Exhibit 10.1
 
 
 
 
 
 
SUBLEASE AGREEMENT
 
BETWEEN
 
ORACLE USA, INC.
 
AND
 
VITALSTREAM HOLDINGS, INC.
 
555 Anton Boulevard
Costa Mesa, California
 
Entire Fourth (4th) Floor
 

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SUBLEASE
 
THIS SUBLEASE ("Sublease") is entered into as of July 31, 2006, by and between
ORACLE USA, INC., a Colorado corporation ("Sublandlord") and VITALSTREAM
HOLDINGS, INC., a Nevada corporation ("Subtenant"), with reference to the
following facts:
 
A.    Pursuant to that certain Lease Agreement between AGL Investments No. 5
Limited Partnership (“Original Landlord”) and J. D. Edwards World Solutions
Company (“Original Tenant”) dated as of March 26, 1999 (“Original Master Lease”)
as amended by (i) that certain First Amendment to Lease between Original
Landlord and Original Tenant dated April __, 2003 (“First Amendment”), (ii) that
certain Second Amendment to Lease between Original Landlord and Original Tenant
dated May __, 2003 (“Second Amendment”), (iii) that certain Third Amendment to
Lease between Original Landlord and Original Tenant dated June 30, 2003 (“Third
Amendment”), (iv) that certain Fourth Amendment to Lease between Original
Landlord and Original Tenant dated July 29, 2003 (“Fourth Amendment”), (v) that
certain Fifth Amendment to Lease between Original Landlord and Original Tenant
dated August 28, 2003 (“Fifth Amendment”), (vi) that certain Sixth Amendment to
Lease between Original Landlord and Original Tenant dated September 30, 2003
(“Sixth Amendment”), and (vii) that certain Seventh Amendment to Lease between
Original Landlord and Original Tenant dated December 26, 2003 (“Seventh
Amendment”) (the Original Master Lease, as amended by the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment and the Seventh Amendment, being referred to
herein as the “Master Lease”), Sublandlord, as the successor-in-interest to
Original Tenant under the Master Lease leases from 555 Anton Associates, LLC
(“Landlord”), as the successor-in-interest to Original Landlord under the Master
Lease, approximately 40,256 rentable square feet of office space (the “Master
Lease Premises”) located on the entire fourth (4th) and fifth (5th) floors of
the building (the “Building”) located at 555 Anton Boulevard, Costa Mesa,
California.
 
B.    Subtenant wishes to sublease from Sublandlord, and Sublandlord wishes to
sublease to Subtenant, a portion of the Master Lease Premises containing
approximately 20,128 rentable square feet located on, and consisting of the
entire fourth (4th) floor of the Building, said space being more particularly
identified and described on the floor plan attached hereto as Exhibit A and
incorporated herein by reference (the "Subleased Premises").
 
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged by the parties, Sublandlord and Subtenant hereby agree as follows:
 
1.    Sublease. Sublandlord hereby subleases to Subtenant and Subtenant hereby
subleases from Sublandlord for the term, at the rental, and upon all of the
conditions set forth herein, the Subleased Premises.
 
2.    Term.
 
(a)    Generally. The term of this Sublease ("Term") shall commence on the date
(the “Commencement Date”) that is the later to occur of (x) October 1, 2006 and
(y) the date that Sublandlord delivers possession of the Subleased Premises to
Subtenant in the condition required hereunder and (z) the date upon which
Sublandlord procures Landlord’s consent to this Sublease (the “Consent”, and the
date upon which Sublandlord procures the Consent being the “Effective Date”) and
end on May 31, 2009 (the "Expiration Date"), unless sooner terminated pursuant
to any provision hereof. Upon the determination of the Commencement Date,
Sublandlord and Subtenant will enter into a letter agreement in the form of
Exhibit B attached hereto.
 

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(b)    Early Access. Subtenant and Subtenant’s representatives shall have the
right to enter the Subleased Premises from and after the later to occur of (i)
August 15, 2006 and (ii) the Effective Date (the date upon which Subtenant first
has such access to the Subleased Premises being referred to herein as the “Early
Access Date”) for the sole purposes of installation of Subtenant’s personal
property and the testing of equipment, furniture, fixtures and voice and data
cabling, all subject to the terms, conditions and requirements of the Master
Lease. All of the rights and obligations of the parties under this Sublease
(other than Subtenant’s obligation to pay Base Rent, but expressly including
without limitation Subtenant’s obligation to pay excess utility charges pursuant
to the Master Lease, Subtenant’s obligation to carry insurance pursuant to the
Master Lease, and Subtenant’s indemnification obligations, and/or damages,
reasonable costs and expenses incurred by Sublandlord by reason of any default
by Subtenant or failure on Subtenant’s part to comply with the terms of this
Sublease) shall commence upon the Early Access Date, and Subtenant shall be
deemed to occupy the Subleased Premises from and after the Early Access Date.
Subtenant shall be liable for any damages to the Subleased Premises caused by
Subtenant’s activities at the Subleased Premises from and after the Early Access
Date and, prior to entering the Subleased Premises, Subtenant shall obtain all
insurance it is required to obtain hereunder and shall provide certificates of
such insurance to Sublandlord. Subtenant shall coordinate such entry with
Sublandlord, and such entry shall be made in compliance with all terms and
conditions of this Sublease, the Master Lease and the rules and regulations
attached to the Master Lease.
 
(c)    Delayed Commencement Date. If, for any reason other than delays caused by
Subtenant (including, without limitation, Subtenant’s failure to promptly
execute and deliver the Consent), the Commencement Date has not occurred on or
before December 1, 2006, Subtenant shall have the right to terminate this
Sublease by written notice delivered to Sublandlord on or before (x) December
10, 2006 and (y) the occurrence of the Commencement Date. Immediately upon such
termination, Sublandlord shall return to Subtenant all amounts paid by Subtenant
to Sublandlord upon execution of this Sublease, or otherwise in connection with
this Sublease.
 
