1
EXHIBIT 10.10
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (the "Sublease" or "Sublease Agreement") is entered
into on this 15th day of November, 1996 by and between BAY NETWORKS, INC., a
Delaware corporation with its principal business address at 4401 Great America
Parkway, Santa Clara, CA 95052 ("Sublandlord") and AWARE, INC., a Massachusetts
corporation having an office address at One Oak Park, Bedford, MA 01730-1413
("Subtenant").
WHEREAS, Wellfleet Communications, Inc., which was merged into Bay
Networks, Inc. on October 21, 1994, entered into a Lease Agreement dated as of
October 22, 1991 (the "Original Lease") which Original Lease has been amended by
that certain First Amendment to Lease (the "First Amendment") dated August 31,
I992 and that certain Second Amendment to Lease (the "Second.Amendment") dated
October 20, 1993 and that certain Third Amendment to Lease (the "Third
Amendment") dated June 30, 1995 and that certain Fourth Amendment to Lease (the
"Fourth Amendment") dated September 1995 and that certain FitSh Amendment to
Lease (the "Fifth Amendment") dated April 1996 (said Original Lease as amended
by the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment is hereinaRer collectively referred to as the
"Master Lease") with respect to certain Premises located in the Building known
as 39 Manning Road, Billerica, MA;), a copy of which is attached hereto as
Exhibit A, under which it leases 80,000 rentable square feet of office space
from WRC Properties, Inc. as assumed by Teachers Insurance Corporation,
("Landlord") in the building known as 39 Manning Road, Billerica, MA as provided
in the Master Lease, together with certain appurtenant fights, the provisions of
which Master Lease, portions of which are incorporated herein by reference; and
WHEREAS, Sublandlord desires to sublease to Subtenant and Subtenant desires
to sublease from Sublandlord the premises leased by Sublandlord under the Master
Lease on the. terms and conditions hereinafter provided,
NOW, THEREFORE, in consideration of the mutual promises herein provided, the
parties agree as follows:
1. PREMISES AND TERM. Sublandlord hereby subleases to Subtenant and
Subtenant hereby subleases from Sublandlord a portion of the premises consisting
of approximately 15,953 rentable square feet, located and configured as shown on
EXHIBIT B hereto (the "Premises"), upon and subject to the covenants,
agreements, terms and conditions herein provided, for term commencing on the
later to occur of: (a) Landlord's consent to this Sublease; or (b) completion of
Subtenant's Work by Sublandlord (as defined on Exhibit's B & C, "Sublandlord's
Work"); or (c) December 1, 1996 (the "Commencement") and terminating on November
30, 1997. Such Term may be extended under the same terms and conditions through
February 28, I998, by written notice from Subtenant on or before August 31,
1997.
2. RENT. Subtenant covenants and agrees to pay net rent to Sublandlord for
the Premises as follows: Annual rental of $63,812.00 in net rent plus
$111,671.00 for operating expenses and real estate taxes, due and payable in
advance on the first day of each month in monthly payments of $14,623.58. The
parties acknowledge that the operating and real estate tax expense is a good
faith estimate by Sublandlord and Subtenant agrees to pay and Sublandlord to
2
Page 2
receive such amount without further documentation and/or adjustments. Payments
for any partial month shall be calculated on a prorated basis based on the
number of days in the month.
All payments shall be made to:
Bay Networks, Inc.
8 Federal Street
Billedca, MA 01821
Attention: Real Estate Lease Administrator
3. USE. The Premises shall be used for offices and uses accessory thereto
light manufacturing, research and development, and warehousing and distribution,
but in no event for any uses not permitted under the Master Lease.
4. INCORPORATION OF MASTER LEASE. Except as otherwise provided herein, all
of the rights, remedies, covenants, agreements, terms and conditions of the
Master Lease relating to or applicable to the Sublandlord under the Master Lease
with respect to the Premises are incorporated herein and made a part hereof with
the same force and effect as if set forth at length herein, except to the extent
the same are modified or amended by this Sublease, it being understood and
agreed that said provisions shall fix the obligations, rights and remedies of
the Subtenant with the same effect as if the Subtenant were the tenant named in
the Master Lease. Except as otherwise provided herein, Subtenant agrees that
Sublandlord shall have all of the rights and remedies of the Landlord under the
Master Lease relating to the Premises with respect to Subtenant as if such
rights and remedies were fully set forth herein. To the extent of a conflict
between the terms of the Master Lease and this Sublease, the latter shall
control.
