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EXHIBIT 10.7
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "Sublease"), is made and entered into as of
the 23rd day of July, 1999, by and between ENTEX INFORMATION SERVICES, INC., a
Delaware corporation, having an office and principal place of business at 0
Xxxxxxxxxxxxx Xxxxx, Xxx Xxxxx, Xxx Xxxx 00000 ("Sublandlord"), and AVISTAR
SYSTEMS CORPORATION, a Nevada corporation, having an office and a principal
place of business at 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx 00000
("Subtenant").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Lease dated as of August 10, 1998 (the
"Master Lease"), Xxxxxxx Properties, L.P. ("Master Landlord"), as landlord,
leased to Sublandlord, as tenant, those certain premises (the "Premises")
consisting of approximately seventeen thousand four hundred fourteen (17,414)
rentable square feet of space known as Suite 360 in the building located at 000
Xxxx Xxxxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxxxxxx (the "Building") which, together
with such other improvements and appurtenances, if any, therein mentioned, are
more particularly described in Exhibit B of the Master Lease; and
WHEREAS, Subtenant desires to sublease from Sublandlord, and Sublandlord is
willing to sublet to Subtenant, approximately seventeen thousand four hundred
fourteen (17,414) rentable square feet of the Premises (the "Sublease
Premises"), which Sublease Premises are more particularly described on Exhibit A
attached hereto and incorporated herein by this reference, upon the terms and
conditions more fully set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Sublandlord and Subtenant, intending to be legally bound, hereby
covenant and agree as follows:
1. INCORPORATION OF RECITALS; DEFINITIONS. The foregoing recitals are
hereby incorporated into this Sublease and made a part hereof by this reference.
All capitalized terms used in this Sublease shall have the meanings ascribed to
them in the Master Lease, unless otherwise defined herein.
2. TERM.
(a) Sublandlord, for and in consideration of the rents and covenants
hereinafter specified to be paid, performed and observed by Subtenant, does
hereby
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sublease to Subtenant, and Subtenant does hereby sublease from Sublandlord the
Sublease Premises for a term (the "Sublease Term") commencing on September 1,
1999 (the "Sublease Commencement Date") and ending on September 30, 2003 (the
"Sublease Expiration Date").
(b) Subject to all of the terms and conditions of this Sublease and
the Lease (except for Xxxxxxxxx 0 xxxxx), xxxx Xxxxxxxxxxx'x receipt of (i) a
certificate of insurance from Subtenant evidencing the insurance required
hereunder, (ii) the Security Deposit (hereinafter defined), and (iii) the
consent of Master Landlord to this Sublease, Sublandlord shall endeavor to
provide Subtenant with access in and to the Sublease Premises prior to the
Sublease Commencement Date so that Subtenant may perform any fit-up work
necessary for Subtenant's use and occupancy of the Sublease Premises. Any and
all such work shall be subject to Sublandlord's prior written consent and
performed in accordance with the terms and conditions of this Sublease and the
Lease. Subtenant shall indemnify Sublandlord and Master Landlord against all
costs, claims and damages sustained by either Sublandlord or Master Landlord as
a result of such use and occupancy by Subtenant. Notwithstanding the foregoing,
in no event shall Sublandlord's failure to provide Subtenant with early access
to the Sublease Premises affect the Sublease Commencement Date or Subtenant's
obligation to pay Rent (hereinafter defined) on the Sublease Commencement Date.
(c) Sublandlord shall not voluntarily amend or terminate the Master
Lease without the prior written consent of Subtenant, which consent shall not be
unreasonably withheld, conditioned or delayed.
3. Rent.
(a) Commencing on the Sublease Commencement Date, Subtenant shall pay
to Sublandlord as rent for the Sublease Premises annual base rent in the amount
of Six Hundred Twenty-Six Thousand Nine Hundred four and 00/100 Dollars
($626,904.00) ("Annual Base Rent"), which Annual Base Rent shall be payable in
equal monthly installments of Fifty-Two Thousand Two Hundred Forty-Two and
00/100 Dollars ($52,242.00) ("Monthly Base Rent"). Annual Base Rent shall be
increased on the first anniversary of the Sublease Commencement Date and on each
anniversary thereafter throughout the Sublease Term in accordance with the
following schedule:
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Annual Base Rent
Per Square Foot
Time Period Per Annum Annual Base Rent Monthly Base Rent
----------- ---------------- ---------------- -----------------
9/1/99 to 8/31/00 $36.00 $626,904.00 $52,242.00
9/1/00 to 8/31/01 $37.20 $647,800.80 $53,983.40
9/1/01 to 8/31/02 $38.40 $668,697.60 $55,724.80
9/1/02 to 9/30/03 $39.60* $689,594.40* $57,466.20
[* on an annualized basis]
Monthly Base Rent shall be payable in advance on the first day of each and
every calendar month during the Sublease Term to Sublandlord, subject to the
terms and conditions of the Master Lease; provided, however, that the first
installment of Monthly Base Rent shall be delivered to Sublandlord
simultaneously with Subtenants delivery of this Sublease to Sublandlord for
execution.