3.    Rent.
 
3.1    Rent Payments.
 
(a)    Generally. From and after the Rent Commencement Date (defined below)
Subtenant shall pay to Sublandlord as base rent for the Subleased Premises
during the Term (“Base Rent”) the following:
 

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Months
of Term
Base Rent Rate Per Rentable
Square Foot Per Month
Monthly
Base Rent
1 - 12
13 - 24
25 - Expiration Date
$1.80
$1.85
$1.90
$36,230.40
$37,236.80
$38,243.20

 
As used herein, the “Rent Commencement Date” shall be the later of (i) the date
that is forty-five (45) days after the Early Access Date, or (ii) October 1,
2006. Base Rent shall be paid on the first day of each month of the Term
following the Base Rent Abatement Period (defined in Section 3.1(b) below),
except that Subtenant shall pay one (1) month’s Base Rent to Sublandlord upon
execution and delivery of this Sublease to Sublandlord; said pre-paid Base Rent
will be applied by Sublandlord to Base Rent first due and payable hereunder
following the Base Rent Abatement Period. Base Rent and Additional Rent
(hereinafter defined) for any partial month shall be prorated by multiplying the
monthly Base Rent and Additional Rent by a fraction, the numerator of which is
the number of days of the partial month included in the Term and the denominator
of which is the total number of days in the full calendar month. All Rent
(hereinafter defined) shall be payable in lawful money of the United States, by
regular bank check of Subtenant, to Sublandlord at the following address:
 
1001 Sunset Boulevard
Rocklin, CA 95765
Attn: Lease Administration
 
or to such other persons or at such other places as Sublandlord may designate in
writing.
 
(b)    Abatement. Notwithstanding anything in Section 3(a) above to the
contrary, so long as Subtenant is not in material monetary default (“Abatement
Default”) under this Sublease, Subtenant shall be entitled to an abatement of
Base Rent for the first three (3) full calendar months following the Rent
Commencement Date (the "Base Rent Abatement Period"). The total amount of Base
Rent abated during the Base Rent Abatement Period is referred to herein as the
"Abated Base Rent". If Subtenant commits an Abatement Default hereunder at any
time during the Term and fails to cure such Abatement Default within any
applicable cure period, all then unamortized Abated Base Rent shall immediately
become due and payable (assuming amortization of the Abated Base Rent on a
straight-line basis over the Term). The payment by Subtenant then unamortized of
the Abated Base Rent in the event of an Abatement Default shall not limit or
affect any of Sublandlord's other rights, pursuant to this Sublease or at law or
in equity. During the Base Rent Abatement Period, only Base Rent shall be
abated, and all Additional Rent and other costs and charges specified in this
Sublease shall remain as due and payable pursuant to the provisions of this
Sublease.
 
3.2    Operating Costs.
 
(a)  Definitions. For purposes of this Sublease and in addition to the terms
defined elsewhere in this Sublease, the following terms shall have the meanings
set forth below:
 

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(1)    "Additional Rent" shall mean the sums payable pursuant to Section 3.2(b)
below.
 
(2)    "Base Operating Costs" shall mean Operating Costs payable by Sublandlord
to Landlord for the Master Lease Premises during the Base Year.
 
(3)    "Base Year" shall mean the calendar year 2007.
 
(4)    "Operating Costs" shall mean the aggregate of Expenses and Taxes (as said
terms defined in the Master Lease) charged by Landlord to Sublandlord pursuant
to the Master Lease.
 
(5)    "Rentable Area" of the Subleased Premises and of the Master Lease
Premises is stipulated by Sublandlord and Subtenant to be 20,128 rentable square
feet and 40,256 rentable square feet, respectively, for all purposes of this
Sublease.
 
(6)    "Rent" shall mean, collectively, Base Rent, Additional Rent, and all
other sums payable by Subtenant to Sublandlord under this Sublease, whether or
not expressly designated as "rent", all of which are deemed and designated as
rent pursuant to the terms of this Sublease.
 
(7)    "Subtenant's Percentage Share" shall mean 50%. Subtenant's Percentage
Share has been obtained by dividing the Rentable Area of the Subleased Premises
by the Rentable Area of the Master Lease Premises and multiplying such quotient
by 100. In the event Subtenant's Percentage Share is changed during a calendar
year by reason of a change in the Rentable Area of the Subleased Premises or the
Master Lease Premises, Subtenant's Percentage Share shall thereupon be adjusted
to equal the result obtained by dividing the Rentable Area of the Subleased
Premises by the Rentable Area of the Master Lease Premises and multiplying such
quotient by 100, Subtenant's Percentage Share shall be determined on the basis
of the number of days during such calendar year at each such percentage share.
 
(b)    Payment of Additional Rent. In addition to the Base Rent payable pursuant
to Section 3.1 above, from and after the expiration of the Base Year, for each
calendar year of the Term, Subtenant, as Additional Rent, shall pay Subtenant's
Percentage Share of the amount by which Operating Costs payable by Sublandlord
for the then current calendar year exceed Base Operating Costs. Sublandlord
shall give Subtenant written notice of Sublandlord's estimate of the amount of
Additional Rent per month payable pursuant to this Section 3.2(b) for each
calendar year after the Base Year promptly following the Sublandlord's receipt
of Landlord's estimate of the Operating Costs payable under the Master Lease.
Thereafter, the Additional Rent payable pursuant to this Section 3.2(b) shall be
determined and adjusted in accordance with the provisions of Section 3.2(c)
below.
 
(c)    Procedure. The determination and adjustment of Additional Rent payable
hereunder shall be made in accordance with the following procedures:
 
(1)    Delivery of Estimate; Payment. Upon receipt of a statement from Landlord
specifying the estimated Operating Costs to be charged to Sublandlord under the
Master Lease with respect to each calendar year, or as soon after receipt of
such statement as practicable, Sublandlord shall give Subtenant written notice
of its estimate of Additional Rent payable under Section 3.2(b) for the ensuing
calendar year, which estimate shall be prepared based on the estimate received
from Landlord (as Landlord's estimate may change from time to time), together
with a copy of the statement received from Landlord. On or before the first day
of each month during each calendar year following the Base Year, Subtenant shall
pay to Sublandlord as Additional Rent one-twelfth (1/12th) of such estimated
amount together with the Base Rent.
 

