<PAGE>
As filed with the Securities and Exchange Commission on September 2, 1999
Registration No. 333-85359
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
E-STAMP CORPORATION
(Exact name of Registrant as specified in its charter)
----------------
<TABLE>
<S> <C> <C>
Delaware 5961 76-0518568
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
</TABLE>
2855 Campus Drive, Suite 100
San Mateo, California 94403
(650) 554-8454
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------
ROBERT H. EWALD
President and Chief Executive Officer
2855 Campus Drive, Suite 100
San Mateo, California 94403
(650) 554-8454
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
<TABLE>
<S> <C>
DAVID J. SEGRE MICHAEL J. HALLORAN
MICHELLE L. WHIPKEY JAMES P. CLOUGH
MARK D. BEARIAULT PATRICK J. DEVINE
Wilson Sonsini Goodrich & Rosati JAMES J. MASETTI
Professional Corporation Pillsbury Madison & Sutro LLP
650 Page Mill Road 2550 Hanover Street
Palo Alto, California 94304 Palo Alto, California 94304
(650) 493-9300 (650) 233-4500
</TABLE>
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall hereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
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<PAGE>
EXPLANATORY NOTE
The purpose of this Amendment No. 1 is solely to file certain exhibits to
the Registration Statement as set forth below as in Item 16(a) of Part II.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
1.1** Form of Underwriting Agreement.
3.1** Certificate of Incorporation of the Registrant.
3.2** Bylaws of the Registrant.
3.3* Form of Amended and Restated Certificate of Incorporation of
Registrant.
3.4* Form of Amended and Restated Bylaws of Registrant.
3.5** Certificates of Designation of Registrant relating to Series A
Preferred Stock.
3.6** Certificates of Designation of Registrant relating to Series B
Preferred Stock.
3.7** Certificate of Designation of Registrant relating to Series C
Preferred Stock.
4.1* Specimen Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1** Form of Indemnification Agreement between the Registrant and each of
its directors and officers.
10.2** 1999 Stock Plan and form of agreements thereunder.
10.3** 1999 Employee Stock Purchase Plan and form of agreements thereunder.
10.4** 1999 Director Option Plan and form of agreements thereunder.
10.5** 1996 Stock Option and Restricted Stock Plan.
10.6** 1996 Non-Employee Director Stock Option Plan.
10.7** Second Amended and Restated Investors Rights Agreement.
10.8 Employment Agreement, dated March 29, 1996, between Registrant and
Nicole Ward (Eagan).
10.9 Employment Agreement, dated May 13, 1996, between Registrant and
Martin Pagel.
10.10 Employment Agreement, dated July 27, 1996, between Registrant and
Thomas Reinemer.
10.11 Promissory Note, dated May 30, 1999, between Registrant and Robert H.
Ewald.
10.12 Crypto iButton Service Provider Agreement dated August 21, 1998,
between Registrant and Dallas Semiconductor Corporation.
10.13+ Premium Partner Website Marketing Agreement dated July 1, 1999,
between Registrant and Microsoft Corporation.
10.14+ America Online Strategic Marketing Agreement dated November 13, 1998,
between Registrant and America Online.
10.15+ Turnkey/Inventory Agreement dated June 1, 1999, between Registrant and
Modus Media International.
10.16* Agreement for Services dated June 27, 1997 between Registrant and
Pilot Network Services, Inc.
10.17 Sublease Agreement dated February 2, 1999 between the Registrant and
Electronics for Imaging, Inc.
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
(see Exhibit 5.1).
23.2** Consent of Ernst & Young LLP, Independent Auditors.
23.3** Consent of Howrey & Simon.
24.1** Power of Attorney.
27.1** Financial Data Schedules.
</TABLE>
- ---------------------
* To be filed by amendment.
** Previously filed.
+ The registrant is seeking confidential treatment of certain portions of this
exhibit from the Commission. The omitted portions have been filed separately
with the Commission.
II-2
<PAGE>
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Mateo, State of California, on the 2nd day of September, 1999.