(b) In addition to Annual Base Rent, commencing on the Sublease
Commencement Date, Subtenant shall promptly pay to Sublandlord the following
additional rent ("Additional Rent"): (i) Subtenant's Proportionate Share
(hereinafter defined) of Operating Expenses (as defined in the Master Lease) and
(ii) any additional payments which may be required to be made by Sublandlord to
Master Landlord pursuant to the Master Lease and which are solely for the
benefit of Subtenant, except those payments specifically excluded by the terms
of this Sublease or which cover a period prior to the Sublease Commencement
Date. As used herein, "Subtenant's Proportionate Share" shall mean eight and
seven hundred seventy-three one-thousandths percent (8.773%). Any payments which
Subtenant is herein required to make which cover a period of time both before
and after the Sublease Commencement Date shall be prorated between the parties
hereto as of the Sublease Commencement Date. Payment of Annual Base Rent and
Additional Rent (collectively hereinafter referred to as "Rent") shall be made
to Sublandlord at its address first above written or at such other place or to
such other party as Sublandlord may designate in writing, without any offset,
counterclaim or deduction whatsoever. In addition, in the event the Master Lease
requires the "Tenant" thereunder to make any payments in the nature of operating
expenses, real estate taxes and/or utilities which are applicable to the
Sublease Premises directly to the service providers, taxing authorities and/or
utility companies, as the case may be, Subtenant shall make such payments in
timely manner and promptly supply Sublandlord with evidence thereof, and such
shall be deemed to be Additional Rent hereunder.
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4. SECURITY DEPOSIT. Upon the execution of this Sublease by
Subtenant, Subtentant will provide the Sublandlord a security deposit (the
"Security Deposit") either in the form of cash or an irrevocable and
unconditional letter of credit (the "Letter of Credit"), issued by and drawn on
a commercial bank or trust company with its principal office in New York, New
York and acceptable to Sublandlord, in form and content reasonably acceptable to
Sublandlord for the benefit of Sublandlord, in the sum of Two Hundred Eight
Thousand Nine Hundred Sixty-Eight and 00/100 Dollars ($208,968.00) as a deposit
to Sublandlord to stand as security for the payment by Subtenant of any and all
present and future debts and liabilities of Subtenant to Sublandlord in
connection with this Sublease and for the performance by Subtenant of all its
obligations arising under or in connection with this Sublease (the "Debts,
Liabilities and Obligations"). The Security Deposit shall remain in full force
and effect for the entire Sublease Term, provided, however, that if Subtenant is
not in default under this Sublease on each of the following dates, and no event
exists on each of those dates which event by notice or the passage of time (or
both) would constitute an event of default (hereinafter defined), the following
adjustments shall be made to the Security Deposit: (i) on the first (1st)
anniversary of the Sublease Commencement Date the amount of the Security Deposit
shall be reduced to One Hundred Fifty-Six Thousand Seven Hundred Twenty-Six and
00/100 Dollars ($156,726.00) and shall remain in full force and effect; (ii) on
the second (2nd) anniversary of the Sublease Commencement Date, the amount of
the Security Deposit shall be reduced to One Hundred Four Thousand Four Hundred
Eighty-Four and 00/100 Dollars ($104,484.00) and shall remain in full force and
effect; (iii) on the third (3rd) anniversary of the Sublease Commencement Date,
the amount of the Security Deposit shall be reduced to Fifty-Two Thousand Two
Hundred Forty-Two and 00/100 Dollars ($52,242.00) and shall remain in full force
and effect as a security for the remainder of the Sublease Term. With respect to
the Letter of Credit, Sublandlord agrees to accept an annually renewable Letter
of Credit for the purpose defined herein, provided that the commercial bank or
trust company agrees to notify Sublandlord and Subtenant by certified mail