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(2)    Sublandlord’s Failure to Deliver Estimate. In the event Sublandlord's
notice set forth in Subsection 3.2(c)(1) is not given on or before December of
the calendar year preceding the calendar year for which Sublandlord's notice is
applicable, as the case may be, then until the calendar month after such notice
is delivered by Sublandlord, Subtenant shall continue to pay to Sublandlord
monthly, during the ensuing calendar year, estimated payments equal to the
amounts payable hereunder during the calendar year just ended. Upon receipt of
any such post-December notice Subtenant shall (i) commence as of the immediately
following calendar month, and continue for the remainder of the calendar year,
to pay to Sublandlord monthly such new estimated payments and (ii) if the
monthly installment of the new estimate of such Additional Rent is greater than
the monthly installment of the estimate for the previous calendar year, pay to
Sublandlord within thirty (30) days of the receipt of such notice an amount
equal to the difference of such monthly installment multiplied by the number of
full and partial calendar months of such year preceding the delivery of such
notice.
 
(d)    Year End Reconciliation. Within thirty (30) days after the receipt by
Sublandlord of a final statement of Operating Costs from Landlord with respect
to each calendar year, Sublandlord shall deliver to Subtenant a statement of the
adjustment to be made pursuant to Section 3.2 above for the calendar year just
ended, together with a copy of any corresponding statement received by
Sublandlord from Landlord. If on the basis of such statement Subtenant owes an
amount that is less than the estimated payments actually made by Subtenant for
the calendar year just ended, Sublandlord shall credit such excess to the next
payments of Rent coming due or, if the term of this Sublease is about to expire,
promptly refund such excess to Subtenant. If on the basis of such statement
Subtenant owes an amount that is more than the estimated payments for the
calendar year just ended previously made by Subtenant, Subtenant shall pay the
deficiency to Sublandlord within thirty (30) days after delivery of the
statement from Sublandlord to Subtenant.
 
(e)    Survival. The expiration or earlier termination of this Sublease shall
not affect the obligations of Sublandlord and Subtenant pursuant to Subsection
3.2(d), and such obligations shall survive and remain to be performed after any
expiration or earlier termination of this Sublease.
 
4.    Security Deposit. Concurrently with Subtenant's execution of this
Sublease, Subtenant shall deposit with Sublandlord the sum of $72,460.80 (the
"Security Deposit"). The Security Deposit shall be held by Sublandlord as
security for the faithful performance by Subtenant of all the provisions of this
Sublease to be performed or observed by Subtenant. If Subtenant fails to pay
rent or other sums due hereunder, or otherwise defaults with respect to any
provisions of this Sublease, Sublandlord may use, apply or retain all or any
portion of the Security Deposit for the payment of any rent or other sum in
default or for the payment of any other sum to which Sublandlord may become
obligated by reason of Subtenant's default, or to compensate Sublandlord for any
loss or damage which Sublandlord may suffer thereby. If Sublandlord so uses or
applies all or any portion of the Security Deposit, Subtenant shall within ten
(10) days after demand therefor deposit cash with Sublandlord in an amount
sufficient to restore the Security Deposit to the full amount thereof and
Subtenant's failure to do so shall be a material breach of this Sublease.
Sublandlord shall not be required to keep the Security Deposit separate from its
general accounts. If Subtenant performs all of Subtenant's obligations
hereunder, the Security Deposit, or so much thereof as has not theretofore been
applied by Sublandlord, shall be returned, without interest, to Subtenant (or,
at Sublandlord's option, to the last assignee, if any, of Subtenant's interest
hereunder) within forty-five (45) days following the later to occur of (x) the
expiration of the Term, and (y) the date upon which Subtenant has vacated the
Subleased Premises. No trust relationship is created herein between Sublandlord
and Subtenant with respect to the Security Deposit. Sublandlord shall not be
required to keep the Security Deposit separate from its other accounts.
Subtenant hereby waives any and all rights under and the benefits of Section
1950.7 of the California Civil Code, and all other provisions of law now in
force or that become in force after the date of execution of this Sublease, that
provide that Sublandlord may claim from a security deposit only those sums
reasonably necessary to remedy defaults in the payment of Rent, to repair damage
caused by Subtenant, or to clean the Subleased Premises. Sublandlord and
Subtenant agree that Sublandlord may, in addition, claim those sums reasonably
necessary to compensate Sublandlord for any other foreseeable or unforeseeable
loss or damage caused by the act or omission of Subtenant or Subtenant’s
officers, agents, employees, independent contractors, or invitees.
 

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5.    Use and Occupancy.
 
5.1    Use. The Subleased Premises shall be used and occupied only for general
office use, and for no other use or purpose.
 
5.2    Compliance with Master Lease. Subtenant agrees that it will occupy the
Subleased Premises in accordance with the terms of the Master Lease and will not
suffer to be done or omit to do any act which may result in a violation of or a
default under any of the terms and conditions of the Master Lease, or render
Sublandlord liable for any damage, charge or expense thereunder. Subtenant
further covenants and agrees to indemnify Sublandlord against and hold
Sublandlord harmless from any claim, demand, action, proceeding, suit,
liability, loss, judgment, expense (including attorneys fees) and damages of any
kind or nature whatsoever arising out of, by reason of, or resulting from,
Subtenant's failure to perform or observe any of the terms and conditions of the
Master Lease or this Sublease. Any other provision in this Sublease to the
contrary notwithstanding, Subtenant shall pay to Sublandlord as Rent hereunder
any and all sums which Sublandlord may be required to pay the Landlord arising
out of a request by Subtenant for, or use by Subtenant of, additional or
over-standard Building services from Landlord (for example, but not by way of
limitation, charges associated with after-hour HVAC usage and overstandard
electrical charges). Subject to the foregoing and to the terms and provisions of
the Master Lease, Subtenant shall have access to the Subleased Premises 24 hours
per day, 7 days per week.
 
