EXHIBIT 10.7
[LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD SUB-SUBLEASE
(Short-form to be used with post 1995 AIR leases)
1. Parties. This Sub-Sublease, dated, for reference purposes only,
December 11, 1998, is made by and between Phase Metrics Inc. ("Sub-Sublessor")
and Altigen Communications Inc. ("Sub-Sublessee").
2. Premises. Sub-Sublessor hereby sub-subleases to Sub-Sublessee and Sub-
Sublessee hereby sub-subleases from Sub-Sublessor for the term, at the rental,
and upon all of the conditions set forth herein, that certain real property,
including all improvements therein, and commonly known by the street address of
00000 Xxxxxxx Xxxxxxxxx located in the County of Alameda, State of California
and generally described as (describe briefly the nature of the property) a free-
standing office/R&D building of approximately 30,400 square feet located in the
Bayside Business Park. ("Premises").
3. Term.
3.1 Term. The term of this Sub-Sublease shall be for twenty one and
one-half (21.5) months commencing on January 15, 1999 and ending on October 31,
2000 unless sooner terminated pursuant to any provision hereof.
3.2 Delay in Commencement. Sub-Sublessor agrees to use its best
commercially reasonable efforts to deliver possession of the Premises by the
commencement date. If, despite said efforts, Sub-Sublessor is unable to deliver
possession as agreed, the rights and obligations of Sub-Sublessor and Sub-
Sublessee shall be as set forth in Paragraph 5.2 of the Sublease Agreement (as
modified by Paragraph 7.3 of this Sub-Sublease).
4. Rent.
4.1 Base Rent. Sub-Sublessee shall pay to Sub-Sublessor as Base Rent
for the Premises equal monthly payments of $27,056.00 in advance, on the first
day of each month of the term hereof. Sub-Sublessee shall pay Sub-Sublessor upon
the execution hereof $13,528.00 as Base Rent for January 15, 1999 through
January 31, 1999 Base Rent for any period during the term hereof which is for
less than one month shall be a pro rata portion of the monthly installment.
4.2 Rent Defined. All monetary obligations of Sub-Sublessee to Sub-
Sublessor under the terms of this Sub-Sublease (except for the Security Deposit)
are deemed to be rent ("Rent"). Rent shall be payable in lawful money of the
United States to Sub-Sublessor at the address stated herein or to such other
persons or at such other places as Sub-Sublessor may designate in writing.
5. Security Deposit. Sub-Sublessee shall deposit with Sub-Sublessor upon
execution hereof $ 27,056.00 as security for Sub-Sublessee's faithful
performance of Sub-Sublessee's obligations hereunder. The rights and obligations
of Sub-Sublessor and Sub-Sublessee as to said Security Deposit shall be as set
forth in Paragraph 5 of the Master Lease (as modified by Paragraph 7.3 of this
Sub-Sublease).
6. Use.
6.1 Agreed Use. The Premises shall be used and occupied only for
general sales, R&D, shipping & receiving, and any and all legally related uses
and for no other purpose.
6.2 Compliance. Sub-Sublessor warrants that the improvements on the
Premises comply with all applicable covenants or restrictions of record and
applicable building codes, regulations and ordinances ("Applicable
Requirements") in effect on the commencement date. Said warranty does not apply
to the use to which Sub-Sublessee will put the Premises or to any alterations or
utility installations made or to be made by Sub-Sublessee. NOTE: Sub-Sublessee
is responsible for determining whether or not the zoning is appropriate for its
intended use, and acknowledges that past uses of the Premises may no longer be
allowed.
6.3 Acceptance of Premises and SubLessee. Sub-Sublessee acknowledges
that:
(a) it has been advised by Brokers to satisfy itself with
respect to the condition of the Premises (including but not limited to the
electrical, HVAC and fire sprinkler systems, security, environmental aspects,
and compliance with Applicable Requirements), and their suitability for Sub-
Sublessee's intended use,
(b) Sub-Sublessee has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to its occupancy of the Premises, and
(c) neither Sub-Sublessor, Sub-Sublessor's agents, nor any
Broker has made any oral or written representations or warranties with respect
to said matters other than as set forth in this Sub-Sublease.