ninety (90) days in advance of the expiration of each twelve (12) month term (or
other term) of the Letter of Credit if the commercial bank or trust company
intends not to renew the Letter of Credit, and Subtenant agrees to provide a
substitute Letter of Credit in like amount drawn on another commercial bank or
trust company acceptable to Sublandlord or to provide Sublandlord with the
required amount in cash in lieu of the Letter of Credit no later than sixty (60)
days prior to the expiration of the previous Letter of Credit. In the event a
replacement Letter of Credit (or the cash in lieu thereof) is not provided or
paid by the time specified herein, Sublandlord may declare Subtenant in default
of this Sublease, and, in addition to all other rights and remedies herein
provided, may demand payment under the Letter of Credit. In the event of
Sublandlord disposing of or transferring its interest in this Sublease,
Sublandlord shall deliver the Security Deposit to its successor and thereupon
shall have no liability to Subtenant to return the Security Deposit to
Subtenant. Subject to the foregoing and to Subtenant not being in default under
this Sublease, Sublandlord shall release the Security Deposit to Subtenant
without
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interest at the end of the Sublease Term or sooner termination of this Sublease
provided that all Debts, Liabilities and Obligations of Subtenant to
Sublandlord are paid and performed in full, failing which Sublandlord may on
notice to Subtenant elect to draw upon the Security Deposit and to apply it in
reduction of the Debts, Liabilities and Obligations and Subtenant shall remain
fully liable to Sublandlord for payment and performance of the remaining Debts,
Liabilities and Obligations.
5. USE AND ACCESS. Subtenant's use of and access to the Sublease
Premises shall be in accordance with the terms and conditions of the Master
Lease.
6. PARKING. Subtenant will be provided with Subtenant's
proportionate share of any unreserved parking provided to Sublandlord, as long
as such parking is made available to Sublandlord pursuant to the terms and
conditions of the Master Lease. As of the date hereof, such parking shall
consist of seventy (70) non-exclusive parking spaces located in the parking
structure at the Building, which parking spaces shall include eleven (11)
executive spaces.
7. BUILDING SERVICES. The provisions of the Master Lease with
respect to services to be provided at the Building and to the Premises are
hereby incorporated into this Sublease by this reference with respect to the
Sublease Premises. In no event shall Sublandlord be liable to Subtenant for the
interruption or discontinuance of any such services to the Sublease Premises or
the Building.
8. [Intentionally omitted.]
9. MASTER LEASE. The provisions of the Master Lease are, except as
otherwise herein specifically provided, hereby incorporated into this Sublease
with the same effect as if entirely rewritten herein, and shall fix the rights
and obligations of the parties hereto with respect to the Sublease Premises
with the same effect as if Sublandlord and Subtenant were "Landlord" and
"Tenant", respectively, named in the Master Lease. Subtenant hereby covenants to
perform the covenants and undertakings of Sublandlord as "Tenant" under the
Master Lease to the extent the same are applicable to the Sublease Premises
during the Sublease Term, and agrees not to do or permit to be done any act
which shall result in a violation of any of the terms and conditions of the
Master Lease. Notwithstanding the foregoing, Sublandlord shall, to the extent
applicable, continue to perform the covenants and undertakings of Sublandlord as
"Tenant" under the Master Lease which are not otherwise required to be performed
by Subtenant hereunder. In the event Sublandlord fails to perform any such
covenants or undertakings, and such failure constitutes a default under the
Master Lease, Subtenant shall have the right, but not the obligation, after the
expiration of Sublandlord's notice and cure periods under the Master Lease, to
perform same on behalf of Sublandlord, at Subtenant's sole cost and expense.