E-STAMP CORPORATION
/s/ Robert H. Ewald
By: _________________________________
Robert H. Ewald
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert H. Ewald President, Chief Executive September 2, 1999
____________________________________ Officer and Director
Robert H. Ewald (Principal Executive
Officer)
/s/ Anthony H. Lewis, Jr. Vice President and Chief September 2, 1999
____________________________________ Financial Officer
Anthony H. Lewis, Jr. (Principal Financial and
Accounting Officer)
* Chairman of the Board September 2, 1999
____________________________________
Marcelo A. Gumucio
* Director September 2, 1999
____________________________________
John V. Balen
* Director September 2, 1999
____________________________________
Thomas L. Rosch
* Director September 2, 1999
____________________________________
Gregory S. Stanger
* Director September 2, 1999
____________________________________
Adam Wagner
</TABLE>
*By: /s/ Robert H. Ewald
-------------------------------
Robert H. Ewald
Attorney-in-Fact
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
1.1** Form of Underwriting Agreement.
3.1** Certificate of Incorporation of the Registrant.
3.2** Bylaws of the Registrant.
3.3* Form of Amended and Restated Certificate of Incorporation of
Registrant.
3.4* Form of Amended and Restated Bylaws of Registrant.
3.5** Certificates of Designation of Registrant relating to Series A
Preferred Stock.
3.6** Certificates of Designation of Registrant relating to Series B
Preferred Stock.
3.7** Certificate of Designation of Registrant relating to Series C
Preferred Stock.
4.1* Specimen Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1** Form of Indemnification Agreement between the Registrant and each of
its directors and officers.
10.2** 1999 Stock Plan and form of agreements thereunder.
10.3** 1999 Employee Stock Purchase Plan and form of agreements thereunder.
10.4** 1999 Director Option Plan and form of agreements thereunder.
10.5** 1996 Stock Option and Restricted Stock Plan.
10.6** 1996 Non-Employee Director Stock Option Plan.
10.7** Second Amended and Restated Investors Rights Agreement.
10.8 Employment Agreement, dated March 29, 1996, between Registrant and
Nicole Ward (Eagan).
10.9 Employment Agreement, dated May 13, 1996, between Registrant and
Martin Pagel.
10.10 Employment Agreement, dated July 27, 1996, between Registrant and
Thomas Reinemer.
10.11 Promissory Note, dated May 30, 1999, between Registrant and Robert H.
Ewald.
10.12 Crypto iButton Service Provider Agreement dated August 21, 1998,
between Registrant and Dallas Semiconductor Corporation.
10.13+ Premium Partner Website Marketing Agreement dated July 1, 1999,
between Registrant and Microsoft Corporation.
10.14+ America Online Strategic Marketing Agreement dated November 13, 1998,
between Registrant and America Online.
10.15+ Turnkey/Inventory Agreement dated June 1, 1999, between Registrant and
Modus Media International.
10.16* Agreement for Services dated June 27, 1997 between Registrant and
Pilot Network Services, Inc.
10.17 Sublease Agreement dated February 2, 1999 between the Registrant and
Electronics for Imaging, Inc.
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
(see Exhibit 5.1).
23.2** Consent of Ernst & Young LLP, Independent Auditors.
23.3** Consent of Howrey & Simon.
24.1** Power of Attorney.
27.1** Financial Data Schedules.
</TABLE>
- ---------------------
* To be filed by amendment.
** Previously filed.
+ The registrant is seeking confidential treatment of certain portions of this
exhibit from the Commission. The omitted portions have been filed separately
with the Commission.