5.3    Landlord’s Obligations. Subtenant agrees that Sublandlord shall not be
required to perform any of the covenants, agreements and/or obligations of
Landlord under the Master Lease and, insofar as any of the covenants, agreements
and obligations of Sublandlord hereunder are required to be performed under the
Master Lease by Landlord thereunder, Subtenant acknowledges and agrees that
Sublandlord shall be entitled to look to Landlord for such performance. In
addition, Sublandlord shall have no obligation to perform any repairs or any
other obligation of Landlord under the Master Lease. Sublandlord shall not be
responsible for any failure or interruption, for any reason whatsoever, of the
services or facilities that may be appurtenant to or supplied at the Building by
Landlord or otherwise, including, without limitation, heat, air conditioning,
ventilation, life-safety, water, electricity, elevator service and cleaning
service, if any; and no failure to furnish, or interruption of, any such
services or facilities shall give rise to any (i) abatement, diminution or
reduction of Subtenant's obligations under this Sublease, except to the extent
that Sublandlord’s obligations under the Master Lease are also abated, or (ii)
liability on the part of Sublandlord. Notwithstanding the foregoing, Sublandlord
shall promptly take such action as may reasonably be indicated, under the
circumstances, to secure such performance upon Subtenant's request to
Sublandlord to do so and shall thereafter diligently prosecute such performance
on the part of Landlord.
 

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6.    Master Lease and Sublease Terms.
 
6.1    Subject to Master Lease. This Sublease is and shall be at all times
subject and subordinate to the Master Lease. Subtenant acknowledges that
Subtenant has reviewed and is familiar with all of the terms, agreements,
covenants and conditions of the Master Lease. Additionally, Subtenant's rights
under this Sublease shall be subject to the terms of the Consent. During the
Term and for all periods subsequent thereto with respect to obligations which
have arisen prior to the termination of this Sublease, Subtenant agrees to
perform and comply with, for the benefit of Sublandlord and Landlord, the
obligations of Sublandlord under the Master Lease which pertain to the Subleased
Premises and/or this Sublease, except for those provisions of the Master Lease
which are directly contradicted by this Sublease, in which event the terms of
this Sublease document shall control over the Master Lease.
 
6.2    Incorporation of Terms of Master Lease. The terms, conditions and
respective obligations of Sublandlord and Subtenant 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,
in which event the terms of this Sublease shall control over the Master Lease.
Therefore, for the purposes of this Sublease, wherever in the Master Lease the
word "Landlord" is used it shall be deemed to mean Sublandlord and wherever in
the Master Lease the word "Tenant" is used it shall be deemed to mean Subtenant.
Any non-liability, release, indemnity or hold harmless provision in the Master
Lease for the benefit of Landlord that is incorporated herein by reference,
shall be deemed to inure to the benefit of Sublandlord, Landlord, and any other
person intended to be benefited by said provision, for the purpose of
incorporation by reference in this Sublease. Any right of Landlord under the
Master Lease (a) of access or inspection, (b) to do work in the Master Lease
Premises or in the Building, (c) in respect of rules and regulations, which is
incorporated herein by reference, shall be deemed to inure to the benefit of
Sublandlord, Landlord, and any other person intended to be benefited by said
provision, for the purpose of incorporation by reference in this Sublease.
 
6.3    Modifications. For the purposes of incorporation herein, the terms of the
Master Lease are subject to the following additional modifications:
 
(a)    Approvals. In all provisions of the Master Lease (under the terms thereof
and without regard to modifications thereof for purposes of incorporation into
this Sublease) requiring the approval or consent of Landlord, Subtenant shall be
required to obtain the approval or consent of both Sublandlord and Landlord.
 

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(b)    Deliveries. In all provisions of the Master Lease requiring Tenant to
submit, exhibit to, supply or provide Landlord with evidence, certificates, or
any other matter or thing, Subtenant shall be required to submit, exhibit to,
supply or provide, as the case may be, the same to both Landlord and
Sublandlord.
 
(c)    Damage; Condemnation. Sublandlord shall have no obligation to restore or
rebuild any portion of the Subleased Premises after any destruction or taking by
eminent domain.
 
(d)    Insurance. In all provisions of the Master Lease requiring Tenant to
designate Landlord as an additional or named insured on its insurance policy,
Subtenant shall be required to so designate Landlord and Sublandlord on its
insurance policy. Subtenant will maintain the insurance coverage described in
Section 9.2 of the Original Master Lease.
 
6.4    Exclusions. Notwithstanding the terms of Section 6.2 above, Subtenant
shall have no rights nor obligations under the following parts, Sections and
Exhibits of the Master Lease:
 
(a)    Original Master Lease: Sections 1.1 (except subsection (o)), 1.2, 1.3
(except Subsections (d), (e), (f), (h), (i), (j), (k) and (m)), Article 3
(except Sections 3.5 and 3.6), Sections 9.1, 15.2, Articles 19, 21, 23, 25,
Sections 26.11, 26.18, Articles 27, 28, 29, 30, Exhibits A, B and C.;
 
(b)    First Amendment: All;
 
(c)    Second Amendment: All;
 
(d)    Third Amendment: All;
 
(e)    Fourth Amendment: All;
 
(f)    Fifth Amendment: All;
 
(g)    Sixth Amendment: All;
 
(h)    Seventh Amendment: All.
 

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6.5    Modifications. Notwithstanding the terms of Section 6.2 above, the
following provisions of the Master Lease are modified as described below for the
purpose of their incorporation into this Sublease.
 