Subtenant agrees to indemnify and save Sublandlord harmless from and against
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any and all loss, cost, expense and liability arising out of or relating to any
violation or breach of, or default under, any provision of the Master Lease
caused by any act or omission of Subtenant. Except as otherwise specifically
provided herein, Subtenant is to have the benefit of the covenants and
undertakings of Master Landlord as "Landlord" in the Master Lease to the extent
the same are applicable to the Sublease Premises during the Sublease Term. It is
expressly understood and agreed, however, that Sublandlord is not in the
position to render any of the services or to perform any of the obligations
required of Sublandlord by the terms of this Sublease which are the
responsibility of Master Landlord, and that performance by Sublandlord of such
obligations hereunder are conditioned upon due performance by Master Landlord of
its corresponding obligations under the Master Lease. It is further understood
and agreed, therefore, that notwithstanding anything to the contrary contained
in this Sublease, Sublandlord shall not be in default under this Sublease for
failure to render such services or perform such obligations required of
Sublandlord by the terms of this Sublease which are the responsibility of the
Master Landlord as "Landlord" under the Master Lease, but Sublandlord agrees to
use commercially reasonable efforts to insure that Master Landlord performs said
obligations. The term "commercially reasonable efforts" shall not include legal
action against Master Landlord for its failure to so perform unless Subtenant
agrees to pay any and all costs and expenses in connection therewith. The
parties agree that the following provisions of the Master Lease (and any
references contained therein relating to such provisions) shall not be
applicable to this Sublease: Section 19 (captioned "Security Deposit"); Section
39, Addendum #2 (captioned "Option to Extend, Addendum #3 (captioned "Right of
First Offer") and Addendum #4 (captioned "Satellite Dish"); and Exhibit C
(captioned "Office Lease Improvement Agreement"). In addition, Section 20 of the
Master Lease (captioned "Limitation of Tenant's Remedies") is hereby amended by
deleting from the first sentence thereof the language "Tenant agrees to look
solely to Landlord's interest in the Project for the recovery of any amount from
Landlord, and shall not look to other assets of Landlord nor" and by inserting
in lieu thereof the language "Tenant shall not". The remaining provisions of the
Master Lease shall, for the purposes of this Sublease and to the extent that
same are applicable, remain in full force and effect as between Sublandlord and
Subtenant as provided in this Paragraph, except as said provisions have been
otherwise amended or modified by this Sublease. Should there be any conflict
between the terms of this Sublease as specifically set forth herein and the
terms of the Master Lease which are incorporated herein by reference, the terms
of this Sublease shall control.
10. Holding Over. In the event Subtenant holds over in its
possession of the Sublease Premises after the Sublease Expiration Date, such
possession shall be deemed unlawful unless expressly consented to by Sublandlord
in writing, and Sublandlord shall be entitled to any and all remedies in law or
in equity by reason of such unlawful holding over by Subtenant. Subtenant agrees
to indemnify and save Sublandlord harmless from and against any and all losses,
costs, expenses and liabilities
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incurred by Sublandlord under the Master Lease by reason of any such holding
over, including, but not limited to any attorneys' fees, court costs or
consequential damages suffered by either Sublandlord, Master Landlord or any
prospective tenant or subtenant of either party.
11. NOTICES. All notices, requests, demands and other communications with
respect to this Sublease, whether or not herein expressly provided for, shall
be in writing and shall be deemed to have been duly given either (i) two (2)
business days after being mailed by United States First-Class Certified or
Registered Mail, postage prepaid, return receipt requested or (ii) the next
business day after being deposited (in time for delivery by such service on
such business day) with Federal Express or another national courier service,
for delivery to the parties at their respective addresses first above written,
or to such other address or addresses as may hereafter be designated by either
party in writing for such purposes. Sublandlord and Subtenant agree that as of
the Sublease Commencement Date Subtenant's notice address for the purpose of
this Sublease shall be at the Sublease Premises.
12. SUBORDINATION; NO RECORDATION. This Sublease is subject and
subordinate in all respects to the Master Lease. Subtenant acknowledges that it
has received and read a copy of the Master Lease and understand and agrees to
be bound by all of the terms and conditions set forth therein, subject to
Paragraph 9 above. In no event shall Subtenant be permitted to record this
Sublease or a memorandum thereof without the express prior written consent of
Sublandlord and Master Landlord.
13. ASSIGNMENT AND SUBLETTING. Subtenant shall not, without the prior
written consent of Sublandlord (which consent shall be granted or withheld in
Sublandlord's sole and absolute discretion), assign the term hereby demised,
nor suffer or permit it to be assigned by operation of law or otherwise, or let
or underlet or permit the Sublease Premises or any part thereof to be used by
others for hire.
14. CONDITIONS OF SUBLEASE PREMISES. Subtenant acknowledges that it has
inspected the Sublease Premises demised hereunder, and is fully satisfied with
their condition and accepts the same, in "as-is," "where-is" condition.
Sublandlord has made no representation or warranties of any nature whatsoever
with regard to the Sublease Premises, and Sublandlord shall have no obligation
or duty with regard to preparation of the Sublease Premises for occupancy by
Subtenant. Sublandlord shall leave all existing telecommunications and computer
wiring in the Sublease Premises for use by Subtenant.