<PAGE>
EXHIBIT 10.8
RATIFICATION AGREEMENT
THIS RATIFICATION AGREEMENT (this "Agreement") is entered into effective as
of September 1, 1996, by and between E-STAMP CORPORATION, a Delaware corporation
(the "Company"), and NICOLE WARD, an individual (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee previously entered into that certain Employment
Agreement with Post N Mail, L.C., a Texas limited liability company ("PNM"),
dated as of the 29th day of March, 1996, (the "Employment Agreement");
WHEREAS, pursuant to the Employment Agreement, PNM granted to Employee the
right to receive as additional compensation certain units of membership interest
in PNM (the "Restricted Units") which were subject to certain restrictions
including vesting provisions;
WHEREAS, PNM has reorganized and merged with and into the Company as of
September 1, 1996;
WHEREAS, the parties to this Agreement desire to reform and ratify their
agreements under the Employment Agreement, so as to cause Employee to continue
in his employment, henceforth with the Company;
WHEREAS, pursuant to such continuation of employment, the parties desire to
allow Employee to participate in the ownership of equity in the Company in a
manner similar to the Restricted Units.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment. The parties hereby agree that Employee shall become an
----------
employee of the Company effective as of the date hereof pursuant to the terms
and conditions of the Employment Agreement, except that the Company shall
replace PNM as the employer pursuant to this reformation of the Employment
Agreement (such reformed agreement to be referred to herein as the "Reformed
Employment Agreement"). The Company shall succeed PNM as to all the rights and
interests PNM possessed in the Employment Agreement. Employee shall become an
employee of the Company pursuant to the Reformed Employment Agreement, and shall
perform those duties and responsibilities, and receive such compensation, as was
previously provided for in the Employment Agreement except as provided herein.
2. Options. Subject to the provisions of the Company's 1996 Stock Option
-------
and Restricted Stock Plan (the "Plan"), the Company shall grant Employee options
to purchase 25,000 shares of the common stock of the Company at an exercise
price of $10.00 per share (the "Stock
<PAGE>
Options"). Simultaneous with the execution of this Agreement, the Company and
the Employee shall enter into a Stock Option Agreement pursuant to which the
Stock Options shall be granted.
3. Restricted Stock. Subject to the provisions of the Plan, the Company
----------------
shall grant to Employee the right to receive as additional compensation options
to purchase 25,625 shares of the common stock of the Company at an exercise
price of $.25 per share (the "Restricted Stock Options"). Simultaneously with
the execution of this Agreement, the Company and the Employee shall enter into a
Restricted Stock Option Agreement pursuant to which the Restricted Stock Options
shall be granted. The Restricted Stock Options, once granted, shall amend and
replace the Restricted Units and any and all rights to the Restricted Units
shall be extinguished at such time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE COMPANY:
-----------
E-STAMP CORPORATION
Address: a Delaware corporation
- -------
3050 Post Oak Blvd., Suite 110
Houston, Texas 77056 By: /s/ Sunir K. Kapoor
---------------------------------------
SUNIR K. KAPOOR,
President
EMPLOYEE:
--------
Address:
3368 La Mesa Drive, #4 /s/ Nicole Ward
-------------------------------------------
San Carlos, California 94070 NICOLE WARD
-2-
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 29th day of
March, 1996, by and between POST N MAIL, L.C., a Texas limited liability company
("Company"), and NICOLE WARD ("Employee").
1. Employment.
The Company hereby agrees to employ the Employee and the Employee
hereby accepts employment upon the terms and conditions specified in this
Agreement.
2. Duties and Responsibilities.
2.1 The Employee shall devote her full business time, efforts, and
abilities to the Company for the profit, benefit, and advantage of the Company,
and shall promptly obey and comply with all lawful rules, regulations, and
orders that may be issued from time to time by the Company.
2.2 The Employee shall be employed initially in the capacity as Vice
President-Marketing and shall report to the President of the Company. During
the term hereof, the Employee shall perform such services and functions as may
be designated from time to time by the Company including, without limitation,
marketing services and items ancillary thereto requested by the Company.
2.3 The Employee represents and warrants that Employee has no prior
obligations, written or oral, such as confidentiality agreements or other
agreements, which restrict Employee's ability to enter into this Agreement or to
perform any duties for the Company. Employee agrees to indemnify and hold
harmless the Company from any and all legal actions in which it is alleged or
asserted that Employee has such obligations or agreements including, but not
limited to, paying the Company's attorney's fees, costs, and any damages the
Company may be assessed.