(a)    Subtenant will not be entitled to any abatement of Rent pursuant to the
provisions of Section 5.3 of the Original Master Lease except to the extent that
Sublandlord is entitled to a similar abatement;
 
(b)    Subtenant shall have the right to use parking spaces pursuant to Section
16 of this Sublease, subject to the provisions of Section 19 of the Master
Lease;
 
(c)    Subject to Landlord’s consent, Subtenant shall have the right, at
Subtenant’s expense, to include one (1) listing in the Building directory board
in the Main Building lobby and to install one (1) sign at the entrance to the
Subleased Premises, subject to the provisions of Section 21.1 of the Original
Master Lease.
 
7.    Assignment and Subletting. Subtenant shall not assign this Sublease or
further sublet all or any part of the Subleased Premises except subject to and
in compliance with all of the terms and conditions of Article 13 of the Original
Master Lease, and Sublandlord (in addition to Master Landlord) shall have the
same rights with respect to assignment and subleasing as Landlord has under said
Article 13.
 
8.    Default. Except as expressly set forth herein, Subtenant shall perform all
obligations in respect of the Subleased Premises that Sublandlord would be
required to perform pursuant to the Master Lease. It shall constitute an event
of default hereunder if Subtenant fails to perform any obligation hereunder
(including, without limitation, the obligation to pay Rent), or any obligation
under the Master Lease which has been incorporated herein by reference, and, in
each instance, Subtenant has not remedied such failure after delivery of any
written notice required under this Sublease and passage of fifty percent (50%)
of any applicable grace or cure period provided in the Master Lease as modified,
if at all, by the provisions of this Sublease, provided that with respect to
non-monetary defaults, Subtenant’s cure period shall be the longer of (A)
one-half of, or (B) five (5) days less than, the actual cure period provided for
such non-monetary default under the Master Lease.
 
9.    Remedies. In the event of any default hereunder by Subtenant, Sublandlord
shall have all remedies provided to the “Landlord” in the Master Lease as if an
event of default had occurred thereunder and all other rights and remedies
otherwise available at law and in equity. Without limiting the generality of the
foregoing, Sublandlord may continue this Sublease in effect after Subtenant’s
breach and abandonment and recover Rent as it becomes due. Sublandlord may
resort to its remedies cumulatively or in the alternative.
 
10.          Right to Cure Defaults. If Subtenant fails to perform any of its
obligations under this Sublease after expiration of applicable grace or cure
periods, then Sublandlord may, but shall not be obligated to, perform any such
obligations for Subtenant’s account. All costs and expenses incurred by
Sublandlord in performing any such act for the account of Subtenant shall be
deemed Rent payable by Subtenant to Sublandlord upon demand, together with
interest thereon at the lesser of (i) twelve percent (12%) per annum or (ii) the
maximum rate allowable under law (the “Interest Rate”) from the date of the
expenditure until repaid. If Sublandlord undertakes to perform any of
Subtenant’s obligations for the account of Subtenant pursuant hereto, the taking
of such action shall not constitute a waiver of any of Sublandlord’s remedies.
Subtenant hereby expressly waives its rights under any statute to make repairs
at the expense of Sublandlord.
 

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11.    Consents and Approvals. In any instance when Sublandlord's consent or
approval is required under this Sublease, Sublandlord's refusal to consent to or
approve any matter or thing shall be deemed reasonable if, among other matters,
such consent or approval is required under the provisions of the Master Lease
incorporated herein by reference but has not been obtained from Landlord. Except
as otherwise provided herein, Sublandlord shall not unreasonably withhold, or
delay its consent to or approval of a matter if such consent or approval is
required under the provisions of the Master Lease and Landlord has consented to
or approved of such matter.
 
12.    Sublandlord’s Liability. Notwithstanding any other term or provision of
this Sublease, the liability of Sublandlord to Subtenant for any default in
Sublandlord’s obligations under this Sublease shall be limited to actual, direct
damages, and under no circumstances shall Subtenant, its partners, members,
shareholders, directors, agents, officers, employees, contractors, sublessees,
successors and/or assigns be entitled to recover from Sublandlord (or otherwise
be indemnified by Sublandlord) for (a) any losses, costs, claims, causes of
action, damages or other liability incurred in connection with a failure of
Landlord, its partners, members, shareholders, directors, agents, officers,
employees, contractors, successors and /or assigns to perform or cause to be
performed Landlord’s obligations under the Master Lease, (b) lost revenues, lost
profit or other consequential, special or punitive damages arising in connection
with this Sublease for any reason, or (c) subject to Section 14, any damages or
other liability arising from or incurred in connection with the suitability of
the Subleased Premises for Subtenant’s intended uses or the condition of the
Subleased Premises, other than liability arising from Sublandlord’s gross
negligence. Subtenant shall, however, have the right to seek any injunctive or
other equitable remedies as may be available to Subtenant under applicable law.
Notwithstanding any other term or provision of this Sublease, no personal
liability shall at any time be asserted or enforceable against Sublandlord’s
stockholders, directors, officers, or partners on account of any of
Sublandlord’s obligations or actions under this Sublease. As used in this
Sublease, the term “Sublandlord” means the holder of the tenant’s interest under
the Master Lease and “Sublandlord” means the holder of sublandlord’s interest
under this Sublease. In the event of any assignment or transfer of the
Sublandlord’s interest under this Sublease, which assignment or transfer may
occur at any time during the Term in Sublandlord’s sole discretion, Sublandlord
shall be and hereby is entirely relieved of all covenants and obligations of
Sublandlord hereunder accruing subsequent to the date of the transfer and it
shall be deemed and construed, without further agreement between the parties
hereto, that any transferee has assumed and shall carry out all covenants and
obligations thereafter to be performed by Sublandlord hereunder. Sublandlord may
transfer and deliver any then existing Security Deposit to the transferee of
Sublandlord’s interest under this Sublease, and thereupon Sublandlord shall be
discharged from any further liability with respect thereto.
 