In addition, Sub-Sublessor acknowledges that:
(a) Broker has made no representations, promises or warranties
concerning Sub-Sublessee's ability to honor the Sub-Sublease or suitability to
occupy the Premises, and
(b) it is Sub-Sublessor's sole responsibility to investigate the
financial capability and/or suitability of all proposed tenants.
7. Master Lease
7.1 Sub-Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter the "Master Lease" and also a "Sublease", both copies of which are
attached hereto marked Exhibit 1, wherein Security Capital Industrial Trust is
the Landlord and Hitachi America, Ltd., a New York corporation, is Lessee (dated
July 26, 1995) and Exhibit 2 wherein Hitachi America, Ltd. is Sublandlord and
Phase Metrics Inc. is Subtenant dated April 1, 1997.
7.2 This Sub-Sublease is and shall be at all times subject and
subordinate to the Master Lease and Sublease.
7.3 The terms, conditions and respective obligations of Sub-Sublessor
and Sub-Sublessee to each other under this Sub-Sublease shall be the terms and
conditions of the Master Lease and Sublease except for those provisions of the
Master Lease and Sublease which are directly contradicted by this Sub-Sublease
in which event the terms of this Sub-Sublease document shall control over the
Master Lease and Sublease. Therefore, for the purposes of this, Sub-Sublease,
wherever in the Master Lease and Sublease the word "Lessor or SubLessor" is used
it shall be deemed to mean the Sub-Sublessor herein and wherever in the Master
Lease and Sublease the word "Lessee or SubLessee" is used it shall be deemed to
mean the Sub-Sublessee herein.
7.4 During the term of this Sub-Sublease and for all periods
subsequent for obligations which have arisen prior to the termination of this
Sub-Sublease, Sub-Sublessee does hereby expressly assume and agree to perform
and comply with, for the benefit of Sub-Sublessor, SubLessor and Master Lessor,
each and every obligation of Sub-Sublessor, and SubLessor under the Master Lease
and Sublease except for the following paragraphs which are excluded
Page 1 of 3
REVISED
therefrom: Master Lease 36, 37c; Addendum - 1, 2; Exhibit C; and Sublease - 3.3,
5.1
7.5 The obligations that Sub-Sublessee has assumed under paragraph 7.4
hereof are hereinafter referred to as the "Sub-Sublessee's Assumed Obligations".
The obligations that Sub-Sublessee has not assumed under paragraph 7.4 hereof
are hereinafter referred to as the "Sub-Sublessor's Remaining Obligations".
7.6 Sub-Sublessee shall hold Sub-Sublessor free and harmless from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys' fees, arising out of Sub-Sublessee's failure to comply with or
perform Sub-Sublessee's Assumed Obligations.
7.7 Sub-Sublessor agrees to maintain the Master Lease and Sublease
during the entire term of this Sub-Sublease, subject, however, to any earlier
termination of the Master Lease and Sublease without the fault of the Sub-
Sublessor, and to comply with or perform Sub-Sublessor's Remaining Obligations
and to hold Sub-Sublessee free and harmless from all liability, judgments,
costs, damages, claims or demands arising out of Sub-Sublessor's failure to
comply with or perform Sub-Sublessor's Remaining Obligations.
7.8 Sub-Sublessor represents to Sub-Sublessee that the Master Lease
and Sublease is are in full force and effect and that no default exists on the
part of any Party to the Master Lease and Sublease.
8. Assignment of Sub-Sublease and Default.
8.1 Sub-Sublessor hereby assigns and transfers to Master Lessor and
SubLessor the Sub-Sublessor's interest in this Sub-Sublease, subject however to
the provisions of Paragraph 8.2 hereof.