3. Compensation.
3.1 In consideration for her services hereunder during the term of
this Agreement and the covenants contained in this Agreement, the Employee shall
be paid beginning on the Commencement Date hereof $10,000.00 per month
("Salary"), payable in accordance with the usual payroll practices of the
Company and subject to all customary payroll deductions. The Salary may be
increased or decreased at any time during the course of the Employee's term of
employment at the sole discretion of the Company.
3.2 During the term of the Employee's employment under this
Agreement, the Employee also shall be entitled to receive the following:
<PAGE>
(i) participation in the Company's present and future benefit
and bonus plans generally offered to other employees and generally offered to
employees of similar duties and responsibilities as the Employee;
(ii) reimbursement of reasonable expenses related to the
performance of her duties hereunder; provided, however, that in order to be
reimbursed the Employee must submit vouchers or other satisfactory evidence of
such expenses as required by Company policies; and
(iii) three (3) weeks of paid vacation per work year earned
ratably per year and all holidays for which the Company is not open for
business.
4. Term and Termination.
4.1 Employees shall commence full time employment ("Commencement
Date") as soon as reasonably possible, but no later than April 15, 1996, unless
the Company otherwise agrees. Notwithstanding anything in this Agreement to the
contrary, Employee's employment with the Company is not for a specific term and
---
can be terminated at will at any time by either the Company or the Employee,
with or without cause, by giving written notice to the other party, which notice
may be for immediate termination. The at-will nature of this employment may only
be changed by a writing signed by the President of the Company in which it
specifically states that Employee's employment is no longer at-will.
4.2 In the event of termination of employment, the Employee shall be
entitled to receive only (i) the Salary compensation due on a pro-rata basis,
(ii) reimbursement of expenses to the effective date of termination, and (iii)
an amount equal to any earned but unused vacation time based upon the then
Salary computed on a daily basis all subject to all customary payroll
deductions. Additionally, in the event of termination of employment without
"cause" as defined in Section 5.2, then the Employee shall be entitled to
receive an additional amount equal four (4) weeks of the then Salary computed on
a weekly basis subject to all customary payroll deductions.
5. Unit Grant.
5.1 Subject to vesting and forfeiture as provided in this Section 5.1
and subject to all other terms and conditions of this Agreement, the Company
shall issue to the Employee 4.0 Units of Membership Interest (singularly a
"Unit", collectively the "Units") of the Company (the "Unit Grant"). The Units
shall vest at the rate of 1.0 Unit each year upon the first, second, third, and
fourth respective annual anniversary dates from the Commencement Date (the
"Vesting Dates"), provided this Agreement is not sooner terminated. The Unit
Grant shall terminate automatically and the Company shall have no obligation to
issue any unvested Units related thereto in the event the Employee resigns or
this Agreement is otherwise terminated for any reason whatsoever (including
termination by the Company) at any time before the fourth annual Vesting Date.
Notwithstanding the preceding sentence to the contrary, in the event of
termination of employment without "cause" as defined in Section 5.2 before the
first annual Vesting Date, then the Company shall still issue to the Employee
upon the first annual Vesting Date the 1.0 Unit scheduled to be issued as of
such date and the remaining Unit Grant shall terminate automatically and be of
no further force or effect. The Units and all rights related thereto are non-
transferrable by Employee until fully vested. The Units,
-4-
<PAGE>
when issued, shall be duly issued, fully paid, and non-assessable and shall be
free and clear of all liens, claims, and encumbrances, but shall be subject to
the Regulations of the Company as amended from time to time. Upon issuance of
the Units and Employee's execution of a Member Agreement similar in form and
content to that executed by other Members of the Company, the Employee shall
become a Member of the Company and shall have no rights as a Member of the
Company prior to such date.