5. CONDITION OF PREMISES. Subtenant represents that it has inspected the
Premises and agrees to accept possession of the Premises in their present
condition without any obligation on the part of Sublandlord to make any
alterations, decorations, installations or improvements, other than the work
outlined and described in Exhibit C "Sublandlord's Work", to be completed by
December I, I996. Subtenant may make alterations and improvements to the
Premises beyond those described in Exhibit C, in accordance with the applicable
provisions of the Master Lease; provided, however, Subtenant will be required to
remove such alterations and improvements and restore the Premises upon the
expiration or termination of this Sublease Agreement to the extent required by
the Master Lease. With respect to Sublandlord's Work, Sublandlord will notify
Subtenant thirty (30) days prior to the expiration of the initial term and/or
the extension term, as to the extent, if any, to which the Subtenant shall
remove the Sublandlord's Work and restore the Premises to its initial condition
ordinary wear and tear or casualty damage excepted.
6. ADHERENCE TO MASTER LEASE. (i) Subtenant covenants and agrees (a) to
perform and observe all of the agreements, covenants, terms and conditions of
the Master Lease with respect to the Premises (and the buildings and common
areas, to the extent applicable) to the extent that the same are not modified or
amended by this Sublease, and (b) that it shall not do or suffer or permit
anything to be done which would constitute a default under the Master Lease with
respect to the Premises, and (c) that notwithstanding any other provision of
this Sublease to the contrary, any act or omission which constitutes a default
under the Master Lease with respect to the Premises also constitutes a default
hereunder.
3
Page 3
(ii) Sublandlord covenants and agrees (a) that it shall not do (or fail to do)
or suffer or permit anything to be done which would constitute a default under
the Master Lease, or which would cause a termination of the Master Lease, and
(b) that it shall not modify or amend the Master Lease in such a manner as to
adversely affect Subtenant's use, occupancy and/or enjoyment of the Premises,
without Subtenant's consent, which shall not be unreasonable withheld.
7. DEFAULT. If any default by Subtenant continues, in the case of payment
of rent or any other sum owned by Subtenant, for more than ten (10) days after
written notice from Sublandlord, or in the case of any of Subtenant's other
covenants, agreements or obligations under this Sublease or the Master Lease for
more than thirty (30) days after notice by Sublandlord or such additional time
as may be necessary if such default is not susceptible of cure within 30 days,
provided Subtenant promptly commences to cure and diligently prosecutes the same
until completion. Sublandlord may immediately or at any time thereatSer and
without further notice terminate this Sublease and take any and all actions
permitted to be taken by the Landlord under the Master Lease in respect of a
default by the tenant thereunder or any termination as a result thereof.
8. PARKING. During the term of this Sublease, Subtenant shall be entitled
to use a proportionate share in common with Sublandlord.
9. INDEMNITY. Subtenant and Sublandlord shall indemnify and hold harmless
from and against any and all cost, expense or liability (including reasonable
attorneys fees) incurred on account of either party's actions or the actions of
its employees, agents, licensees or contractors on or about the Premises or on
account of any breach or violation by Subtenant or Sublandlord of this Sublease,
or the Master Lease, unless the same is due in substantial part to the
negligence of either party's employees, agents, licensees, or contractors.
Subtenant and Sublandlord hereby releases and waives any fight or claim against
the other for loss of business, loss of profits, inconvenience, or for any other
incidental or consequential damages.
10. ASSIGNMENT. Subtenant shall not assign this Sublease nor further sublet
the Premises in whole or in part, and shall not permit Subtenant's interest in
this Sublease Agreement to be vested in any third party by operation of law or
otherwise. A change of control of Subtenant shall not be deemed to be an
assignment for the purposes of this Section I0, except, if the acquirer of
Subtenant is a direct competitor of the Sublandlord.
11. AUTHORITY. Subtenant represents and warrants that it has read and is
familiar with the terms of the Master Lease. Subtenant and Sublandlord represent
and warrant that each has all requisite corporate power and authority to enter
into this Sublease.
12. LATE CHARGES. Other remedies for non-payment of rent notwithstanding,
any rental payment not received within ten (10) days of the date it was due
shall bear interest at 18% annually from the date the rent was due, which fee is
a service charge intended to compensate Sublandlord for the additional
administrative and other costs and expenses it incurs by reason of such late
payment.
