the "Executive Order"), and
the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law
10756, the "Patriot Act") prohibit certain property transfers.
Sublessee hereby represents and warrants to Sublessor (which
representations and warranties shall be deemed to be continuing and
re-made at all times during the Sublease Term) that neither Sublessee
nor any officer or director, beneficiary, partner, or principal of
Sublessee is subject to the Executive Order, that none of them is
listed on the United States Department of the Treasury Office of
Foreign Assets Control ("OFAC") list of "Specially Designated Nationals
and Blocked Persons" as modified from time to time, and that none of
them is otherwise subject to the provisions of the Executive Order or
the Patriot Act. The most current list of "Specially Designated
Nationals and Blocked Persons" can be found at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html. Sublessee
shall from time to time, within ten days after request by Sublessor,
deliver to Sublessor any certifcation or other evidence requested from
time to time by Sublessor in its reasonable discretion, confirming
Sublessee's compliance with these provisions. No assignment or
subletting shall be effective unless and until the assignee or
subtenant thereunder delivers to Sublessor written confirmation of such
party's compliance with the provisions of this Paragraph, in form and
content satisfactory to Sublessor. If for any reason the
representations and warranties set forth in this Paragraph, or any
certifcate or other evidence of compliance delivered to Sublessor
hereunder, is untrue in any respect when made or delivered, or
thereafter becomes untrue in any respect, then an Event of Default
hereunder shall be deemed to occur immediately, and there shall be no
opportunity to cure. Sublessee shall indemnify, defend with counsel
reasonably acceptable to Sublessor, and hold Sublessor harmless from
and against, any and all liabilities, losses claims, damages,
penalties, fines, and costs (including attorneys' fees and costs)
arising from or related to the breach of any of the foregoing
representations, warranties, and duties of Sublessee. The provisions of
this subsection shall survive the expiration or earlier termination of
this Sublease for the longest period permitted by law.
Page 13
16. Brokers. Each of the parties hereto represents and warrants to the
other that there are no claims for brokerage commissions or finder's
fees in connection with the execution of this Lease except the
commissions to be paid by Sublessor to Meredith & Grew & the Staubach
Company (collectively, the "Brokers"). Each party shall indemnify and
hold harmless the other party from and against any and all claims for
brokerage fees, commissions or other charges by any third party other
than the Brokers arising from the dealings of such party in connection
with this Sublease.
17. Furniture. Sublessor agrees to sell and Subtenant agrees to purchase
for the sum of One Dollar ($1.00) all furniture, telephone and data
cabling, and fixtures (the "Personal Property") existing within the
Premises. Sublessor shall execute and deliver to Sublessee a Bill of
Sale, in the form attached hereto as Exhibit C, for such Personal
Property. As of Commencement Date, Sublessee shall be solely
responsible for the payment prior to delinquency of all personal
property taxes, assessments and other similar fees or charges
attributable to the Personal Property and Sublessee's equipment, trade
fixtures, inventory, fixtures and personal property located on or in
the Premises.
18. No Default. Sublessor hereby certifies that all Rent and Expenses
relating to the Master Lease are fully paid through February 28, 2006
and that the Master Lessor has not declared or provided any notice of
default or claim against Sublessor under the Master Lease.
19. Limitation of Liability. Except as otherwise set forth herein, neither
Sublessor nor Sublessee shall be liable to the other under any
circumstances for any exemplary, punitive, consequential or indirect
damages.
20. Governing Law. This Sublease shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of
Massachusetts.
21. Exhibits. The exhibits listed below and attached to this Sublease are
incorporated by reference and are a part of this Sublease
Exhibit A: Master Lease
Exhibit B: Consent of Master Lessor
Exhibit C: Bill of Sale
Exhibit D: Form of Letter of Credit
Exhibit E: Sublessee Improvements
Exhibit F: Description of the Premises
Exhibit G: Sublessor's Work
[*Signatures Appear on the Following Page*]
Page 14
EXECUTED as of the Effective Date.
SUBLESSOR:
TERADYNE, INC.
By: /s/ Gregory R. Beecher
------------------------------------------
Gregory R. Beecher
Vice President and Chief Financial Officer
Duly Authorized
SUBLESSEE:
SONUS NETWORKS, INC.
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
Duly Authorized
Page 15
EXECUTED as of the Effective Date.
SUBLESSOR:
TERADYNE, INC.
By:
------------------------------------------
Gregory R. Beecher
Vice President and Chief Financial Officer
Duly Authorized
SUBLESSEE:
SONUS NETWORKS, INC.
By: /s/ Ellen B. Richstone
------------------------------------------
Name: Ellen B. Richstone
Title: Chief Financial Officer
Duly Authorized
2-23-06
Page 15