5.2 Without affecting the generality of Section 4.1 above, this
Agreement may be terminated immediately by the Company for "cause" which shall
mean upon the occurrence of any of the following events:
(i) willful breach or attempted breach by Employee of any
material provision of this Agreement or negligent or unsatisfactory performance
of her duties hereunder;
(ii) misappropriation or attempted misappropriation by employee
of funds or property of the Company;
(iii) attempting to or securing any personal profit or benefit
by Employee not thoroughly disclosed to and approved by the Board of Managers in
connection with any transaction entered or to be entered on behalf of the
Company or any affiliate;
(iv) conduct on any part of the employee, even if not in
connection with the performance of her duties hereunder, which would result in
serious prejudice to the interests or reputation of the Company including,
without limitation, conviction of a felony criminal offense; or
(v) if, for a continuous period of thirty (30) calendar days,
or for more than thirty (30) calendar days in any calendar year, excluding any
authorized vacation or authorized leave of absence, the Employee is absent or
expected to be absent from her employment or is otherwise unable to perform her
duties, as reasonably determined by a disinterested physician selected by the
Company, by reason of illness, injury, or mental or physical disability.
5.3 In the event the Company agrees to be merged with or consolidated
into one or more corporations or other entities in which the Company shall not
be the surviving entity then, the Company shall, prior to such merger or
consolidation, obtain the full and unconditional agreement of such surviving
entity to assume all of the obligations of the Company under this Agreement.
Additionally, the Employee shall be entitled, at no additional cost, upon
receipt of the Unit Grant to receive in lieu of the number of Units to be issued
under Section 5.1 hereof, the number and class of shares of stock or other
securities to which the Employee would have been entitled pursuant to the terms
of the agreement of merger or consolidation if, immediately prior to such merger
or consolidation, the Employee had been the holder of record of the Units to
which the Unit Grant is applicable.
5.4 In the event of a Change in Control (defined below), the Company
shall issue the then remaining, unvested portion of the Unit Grant to the
Employee within thirty (30) days of Change in Control. For purposes of this
Agreement, a "Change in Control" shall be deemed to occur in the event of either
(i) the sale of all or substantially all of the Company's assets or (ii) a
transaction
-5-
<PAGE>
or series of related transactions (excluding an initial public offering) in
which securities constituting more than 50% of the Company's outstanding voting
power are transferred to a person or persons other than the persons holding such
securities immediately prior to such transaction or series of related
transactions.
6. Confidential Information and Discoveries of the Company.
6.1 The Employee will have access to confidential information of the
Company, including, but not limited to, corporate books and records, financial
information, personnel information, lists of customers and suppliers, processes
or dealings, patents, inventions, discoveries, information, data, programs, know
how, knowledge, and other trade secrets (collectively, "Confidential
Information"). "Confidential Information" shall also include but is not limited
to confidential evaluations of, and the confidential use or non-use by the
Company or any subsidiary thereof of, technical or business information not in
the public domain.
To ensure the continued secrecy of the Confidential Information,
the Employee agrees that she will not at any time during the term of the
Employee's employment with the Company or anytime thereafter, divulge such
Confidential Information to any person or entity without the prior written
consent of the Company.
During the term of this Agreement, the Employee shall not make,
other than for the benefit of the Company, any notes or memoranda relating to
any matter within the scope of the business of the Company or concerning any of
its dealings or affairs, nor shall the Employee use or permit to be used any
such notes or memoranda, other than for the benefit of the Company. Upon the
termination of this Agreement, the Employee shall not take from the Company, or
otherwise retain, and shall surrender to the Company, any such Confidential
Information and any records, files, notes, memoranda, or other documents, or
copies thereof, relating to the business or affairs of the Company.
The obligations of this Section 6.1 shall not apply to
---
Confidential Information that: (i) at the time of the Employee's employment by
the Company was in the public domain; (ii) is or becomes generally available in
the public domain other than pursuant to a breach by the Employee of her
obligations under this Section 6.1; or (iii) the Employee proves that such
Confidential Information was acquired after the date of this Agreement, from a
third party and such third party did not obtain such Confidential Information
from the Company subject to or in violation of obligations similar to those set
forth in this Section 6.1.