13.    Attorneys’ Fees. If Sublandlord or Subtenant brings an action to enforce
the terms hereof or to declare rights hereunder, the prevailing party who
recovers substantially all of the damages, equitable relief or other remedy
sought in any such action on trial and appeal shall be entitled to receive from
the other party its costs associated therewith, including, without limitation,
reasonable attorney's fees and costs from the other party.
 

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14.    Delivery of Possession.
 
14.1    Generally. Sublandlord represents that it has no notice of any violation
of environmental laws or regulations with respect to the condition of the
Subleased Premises. Subject to the foregoing representation, Sublandlord shall
deliver, and Subtenant shall accept, possession of the Subleased Premises in
their "AS IS" condition as the Subleased Premises exists on the date hereof.
Sublandlord shall have no obligation to furnish, render or supply any work,
labor, services, materials, furniture (other than the Furniture, defined below),
fixtures, equipment, decorations or other items to make the Subleased Premises
ready or suitable for Subtenant's occupancy. In making and executing this
Sublease, Subtenant has relied solely on such investigations, examinations and
inspections as Subtenant has chosen to make or has made and has not relied on
any representation or warranty concerning the Subleased Premises or the
Building, except as expressly set forth in this Sublease. Subtenant acknowledges
that Sublandlord has afforded Subtenant the opportunity for full and complete
investigations, examinations and inspections of the Subleased Premises and the
common areas of the Building. Subtenant acknowledges that it is not authorized
to make or do any alterations or improvements in or to the Subleased Premises
except as permitted by the provisions of this Sublease and the Master Lease and
that upon termination of this Sublease, Subtenant shall deliver the Subleased
Premises to Sublandlord in the same condition as the Subleased Premises were at
the commencement of the Term, reasonable wear and tear excepted; Subtenant
acknowledges that the foregoing provision requires Subtenant to remove from the
Subleased Premises any improvements constructed therein by Subtenant unless
Sublandlord shall have previously agreed that such improvements do not have to
be removed; additionally, at Subtenant’s cost, Subtenant will remove all
telecommunications and data cabling installed by Subtenant.
 
14.2         Subtenant's Improvements.
 
(a)    Generally. If Subtenant constructs improvements within the Subleased
Premises ("Subtenant Improvements"), all Subtenant Improvements shall be carried
out in accordance with the Master Lease. Sublandlord will have the right to
approve the plans and specifications for any proposed Subtenant Improvements, as
well as any contractors whom Subtenant proposes to retain to perform such work.
Accordingly, Subtenant will submit all such information for Sublandlord’s review
and written approval prior to commencement of any such work. Subtenant expressly
acknowledges that Landlord or Sublandlord may require Subtenant to remove some
or all of the Subtenant Improvements at the expiration or sooner termination of
the Term. Promptly following the completion of any Subtenant Improvements or
subsequent alterations or additions by or on behalf of Subtenant, Subtenant will
deliver to Sublandlord a reproducible copy of “as built” drawings of such work
together with a CAD file of the “as-built” drawings in the then-current version
of AutoCad. Notwithstanding the foregoing, Sublandlord hereby approves the
conceptual changes to the Subleased Premises based on the space plan attached
hereto as Exhibit D (Block Plan 6 - BP6) and will not require Subtenant to
remove such improvements unless it is a requirement of the Landlord.
 
(b)    Code-Required Work. If the performance of any Subtenant Improvements or
other work by Subtenant within the Subleased Premises "triggers" a requirement
for code-related upgrades to or improvements of any portion of the Master Leased
Premises or any common areas, Subtenant shall be responsible for the cost of
such code-required upgrade or improvements.
 

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15.    Holding Over. If Subtenant fails to surrender the Subleased Premises at
the expiration or earlier termination of this Sublease, occupancy of the
Subleased Premises after the termination or expiration shall be that of a
tenancy at sufferance. Subtenant’s occupancy of the Subleased Premises during
the holdover shall be subject to all the terms and provisions of this Sublease
and Subtenant shall pay an amount (on a per month basis without reduction for
partial months during the holdover) equal to 150% of the sum of the Base Rent
and Additional Rent due for the period immediately preceding the holdover. No
holdover by Subtenant or payment by Subtenant after the expiration or early
termination of this Sublease shall be construed to extend the Term or prevent
Sublandlord from immediate recovery of possession of the Subleased Premises by
summary proceedings or otherwise. In addition to the payment of the amounts
provided above, if Sublandlord is unable to deliver possession of the Subleased
Premises to a new subtenant or to Landlord, as the case may be, or to perform
improvements for a new subtenant, as a result of Subtenant’s holdover or perform
improvements, Subtenant shall be liable to Sublandlord for all damages,
including, without limitation, consequential damages, that Sublandlord suffers
from the holdover; Subtenant expressly acknowledges that such damages may
include all of the holdover rent charged by Landlord under the Master Lease as a
result of Subtenant’s holdover, which Master Lease holdover rent may apply to
the entire Master Lease Premises.
 
16.    Parking. During the Term Subtenant shall be permitted to use eighty (80)
of the parking spaces allocated to Sublandlord in the Master Lease of which
twenty-four (24) parking spaces are surface areas outside the Building.
Subtenant will pay the rate(s) being charged by Landlord pursuant to the Master
Lease for such spaces.
 
17.    Notices: Any notice by either party to the other required, permitted or
provided for herein shall be valid only if in writing and shall be deemed to be
duly given only if (a) delivered personally, or (b) sent by means of Federal
Express, UPS Next Day Air or another reputable express mail delivery service
guaranteeing next day delivery, or (c) sent by United States Certified or
registered mail, return receipt requested, addressed: (i) if to Sublandlord, at
the following addresses:
 

  Oracle USA, Inc.   c/o Oracle Corporation   1001 Sunset Boulevard   Rocklin,
California 95765   Attn:  Lease Administration

 

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with a copy to:

 
Oracle USA, Inc.
 
c/o Oracle Corporation
 
500 Oracle Parkway
 
Box 5OP7
 
Redwood Shores, California 94065
  Attn:  Legal Department

 
and (ii) if to Subtenant, at the following address:
 
Prior to Commencement Date:
 

 
VitalStream Holdings, Inc.
 