8.2 Master Lessor and SubLessor, by executing this document, agrees
that until a Default shall occur in the performance of Sub-Sublessors
Obligations under the Master Lease and Sublease, that Sub-Sublessor may receive,
collect and enjoy the Rent accruing under this Sub-Sublease. However, if Sub-
Sublessor shall Default in the performance of its obligations to Master Lessor
or SubLessor then Master Lessor and SubLessor may, at Its option, receive and
collect, directly from Sub-Sublessee, all Rent owing and to be owed under this
Sub-Sublease. Master Lessor shall not, by reason of this assignment of the Sub-
Sublease nor by reason of the collection of the Rent from the Sub-Sublessee, be
deemed liable to Sub-Sublessee for any failure of the Sub-Sublessor to perform
and comply with Sub-Sublessor's Remaining Obligations.
8.3 Sub-Sublessor hereby irrevocably authorizes and directs Sub-
Sublessee upon receipt of any written notice from the Master Lessor or SubLessor
stating that a Default exists in the performance of Sub-Sublessor's obligations
under the Master Lease and Sublease, to pay to Master Lessor or SubLessor the
Rent due and to become clue under the Sub-Sublease. Sub-Sublessor agrees that
Sub-Sublessee shall have the right to rely upon any such statement and request
from Master Lessor or SubLessor, and that Sub-Sublessee shall pay such Rent to
Master Lessor and SubLessor without any obligation or right to inquire as to
whether such Default exists and notwithstanding any notice from or claim from
Sub-Sublessor to the contrary and Sub-Sublessor shall have no right or claim
against Sub-Sublessee for any such Rent so paid by Sub-Sublessee.
8.4 No changes or modifications shall be made to this Sub-Sublease
without the consent of Master Lessor and SubLessor.
9. Consent of Master Lessor and SubLessor.
9.1 In the event that the Master Lease and Sublease requires that Sub-
Sublessor obtain the consent of Master Lessor and SubLessor to any subletting by
Sub-Sublessor then, this Sub-Sublease shall not be effective unless, within ten
days of the date hereof, Master Lessor and SubLessor signs this Sub-Sublease
thereby giving its consent to this Sub-Subletting.
9.2 In the event that the obligations of the Sub-Sublessor under the
Master Lease and Sublease have been guaranteed by third parties then neither
this Sub-Sublease, nor the Master Lessor's or SubLessor's consent, shall be
effective unless, within 10 days of the date hereof, said guarantors sign this
Sub-Sublease thereby giving their consent to this Sub-Sublease.
9.3 In the event that Master Lessor or SubLessor does give such
consent then:
(a) Such consent shall not release Sub-Sublessor of its
obligations or alter the primary liability of Sub-Sublessor to pay the Rent and
perform and comply with all of the obligations of Sub-Sublessor to be performed
under the Master Lease or Sublease.
(b) The acceptance of Rent by Master Lessor or SubLessor from
Sub-Sublessee or anyone else liable under the Master Lease and Sublease shall
not be deemed a waiver by Master Lessor or SubLessor of any provisions of the
Master Lease and Sublease.
(c) The consent to this Sub-Sublease shall not constitute a
consent to any subsequent subletting or assignment.
(d) In the event of any Default of Sub-Sublessor under the Master
Lease and Sublease, Master Lessor or SubLessor may proceed directly against Sub-
Sublessor, any guarantors or anyone else liable under the Master Lease and
Sublease or this Sub-Sublease without first exhausting Master Lessor's or
SubLessor's remedies against any other person or entity liable thereon to Master
Lessor or SubLessor.
(e) Master Lessor or SubLessor may consent to subsequent
sublettings and assignments of the Master Lease and Sublease or this Sub-
Sublease or any amendments or modifications thereto without notifying Sub-
Sublessor or any one else liable under the Master Lease and Sublease and without
obtaining their consent and such action shall not relieve such persons from
liability.