6.2 Any and all inventions, discoveries, ideas, concepts,
improvements, processes, methods, designs, programs and/or know-how, whether or
not patentable, or copyrightable that the Employee may conceive, discover,
develop or make, either jointly or alone, during the Employee's term of
employment with the Company and: (i) for which the Company provided equipment,
supplies, facilities, or Confidential Information; or (ii) that was developed on
or partially on the Company's time; or (iii) that relates to the Company's
current business or business that the Company is planning to develop or to the
Company's actual or planned research or development or that results from any
work performed by the Employee for the Company, shall be the sole and exclusive
property of the Company (collectively, referred to as a "Company Invention").
All works of
-6-
<PAGE>
authorship created by the Employee during the term of this Agreement, solely or
jointly with others, shall be considered works made for hire under the Copyright
Act of 1976, as amended, and shall be owned entirely by the Company. Without
limiting the generality of the foregoing, any Company Invention of the Employee
relating to any subject matter on which the Employee worked or was informed
during her employment by the Company shall be conclusively presumed to have been
conceived and made prior to the termination of her employment (unless the
Employee clearly proves that such Company Invention was conceived and made
following the termination of her employment), and shall accordingly belong and
be assigned to the Company and shall be subject to this Agreement. The Employee
shall promptly disclose to the Company all Company Inventions that she may
conceive or make, alone or with others, during the term of her employment with
the Company, and that directly or indirectly are based on her knowledge of the
information or the actual or anticipated business or interests of the Company or
any of its affiliates.
The Employee shall give all testimony and execute all patent
applications, rights or priority, assignments and other documents and in general
do all lawful things requested of the Employee by the Company to enable the
Company to obtain, maintain, and enforce protection of such ideas, inventions
and discoveries, and any improvements or modifications therein, for and in the
name of the Company, or its nominee, in all countries of the world. However,
should the Employee render any of these services following termination of her
employment, the Employee shall be compensated at a rate per hour based upon the
base wages the Employee received from the Company at the time of termination
(assuming a 40 hour work week) and shall be reimbursed for reasonable out-of-
pocket expenses incurred in rendering the services.
NOTICE: Notwithstanding any other provision of this Agreement to the
------
contrary, this Agreement does not obligate Employee to assign or offer to assign
to the Company any of Employee's rights in an invention for which no equipment,
supplies, facilities, or trade secret information of the Company were used and
which was developed entirely on Employee's own time, unless (a) the invention
relates (i) at the time of conception or reduction to practice of the invention
to the business of the Company or (ii) to the Company's actual or demonstrably
anticipated research or development or (b) the invention results from any work
performed by Employee for the Company. This notice satisfies the written notice
and other requirements of California Labor Code (S)2872.
7. Agreement Not to Solicit.
To induce the Company to enter into this Agreement, the Employee
agrees, during the term of this Agreement, and for a period of nine (9) months
after the termination of her employment with the Company for any reason, not to,
directly or indirectly, for her own account or for the account of others, employ
any of the Company's employees or induce or attempt to induce any of the
Company's employees to leave their employment, nor will the Employee in any
other way interfere with the employee relations of the Company.
8. Non-Competition.
8.1 The Employee acknowledges that she shall receive special training
and knowledge from the Company. The Employee acknowledges that included in the
special knowledge
-7-
<PAGE>
received is the Confidential Information identified in Section 6. The Employee
acknowledges that this Confidential Information is valuable to the Company and,
therefore, its protection and maintenance constitutes a legitimate interest to
be protected by the Company by this covenant not to compete. Therefore, the
Employee agrees that during her employment with the Company the Employee will
not, directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business of the
Company. The Employee represents to the Company that her experience and
capabilities are such that the enforcement of the restriction contained in this
Section 8 would not be unduly burdensome to the Employee.
8.2 In addition to the restrictions set forth in Section 8.1, the
Employee shall not during her employment and for a period ending nine (9) months
thereafter, either directly or indirectly, (i) make known to any person, firm or
corporation the names and addresses of any of the customers or suppliers of the
Company or contacts of the Company or any other information pertaining to such
persons or (ii) call on, solicit, or take away, or attempt to call on, solicit
or take away any of the customers or suppliers of the Company on whom the
Employee called or with whom the Employee became acquainted during the
Employee's association with the Company, whether for the Employee or for any
other person, firm or corporation.