15. INSURANCE; INDEMNIFICATION. Throughout the Sublease Term, Subtenant
shall comply with all of the insurance obligations of the "Tenant" under the
Master Lease. In addition to any and all other requirements of the Master Lease
with respect to insurance, Subtenant shall name Sublandlord, Master Landlord
and any
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mortgagee as additional insured. Subtenant shall indemnify, defend and save
harmless Sublandlord, its officers, directors, shareholders and employees from
and against any and all liability, damage, expense, cause of action, suits,
claims or judgments for injury or death to persons or damage to property
sustained by anyone in, on and about the Sublease Premises or any part thereof,
caused either directly or indirectly by Subtenant's acts or omissions.
Subtenant's indemnification obligations hereunder shall survive the expiration
or earlier termination of this Sublease.
16. HAZARDOUS SUBSTANCES. Subtenant shall not cause or permit any
"Hazardous Substances" (hereinafter defined) to be used, stored, generated or
disposed in, on or about the Sublease Premises by Subtenant, its agents,
employees, contractors or invitees, except for such Hazardous Substances as are
normally utilized in the activities which are permitted on the Sublease Premises
pursuant to the Master Lease and this Sublease and which are necessary to
Subtenant's business. Any permitted Hazardous Substances at the Sublease
Premises, and all containers therefor, shall be used, kept, stored and disposed
of in a manner that complies with all federal, state and local laws or
regulations applicable to any such Hazardous Substances. Subtenant shall
indemnify and hold harmless Sublandlord, its officers, directors, shareholders
and employees from and against any and all claims, damages, fines, judgments,
penalties, costs, expenses or liabilities (including, without limitation, any
and sums paid for settlement of claims, attorneys' fees, consultant and expert
fees) arising during or after the Sublease Term from or in connection with the
use, storage, generation or disposal of Hazardous Substances in, on or about
the Sublease Premises by Subtenant, its agents, employees, contractors or
invitees. As used herein, "Hazardous Substances" means any substance which, is
toxic, ignitable, reactive, or corrosive and which is regulated by any state or
local government or by the United States government. "Hazardous Substances"
includes any and all material or substances which are defined as "hazardous
waste", "extremely hazardous waste" or a "hazardous substance" pursuant to
state, federal or local governmental law. "Hazardous Substances" includes, but
is not restricted to, asbestos, polychlorinated biphenyls ("PCBs") and
petroleum products. Subtenant's indemnification obligations hereunder shall
survive the expiration or earlier termination of this Sublease.
17. ATTORNEY'S FEES. In the event any legal action is taken by either
party against the other to enforce any of the terms and conditions of this
Sublease, it is agreed that the unsuccessful party to such action shall pay to
the prevailing party all court costs, reasonable attorneys' fees and expenses
incurred by the prevailing party.
18. BROKER. Neither Sublandlord nor Subtenant have had any relationship
or dealings with any real estate broker in connection with this Sublease,
except CB Xxxxxxx Xxxxx, Inc., as Sublandlord's and Subtenant's agent (the
"Broker"). Sublandlord shall pay any commission due to the Broker in connection
with this Sublease, pursuant to a separate listing agreement with the Broker.
Sublandlord and
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Subtenant each shall indemnify, defend and hold the other harmless from claims
by any other broker who has or alleges that it has represented Sublandlord or
Subtenant and is entitled to a commission in connection with this Sublease.
19. AUTHORITY. Subject to Paragraph 21 below, each party hereto and
the persons signing below warrant that the person signing below on such party's
behalf is authorized to do so and to bind such party to the terms of this
Sublease.
20. MISCELLANEOUS. This Agreement and any Exhibits attached hereto:
(a) Contain the entire agreement among the parties hereto with
respect to the subject matter covered hereby;
(b) May not be amended or rescinded except by an instrument in
writing executed by each of the parties hereto;
(c) Shall inure to the benefit of and be binding upon the
successors and permitted assigned of the parties hereto.
21. MASTER LANDLORD'S CONSENT. This Sublease is subject to and
conditioned upon the written consent of Master Landlord to the subleasing of the
Sublease Premises by Sublandlord to Subtenant.
[Signature Page Follows on Page 10]
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as of
the day and year first about written.
SUBLANDLORD:
ENTEX INFORMATION SERVICES, INC.,
a Delaware corporation
By: [signature]
----------------------------
Name:
Title:
SUBTENANT:
AVISTAR SYSTEMS CORPORATION, a
Nevada corporation
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------
Name: XXXXXXX X. XXXXXXXX
Title: CHIEF FINANCIAL OFFICER
Approved and Consented to:
MASTER LANDLORD:
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EXHIBIT A
Sublease Premises
[To be attached]
A-1