One Jenner, Suite 100
 
Irvine, California
  Attn:  Brian Stich

 
Following Commencement Date:
 
At the Subleased Premises, Attn: Brian Stitch
 
or at such other address for either party as that party may designate by notice
to the other. A notice shall be deemed given and effective, if delivered
personally, upon hand delivery thereof (unless such delivery takes place after
hours or on a holiday or weekend, in which event the notice shall be deemed
given on the next succeeding business day), if sent via overnight courier, on
the business day next succeeding delivery to the courier, and if mailed by
United States certified or registered mail, three (3) business days following
such mailing in accordance with this Section.
 
18.    Furniture. During the Term, at no charge to Subtenant, Subtenant shall be
permitted to use the existing modular and office furniture and data and
telephone cabling located in the Subleased Premises and described in more
particular detail in Exhibit C attached hereto (the “Furniture”). Subtenant
shall accept the Furniture in its current condition without any warranty of
fitness from Sublandlord (Subtenant expressly acknowledges that no warranty is
made by Sublandlord with respect to the condition of any cabling currently
located in or serving the Subleased Premises); for purposes of documenting the
current condition of the Furniture, Subtenant and Sublandlord shall, prior to
the Commencement Date, conduct a joint walk-through of the Subleased Premises in
order to inventory items of damage or disrepair in the Furniture. Subtenant
shall use the Furniture only for the purposes for which such Furniture is
intended and shall be responsible for the proper maintenance, care and repair of
the Furniture, at Subtenant’s sole cost and expense, and using maintenance
contractors specified by Sublandlord. No item of Furniture shall be removed from
the Subleased Premises without Sublandlord’s prior written consent. On or about
the date of expiration of the Term, the parties shall once again conduct a
walk-through of the Subleased Premises to catalog any items of damage,
disrepair, misuse or loss among the Furniture (reasonable wear and tear
excepted), and Subtenant shall be responsible, at Subtenant’s sole cost and
expense, for curing any such items (including, with respect to loss, replacing
any lost item with a substantially similar new item reasonably acceptable to
Sublandlord). Subtenant shall not modify, reconfigure or relocate any furniture
except with the advanced written permission of Sublandlord, and any work of
modifying any Furniture (including, without limitation, changing the
configuration of, “breaking down” or reassembly of cubicles or other modular
furniture) shall be performed at Subtenant's sole cost using Sublandlord’s
specified vendors or an alternate vendor approved in writing by Sublandlord
(such approval to be granted or withheld on Sublandlord's good faith discretion,
based upon Sublandlord's assessment of factors which include, without
limitation, whether the performance by such vendor will void applicable
warranties for such furniture and whether such vendor is sufficiently
experienced in the design of such furniture). Notwithstanding the foregoing,
Sublandlord hereby approves the conceptual furniture changes in the Subleased
Premises based on the drawings attached hereto as Exhibit E that is in
accordance with the Subtenant Improvements required in Block Plan 6 (Exhibit D).
 

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19.    Brokers. Subtenant represents that it has dealt directly with and only
with Studley, Inc. (“Subtenant’s Broker”), as a broker in connection with this
Sublease. Sublandlord represents that it has dealt directly with and only with
Trammell Crow Company (“Sublandlord’s Broker”), as a broker in connection with
this Sublease. Sublandlord and Subtenant shall indemnify and hold each other
harmless from all claims of any brokers other than Subtenant’s Broker and
Sublandlord’s Broker claiming to have represented Sublandlord or Subtenant in
connection with this Sublease. Subtenant and Sublandlord agree that Subtenant’s
Broker and Sublandlord’s Broker shall be paid commissions by Sublandlord in
connection with this Sublease pursuant to a separate agreement.
 
20.    Right of First Refusal. Subject to Landlord’s consent, prior to
subleasing all or any portion of the Master Lease Premises on the fifth (5th)
floor of the Building (“Expansion Space”), Subtenant shall have the on-going
right of first refusal to sublease (“Right of First Refusal”) any available
Expansion Space so long as such space is leased and controlled by the
Sublandlord. If Sublandlord and a prospective new subtenant agree on economic
terms pursuant to which such subtenant will sublease any of the Expansion Space
(“Approved Sublease Offer”), then Sublandlord shall deliver a written offer
(“Offer”) to Subtenant setting forth the terms of Approved Sublease Offer (the
“Refusal Notice”) and Subtenant shall have a right, to be exercised by the
delivery of irrevocable written notice to Sublandlord within five (5) days after
delivery of the Refusal Notice, to sublease the Offered Space on the terms and
conditions set forth in the Refusal Notice. If Subtenant does not timely elect
to Sublease the applicable Expansion Space on the terms set forth in the Refusal
Offer, then Sublandlord shall be free to sublease the applicable space to the
prospective new subtenant based on such terms and conditions in the Approved
Sublease Offer; provided, however, if Sublandlord is willing to sublease the
applicable space to the prospective subtenant upon Economic Terms (defined
below) which are more than five percent (5%) less than the Economic Terms set
forth in the Refusal Notice, Sublandlord must first re-offer the space at the
revised Economic Terms (“Revised Offer”) to Subtenant after which Subtenant
shall have five (5) days to accept the Revised Offer. If Subtenant fails to
timely accept the Revised Offer, then Sublandlord shall be free to sublease the
space to the prospective subtenant pursuant to such terms and conditions in the
Revised Offer. If Subtenant timely accepts the Offer or the Revised Offer, as
applicable, then Sublandlord shall prepare and submit to Subtenant an amendment
to this Sublease containing the terms of the Refusal Notice or the Revised
Offer, as applicable, and otherwise on the form of amendment then in use by
Sublandlord and reasonably approved by Subtenant. Subtenant shall execute and
deliver such an amendment to Sublandlord within ten (10) business days after
delivery of same to Subtenant for execution. However, if Subtenant fails to
timely execute and deliver the amendment (or fails to object to the terms
contained therein as not correctly being in accordance with the terms of the
Refusal Notice, Revised Offer, or this Sublease), Subtenant shall nonetheless be
irrevocably bound to sublease the applicable space from Sublandlord on the terms
set forth in the Refusal Notice or the Revised Offer. This Right of First
Refusal is personal to the original Subtenant, and shall automatically terminate
with the expiration or sooner termination of this Sublease, the expiration or
earlier termination of the Master Lease with respect to the fifth (5th) floor of
the Building, or upon the assignment of the Sublease (to a non-affiliated entity
of Subtenant) or the sub-subletting of all or more than fifty percent (50%) of
the rentable area in the original Subleased Premises. As used herein, “Economic
Terms” shall mean the net, aggregated, cost to Subtenant or another party, on a
present value basis, of the following terms for the space in question: (i) the
rental rate, (ii) the amount of any subtenant improvement allowance (which
amount is a deduction from Subtenant's or the other party's cost), (iii) the
amount of free rent (which amount is a deduction from Subtenant's or the other
party's cost), (iv) the amount of protection from the payment of operating and
tax expenses , and (v) any other lease concessions or inducements which have a
reasonably ascertainable monetary value.
 