9. Remedies.
The Employee acknowledges that the provisions of Sections 6, 7, and 8
shall survive the termination of this Agreement for any reason whatsoever and
are reasonable and necessary for the protection of the Company and that the
Company will be irrevocably damaged if such provisions are not specifically
enforced. Accordingly, in the event of breach or threatened breach of the
provisions of Sections 6, 7, or 8, it is understood and agreed that the Company
shall be entitled to injunctive relief (without bond or other security being
required) as well as any and all other applicable remedies at law and in equity.
Should a court of competent jurisdiction declare any of these provisions
unenforceable due to an unreasonable restriction, or for any other reason, such
court shall have the express authority of the parties to this Agreement to
reform such provisions and/or to grant the Company any and all other relief, at
law or in equity, reasonably necessary to protect the interests of the Company.
The Employee expressly acknowledges that (i) she has been encouraged to obtain
separate legal counsel in connection with the negotiation of this Agreement who
can explain the legal effects of these provisions and (ii) she considers these
provisions to be reasonable.
10. Alternative Dispute Resolution.
Except for actions involving requests by the Company for injunctive
relief under section 9 hereof, the parties hereto hereby knowingly, voluntarily,
and irrevocably agree that any disputes or conflicts in any way arising out of
or relating to: (i) this Agreement or (ii) the performance or breach of any of
the matters described herein, may be mediated or arbitrated, at the written
election of either party hereto. If a party makes a proper election to mediate
under this paragraph, but such mediation efforts fail to resolve the subject
dispute(s) between the parties, the parties shall be bound to resolve the
subject dispute(s) by binding arbitration; provided that nothing in this
sentence shall be read to require a party to first elect to mediate
-8-
<PAGE>
any dispute hereunder prior to electing to arbitrate. If the subject dispute(s)
are ultimately resolved by arbitration, the parties hereto irrevocably agree to
be bound by all findings of fact and conclusions of law of the arbitrator
selected. The election of a party under this paragraph shall be by delivery of
written notice to the opposing party; provided that if a legal proceeding
relating to the subject dispute (other than a proceeding for injunctive relief
under section 9 hereof) has previously been filed in any court of competent
jurisdiction, then such notice of election under this paragraph shall be
delivered within ninety (90) days of the date the electing party receives
service of process in such legal proceeding. Any such mediation or arbitration
shall be conducted in Palo Alto, California, and shall proceed in accordance
with the Employment Dispute rules of JAMS/ENDISPUTE COMPANY (the "JAMS Rules"),
including selection of a single mediator and/or arbitrator. If as of the date of
a proper election made by a party under this paragraph, the JAMS Rules are not
then in effect, the mediation and/or arbitration shall proceed in accordance
with the commercial rules of the American Arbitration Association. All federal
and state substantive and procedural laws applicable to this agreement relating
to arbitration or mediation of conflicts shall be fully complied with by the
parties.
Unless the parties otherwise agree, each party may conduct discovery
prior to any mediation or arbitration hearing in accordance with the California
rules of civil procedure and evidence. Additionally, there shall be no evidence
by affidavit allowed, and each party shall disclose a list of all documentary
evidence to be used, a list of all witnesses, and experts to be called by the
party at least twenty (20) days prior to the mediation or arbitration hearing.
To the maximum extent permitted by law, each party knowingly,
voluntarily, and intentionally waives any right to consequential, exemplary, or
punitive damages regardless of the forum for the proceedings. The provisions of
this Section 10 shall survive the termination of this Agreement for any reason
whatsoever.
11. Miscellaneous.
11.1 Notices. Any notice required or permitted under this Agreement
-------
shall be in writing and shall be deemed to be delivered three (3) business days
after deposit in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, addressed as follows:
Company: Post N Mail, L.C.