(f) In the event that Sub-Sublessor shall Default in its
obligations under the Master Lease and Sublease, then Master Lessor or
SubLessor, at its option and without being obligated to do so, may require Sub-
Sublessee to attorn to Master Lessor or SubLessor in which event Master Lessor
or SubLessor shall undertake the obligations of Sub-Sublessor under this Sub-
Sublease from the time of the exercise of said option to termination of this
Sub-Sublease but Master Lessor or SubLessor shall not be liable for any prepaid
Rent nor any Security Deposit paid by Sub-Sublessee, nor shall Master Lessor or
SubLessor be liable for any other Defaults of the Sub-Sublessor under the Sub-
Sublease.
9.4 The signatures of the Master Lessor and SubLessor and any
Guarantors of Sub-Sublessor at the end of this document shall constitute their
consent to the terms of this Sub-Sublease.
9.5 Master Lessor and SubLessor acknowledges that, to the best of
Master Lessor's and SubLessor's knowledge, no Default presently exists under the
Master Lease and Sublease of obligations to be performed by Sub-Sublessor and
that the Master Lease and Sublease is in full force and effect.
9.6 In the event that Sub-Sublessor Defaults under its obligations to
be performed under the Master Lease and Sublease by Sub-Sublessor, Master Lessor
and SubLessor agrees to deliver to Sub-Sublessee a copy of any such notice of
default. Sub-Sublessee shall have the right to cure any Default of Sub-Sublessor
described in any notice of default within ten days after service of such notice
of default on Sub-Sublessee. If such Default is cured by Sub-Sublessee then Sub-
Sublessee shall have the right of reimbursement and offset from and against Sub-
Sublessor.
10. Brokers Fee.
10.1 Upon execution hereof by all parties, Sub-Sublessor shall pay to
Xxxxx & Xxxxx Company a licensed real estate broker, ("Broker"), a fee as set
forth in a separate agreement between Sub-Sublessor and Broker, or in the event
there is no such separate agreement, the sum of $per separate agreement for
brokerage services rendered by Broker to Sub-Sublessor in this transaction.
10.2 Sub-Sublessor agrees that if Sub-Sublessee exercises any option or
right of first refusal as granted by Sub-Sublessor herein, or any option or
right substantially similar thereto, either to extend the term of this Sub-
Sublease, to renew this Sub-Sublease, to purchase the Premises, or to lease or
purchase adjacent property which Sub-Sublessor may own or in which Sub-Sublessor
has an Interest, then Sub-Sublessor shall pay to Broker a fee in accordance with
the schedule of Broker in effect at the time of the execution of this Sub-
Sublease. Notwithstanding the foregoing, Sub-Sublessor's obligation under this
Paragraph 10.2 is limited to a transaction in which Sub-Sublessor is acting as a
Sub-Sublessor, lessor or seller.
10.3 Master Lessor and Sub-Lessor agrees that if Sub-Sublessee shall
exercise any option or right of first refusal granted to Sub-Sublessee by Master
Lessor or SubLessor in connection with this Sub-Sublease, or any option or right
substantially similar thereto, either to extend or renew the Master Lease and
Sublease, to purchase the Premises or any part thereof, or to lease or purchase
adjacent property which Master Lessor or SubLessor may own or in which Master
Lessor or SubLessor has an interest, or if Broker is the procuring cause of any
other lease or sale entered into between Sub-Sublessee and Master Lessor or
SubLessor pertaining to the Premises, any part thereof, or any adjacent property
which Master Lessor or SubLessor owns or in which it has an interest, then as to
any of said transactions, Master Lessor and SubLessor shall pay to Broker a fee,
in cash, in accordance with the schedule of Broker in effect at the time of the
execution of this Sub-Sublease.
10.4 Any fee due from Sub-Sublessor or Master Lessor or SubLessor
hereunder shall be due and payable upon the exercise of any option to extend or
renew, upon the execution of any new lease, or, in the event of a purchase, at
the close of escrow.