4
Page 4
13. BROKERS. Sublandlord and Subtenant each represent to the other that
they have not retained or dealt with any broker or agent in connection with this
Sublease Agreement other than Avalon Partners, Inc. whose commission shall be
paid entirely by Sublandlord. Each party agrees to indemnify and hold the other
harmless from and against any breach of the foregoing representation.
14. INSURANCE. During the term of this Sublease Agreement, Subtenant shall
maintain public liability and property damage insurance in accordance with the
provisions of the Master Lease. Subtenant shall maintain fire and extended
coverage insurance on its fixtures, equipment and leasehold improvements in
amounts equal to the full insurable value thereof. Sublandlord and Subtenant
each release the other from any liability for loss or damage sustained by it to
the extent the' same would be or is covered by insurance as herein provided.
Subtenant shall name Sublandlord and Landlord as an additional insured on its
comprehensive liability insurance policy and shall provide Sublandlord and
Landlord with a Certificate of Insurance certifying said coverage prior to
taking possession of the Premises.
15. SERVICES AND REPAIRS. (i) Except as provided in subparagraph (ii)
herein, it is understood that all work, services; repairs, restorations,
equipment and access which are required to be provided and made by Sublandlord
hereunder or by Landlord under the Master Lease, will, in fact, be provided by
the Landlord under the Master Lease, and Sublandlord shall have no obligation
during the term of this Sublease Agreement to do any such work, to provide any
such services, equipment or access, or to make any such repairs or restorations
or otherwise perform any obligations or observe any conditions required to be
observed or performed by Landlord under the Master Lease, and Subtenant agrees
to look solely to the Landlord under the Master Lease for the performance and
observance of the same. Sublandlord shall in no event be liable to Subtenant nor
shall Subtenant's obligations hereunder be impaired or the performance thereof
excused because of any failure or delay on the part of the Landlord under the
Master Lease in performing or observing the obligations of the Landlord under
the Master Lease, provided, however, that if a failure by the Landlord under the
Master Lease materially interferes with Subtenant's use and occupancy of the
Premises, and Subtenant so notifies Sublandlord in writing, Sublandlord shall
use its best efforts to cause the Landlord under the Master Lease to promptly
correct the failure.
Not withstanding the foregoing, if (a) Subtenant's use, occupancy and/or
enjoyment of the Premises is adversely affected as a result of (1) Landlord's
failure or delay to perform its obligations under the Master Lease, or (2)
Sublandlord's failure or delay to perform its obligations under the Sublease, or
(3) by reason of interruption, suspension or delay of work, services repairs,
restorations, equipment and access, and (b) Sublandlord shall be entitled to an
abatement of rent under the Master Lease as a result of the foregoing, then
Subtenant shall be entitled to an equitable abatement of rent under this
Sublease.
(ii) Any maintenance required of Subtenant under the Master Lease (including
without limitation Section 7.2 of the Master Lease) will be performed by
Sublandlord and paid by Sublandlord unless such repair or maintenance is the
result of Subtenants negligence in which the cost will be billed to Subtenant.
5
Page 5
16. ACCESS. Subtenant agrees to allow Sublandlord and its agents access to
the entire Premises at any time, with reasonable advance notice to inspect
Subtenant's compliance with the terms of this Sublease.
17. SURRENDER OF PREMISES. Subtenant agrees that time shall be of the
essence with respect to Subtenant's obligation to surrender possession of the
Premises to Sublandlord upon the termination of the term of this Sublease, and
further agrees that in the event that Subtenant does not promptly surrender
possession of the Premises to Sublandlord upon such termination, Sublandlord, in
addition to any other rights and remedies Sublandlord may have against Subtenant
for such holding over, shall be entitled to bring summary proceedings against
Subtenant, and Subtenant agrees to reimburse Sublandlord for all Sublandlord's
damages sustained by reason of such holding over (subject to the provisions of
Paragraph 9 of this Sublease), including without limitation, Sublandlord's
reasonable attorneys' fees and disbursements incurred in connection with the
exercise by Sublandlord of its remedies against Subtenant.