21.    Complete Agreement. There are no representations, warranties, agreements,
arrangements or understandings, oral or written, between the parties or their
representatives relating to the subject matter of this Sublease which are not
fully expressed in this Sublease. This Sublease cannot be changed or terminated
nor may any of its provisions be waived orally or in any manner other than by a
written agreement executed by both parties.
 

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22.    Interpretation. Irrespective of the place of execution or performance,
this Sublease shall be governed by and construed in accordance with the laws of
the State of California. If any provision of this Sublease or the application
thereof to any person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, the remainder of this Sublease and the application
of that provision to other persons or circumstances shall not be affected but
rather shall be enforced to the extent permitted by law. The table of contents,
captions, headings and titles, if any, in this Sublease are solely for
convenience of reference and shall not affect its interpretation. This Sublease
shall be construed without regard to any presumption or other rule requiring
construction against the party causing this Sublease or any part thereof to be
drafted. If any words or phrases in this Sublease shall have been stricken out
or otherwise eliminated, whether or not any other words or phrases have been
added, this Sublease shall be construed as if the words or phrases so stricken
out or otherwise eliminated were never included in this Sublease and no
implication or inference shall be drawn from the fact that said words or phrases
were so stricken out or otherwise eliminated. Each covenant, agreement,
obligation or other provision of this Sublease shall be deemed and construed as
a separate and independent covenant of the party bound by, undertaking or making
same, not dependent on any other provision of this Sublease unless otherwise
expressly provided. All terms and words used in this Sublease, regardless of the
number or gender in which they are used, shall be deemed to include any other
number and any other gender as the context may require. The word "person" as
used in this Sublease shall mean a natural person or persons, a partnership, a
corporation or any other form of business or legal association or entity.
 
23.    Counterparts. This Sublease may be executed in separate counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same instrument. This Sublease shall be fully executed
when each party whose signature is required has signed and delivered to each of
the parties at least one counterpart, even though no single counterpart contains
the signatures of all parties hereto.
 
IN WITNESS WHEREOF, the parties hereto hereby execute this Sublease as of the
day and year first above written.
 

  SUBLANDLORD:    ORACLE USA, INC.,
                                     a Colorado corporation
        By:  /s/ Randall W. Smith                                              
  Print Name: Randall W.
Smith                                                      Title: VP, Real
Estate and Facilities                               

 
 

 
SUBTENANT:         VITALSTREAM HOLDINGS, INC.,
                                      a Nevada corporation
        By: 
/s/ Philip N. Kaplan                                               
                                     
  Print Name:
Philip N. Kaplan                                                      
  Title:
President and Chief Operating Officer                 

 

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EXHIBIT A
 
Subleased Premises

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EXHIBIT B
 
Commencement Agreement

Date              September 14, 2006

Subtenant            VITALSTREAM HOLDINGS, INC.
Address       555 Anton Blvd. Suite 400
                              Costa Mesa, CA 92626

Re:
Commencement Letter with respect to that certain Sublease dated as of the 31 day
of July, 2006, by and between ORACLE USA, INC., a Colorado corporation, as
Sublandlord, and VITALSTREAM HOLDINGS, INC., a Nevada corporation, as Subtenant,
for 20,128 rentable square feet on the fourth (4th) floor of the Building
located at 555 Anton Boulevard, Costa Mesa, California.

Dear Mr. Stich:

In accordance with the terms and conditions of the above referenced Sublease,
Subtenant accepts possession of the Premises and agrees:

1.    The Commencement Date is October 13, 2006 (Early Access on August 29,
2006;

2.    The Expiration Date is May 31, 2009;

3.    The Base Rent Abatement Period began October 13, 2006 and terminates on
January 13, 2007.

Please acknowledge your acceptance of possession and agreement to the terms set
forth above by signing all 3 counterparts of this Commencement Letter in the
space provided and returning 2 fully executed counterparts to my attention.

Sincerely,

/s/ Steven N. Tsuruoka
Oracle USA, Inc.
Steven N. Tsuruoka
Sr. Real Estate Manager

Agreed and Accepted:

Subtenant:  VITALSTREAM HOLDINGS, INC.

By:                          /s/ Eric L. Mersch                      
Name:                     Eric L. Mersch                            
Title:                       CFO                                              
Date:                       9/21/06                                         

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EXHIBIT C
 
Furniture
 
 
[image]

 

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EXHIBIT D
 
Subtenant’s Space Plan

 
[image]

 

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EXHIBIT E
 
Furniture Modifications

 
[image]