10.5 Any transferee of Sub-Sublessor's interest in this Sub-Sublease,
or of Master Lessor's or SubLessor's interest in the Master Lease and Sublease,
by accepting an assignment thereof, shall be deemed to have assumed the
respective obligations of Sub-Sublessor or Master Lessor under this Paragraph
10. Broker shall be deemed to be a third-party beneficiary of this paragraph 10.
11. Attorney's Fees. If any party or the Broker named herein brings an
action to enforce the terms hereof or to declare rights hereunder, the
prevailing party in any such action, on trial and appeal, shall be entitled to
his reasonable attorney's fees to be paid by the losing party as fixed by the
Court.
12. Additional Provisions. [if there are no additional provisions, draw a
line from this point to the next printed word after the space left here. If
there are additional provisions place the same here.]
13. For purpose of the sub-sublease, when the Sublease and the Master Lease
(collectively "The Documents") refer to Landlord, Tenant, Subtenant or
Sublandlord
Page 2 of 3
REVISED
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ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
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INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY REAL ESTATE BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE OR THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS SUBLEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PROPERTY, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR SUBLESSEE'S INTENDED USE.
WARNING: IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
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CERTAIN PROVISIONS OF THE SUBLEASE MAY NEED TO BE REVISED TO COMPLY WITH THE
LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.
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Executed at:____________________________ ___________________________________
on:_____________________________________ By /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Address:________________________________ By VP-Finance & CFO
---------------------------------
"Sub-Sublessor" (Corporate Seal)
Executed at: 00000 Xxxxxxxxx Xxxx Xxxx ___________________________________
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on: 12/30/98 By /s/ Xxxxxxx Xx
------------------------------------- ---------------------------------
Address: Fremont, CA By President & CEO
-------------------------------- --------------------------------
"Sub-Sublessee" (Corporate Seal)
XXXXXXX XX
Executed at:____________________________ ___________________________________
on:_____________________________________ By_________________________________
Address:________________________________ By_________________________________
"Master Lessor" (Corporate Seal)
___________________________________
By_________________________________
By_________________________________
"Sub-Lessor" (Corporate Seal)
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 000 Xxxxx Xxxxxx
Xx., Xxxxx 000, Xxx Xxxxxxx, XX 00000. (000) 000-0000.
Page 3 of 3
REVISED
CONSENT BY SUBLANDLORD TO SUB-SUBLEASE
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The undersigned as Sublandlord under that certain Sublease dated April 1, 0000
xxxxxxx Xxxxxxx Xxxxxxx Ltd., a New York corporation ("Sublandlord") and Phase
Metrics, Inc., a California corporation ("Subsublandlord") for certain premises
at 00000 Xxxxxxx Xxxxxxxxx, xx Xxxxxxx XX (the "Sublease"), hereby consents to
the entering into of the foregoing Subsublease dated December 11, 1998
("Subsublease") between Subsublandlord, as subsublessor, and Altigen
Communications Inc., as subsubtenant, upon the express understandings and
conditions that:
a. Sublandlord neither approves nor disapproves the terms, conditions and
agreements contained in the Subsublease (all of which shall be subordinate
and subject at all times to the terms, covenants and conditions of the
Sublease and that certain Master Lease dated July 26, 1995, between
Security Capital Industrial Trust, as lessor, and Sublandlord, as lessee)
and assumes no liability or obligation of any kind whatsoever on account of
anything contained in the Subsublease;
b. By executing this consent, Sublandlord shall not be deemed to have waived
any rights under the Sublease or Master Lease nor shall Sublandlord be
deemed to have waived Subsublandlord's obligations to obtain any required
consents under the Sublease and Master Lease (other than consent by
Sublandlord to the Subsublease itself);
c. Notwithstanding anything in the Subsublease to the contrary, Subsublandlord
shall be and continue to remain liable for the payment of rent and the full
prompt performance of all of the obligations of Tenant under and as set
forth in the Sublease and Master Lease;
d. Subsublandlord shall pay Sublandlord 50% of all excess monthly rent
received per the Subsublease, with each payment of rent under the Sublease;
e. Nothing contained in the Subsublease shall be taken or construed to in any
way modify, alter, waive or affect any of the terms, covenants or
conditions contained in the Sublease or the Master Lease, or be deemed to
grant Subsubtenant any privity of contract with Landlord or Sublandlord, or
require Landlord or Sublandlord to accept any payments from Subsubtenant on
behalf of Subsublandlord;
4
f. The Subsublease shall be deemed and agreed to be a sublease only and not an
assignment and there shall be no further subletting or assignment of all or
any portion of the premises demised under the Sublease or the Master Lease
(including the premises demised by the foregoing Subsublease) except in
accordance with the terms and conditions of the Sublease and the Master
Lease; and
g. If Landlord terminates the Master Lease as a result of a default by
Sublandlord thereunder, or if Sublandlord terminates the Sublease as a
result of a default by Subsublandlord thereunder, then the Subsublease
shall automatically terminate concurrently therewith unless Landlord or
sublandlord elects in writing to keep the Subsublease in full force and
effect in which case the Subsublease shall become and be deemed to be a
direct indenture of lease or sublease, as applicable, between Landlord or
Sublandlord, as applicable, and Subsubtenant.