18. NOTICES. Any notice, approval, consent or election made pursuant to
this Sublease or the Master lease shall be in writing and shall be deemed duly
delivered upon receipt if delivered personally or if mailed by registered or
certified mail, return receipt requested, or by a reputable nationally
recognized overnight carrier, addressed
if to Sublandlord: to the attention of the Real Estate Manager, Bay
Networks, Inc., 8 Federal Street, Billedca, MA 01821.
if to Subtenant; to the President of Aware, Inc., One Oak Park, Bedford, MA
01730
Either party may, by notice as aforesaid, direct that future notices be sent to
a different address.
19. ENTIRE AGREEMENT. All prior understandings and agreements between the
parties with respect to the subject matter hereof are merged within this
Sublease. The covenants and agreements herein contained shall bind and inure to
the benefit of Sublandlord, Subtenant, and their respective successors and
permitted assigns.
20. EFFECTIVENESS. This Sublease shall be effective only when executed by
Sublandlord and Subtenant and approved by the Landlord under the Master Lease.
21. MISCELLANEOUS.
(a) If any dispute should arise between Sublandlord and Subtenant with respect
to interpretation or performance of this Sublease, the non-prevailing party
shall pay the prevailing party's reasonable attorneys' fees and costs.
(b) This Sublease shall be governed by and interpreted under and construed and
enforced in accordance with the laws of the State Massachusetts.
6
Page 6
(c) No modification, change or amendment of fids Sublease shall be binding upon
either party unless such modification, change or amendment is in writing, duly
authorized and signed by Sublandlord and Subtenant and consented in writing by
Landlord.
(d) Notwithstanding anything to the contrary contained herein, the parties
rights and duties herein are subject and subordinate to the requirements of the
Consent To Sublease among Sublandlord, Subtenant and Landlord.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease Agreement
to be executed under seal by an officer duly authorized, as of the day and year
first above written.
SUBLANDLORD: BAY NETWORKS, INC.
By: /s/ Berry E. Beswick
---------------------------
Berry E. Beswick
U.S. Real Estate Manager
SUBTENANT: Aware, Incorporated
By: /s/ Richard Moberg
---------------------------
Richard Moberg
Chief Financial Officer
As Landlord under the Master Lease, this Sublease Agreement is hereby
consented to and approved in accardance with the applicable provisions of the
Master Lease, by Landlord's duly authorized officer.
LANDLORD
By:
-------------------------------
Its
7
EXHIBIT B
MAP
PROPOSED SPACE - AWARE, INC.
39 MANNING ROAD
BILLERICA, MA 1/8" = 1'0"
21 HARD WALL OFFICES
41 CUBICAL OFFICES
1 CONFERENCE
1 LAB
1 RECEPTION AREA
1 VESTIBULE
- ----------------------
15,404 SQ.FT. USEABLE SPACE
549 SQ.FT. BATHROOMS / CORE AREA
- ----------------------
15,953 SQ.FT. SPACE TO BE LEASED
8
EXHIBIT C
Description of Sublandlord"s Work
Sublandlord shall construct and install the items as described below on behalf
of the Subtenant in accordance to the mutually agreed upon floor plan outlined
on Exhibit B. All work shall be performed in good workman like manner in
accordance with all applicable local, state and federal codes.
1. Construct eleven (11) 10 x 12 full height offices, framed and finished to the
underside of the ceiling using existing carpet, lighting and ceiling.
2. Construct common vestibule on the southwest wall approximately 320 square
feet (16 x 20) including all framing, doors & Hardware and security system.
3. Convert large conference room on the southwest wall into two private offices
of equal size, framed to the underside of the ceiling using existing carpet,
lighting and ceiling.
4. All necessary mechanical, electrical and plumbing for each office will be in
accordance with building standards and all building codes.
5. Remove approximately 4,500 square feet of existing carpet and replace with
VCT tile floor as outlined in the shaded area on Exhibit B.
Both Sublandlord and Subtenant agree the final cost for the above work will be
$39,855.00 and payable by the Subtenant within thirty (30) days from the
completion of such work.
The Subtenant agrees that all change orders and punch list items or any other
construction issues during and after construction will be resolved between the
Subtenant and Siena Construction. The Sublandlord agrees that it will use
reasonable efforts to assist in the resolution of any issues between these
parties.
Any change orders shall be approved by Subtenant and Sublandlord. In addition,
Sublandlord shall construct the demising wall, and necessary fire exits at its
own expense.