SUBLANDLORD: HITACHI AMERICA, LTD.,
a New York corporation
By: /s/ Xxxxxxxxx Xxxxxxxx
-----------------------------------
Xxxxxxxxx Xxxxxxxx
General Manager- Computer Division
5
CONSENT BY LANDLORD TO SUBLEASE
-------------------------------
The undersigned, as Landlord under that certain Lease dated July 26, 1995
with Hitachi America, Ltd., a New York corporation ("Sublandlord") for certain
premises at 00000 Xxxxxxx Xxxxxxxxx xx Xxxxxxx, XX (the "Prime Lease"), hereby
consents to the entering into of the foregoing Sublease dated December 11, 1998
("Sublease") between sub-Sublanlord, phase Metrics, Inc., a California
Corporation as sublessor, and Altigen Communication Inc., a California
Corporation, as subtenant ("Subtenant"), upon the express understandings and
conditions that:
a. Landlord neither approves nor disapproves the terms, conditions and
agreements contained in the Sublease (all of which shall be
subordinate and subject at all times to the terms, covenants and
conditions of the Prime Lease) and assumes no liability or
obligation of any kind whatsoever on account of anything contained
in the sublease;
b. By executing this consent, Landlord shall not be deemed to have
waived any rights under the Prime Lease nor shall Landlord be deemed
to have waived Sublandlord's obligations to obtain any required
consents under the Prime Lease (other than consent to the Sublease
itself);
c. Notwithstanding anything in the Sublease to the contrary,
Sublandlord shall be and continue to remain liable for the payment
of rent and the full and prompt performance of all of the
obligations of Tenant under and as set forth in the Prime Lease;
d. Nothing contained in the Sublease shall be taken or construed to in
any way modify, alter, waive or affect any of the terms, covenants
or conditions contained in the Prime Lease, or be deemed to grant
Subtenant any privity of contract with Landlord, or require Landlord
to accept any payments from Subtenant on behalf of Sublandlord;
e. The Sublease shall be deemed and agreed to be a sublease only and
not an assignment and there shall be no further subletting or
assignment of all or any portion of the premises demised under the
Prime lease (including the premises demised by the foregoing
Sublease) except in accordance with the terms and conditions of the
Prime lease; and
f. If Landlord terminates the Prime Lease as a result of a default by
Sublandlord thereunder, the Sublease shall automatically terminate
concurrently therewith unless Landlord elects in writing to keep the
Sublease in full force and effect in which case the sublease shall
become and be deemed to be a direct indenture of lease between
Landlord and Subtenant.
LANDLORD
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ProLogis Trust, a Maryland Real Estate
Investment Trust
By: /s/ Xxx X. Xxxxxxxx
------------------------------------
Xxx X. Xxxxxxxx
Title: Managing Director
Dated: 1/6/99
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