3050 Post Oak Blvd., Suite 110
Houston, Texas 77056-6524
Attn: President
Employee: 3368 La Mesa Drive, #4
San Carlos, California 94070
Notice given in any other manner shall be effective when
delivered to the addressee. The address for notice may be changed by notice
given in accordance with this provision.
-9-
<PAGE>
11.2 Drug Testing. Employee acknowledges and agrees that she may be
------------
required to submit to random drug and/or alcohol screening tests while employed
by Company. Employee agrees that the results of any blood and/or urine sample
test results may be revealed to the Company for its use and evaluation.
Furthermore, Employee acknowledges and agrees that her refusal to submit to such
testing can be grounds for immediate termination.
11.3 Amendments. This Agreement constitutes the entire agreement
----------
between the parties with respect to the employment of the Employee and
supersedes any prior agreements and may not be amended, supplemented, waived,
modified, or amended except by written instrument executed by the parties
hereto. There are no oral agreements between the parties.
11.4 Preservation of Business: Fiduciary Responsibility. The
---------------------------------------------------
Employee shall use her best efforts to preserve the business and organization of
the Company, to keep available to the Company the services of its employees and
to preserve the business relations of the Company the Employee shall not commit
any act that might reasonably be expected to injure the Company. The Employee
shall observe and fulfill proper standards of fiduciary responsibility attendant
upon her service and office.
11.5 Assignments. The Company may not assign this Agreement without
-----------
the consent of the Employee, except in connection with a sale of substantially
all of the assets of the Company or the merger or consolidation of the Company
with a successor entity provided in such events such transferee entity assumes
all of the obligations of the Company pursuant to this Agreement. The rights
and obligations of the Employee hereunder are personal to her, and no such
rights, benefits, duties or obligations shall be subject to voluntary or
involuntary alienation, assignment, or transfer.
11.6 Effect of Agreement. This Agreement shall be binding upon the
-------------------
Employee and her heirs, executors, administrators, and legal representatives and
upon the Company and its successors and assigns.
11.7 Waiver of Breach. The waiver by either party hereto of a breach
----------------
of any provision of this Agreement by the other party hereto shall not operate
or be construed as a waiver by such party of any subsequent breach of such other
party.
11.8 Governing Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the laws (excluding
conflicts of laws provisions) of the State of California. The Company and the
Employee consent to the personal jurisdiction of all state and federal courts in
Santa Clara County, California, and agree that the proper, exclusive, and
convenient venues for any mediation, arbitration, or litigation relating to this
Agreement are Santa Clara County, California, and each party waives any defense,
whether asserted by motion or pleading, that Santa Clara County, California, is
an improper or inconvenient venue.
11.9 Severability. If any provision of this Agreement is declared
------------
unenforceable, such declaration shall not affect the validity of any other
provision of this Agreement.
-10-
<PAGE>
11.10 Construction. The headings contained in this Agreement are for
------------
reference purposes only and shall not affect this Agreement in any manner
whatsoever. Wherever required by the context, any gender shall include any
other gender, the singular shall include the plural, and the plural shall
include the singular.
11.11 Execution. This Agreement may be executed in multiple
---------
counterparts, each of which shall be deemed an original but all of which shall
be deemed one instrument. The Employee acknowledges that she has read this
Agreement and has been represented by separate legal counsel and she understands
that executing this Agreement is a condition of her employment by the Company.
INTENDING TO BE LEGALLY BOUND, the parties hereto have executed this
Agreement as of the day and year first written above.
COMPANY:
POST N MAIL, L.C.
By: /s/ Sunir K. Kapoor
----------------------------------------
SUNIR K. KAPOOR
President
EMPLOYEE:
/s/ Nicole Ward
--------------------------------------------
NICOLE WARD
-11-
<PAGE>
EXHIBIT 10.9
RATIFICATION AGREEMENT
THIS RATIFICATION AGREEMENT (this "Agreement") is entered into effective as
of September 1, 1996, by and between E-STAMP CORPORATION, a Delaware corporation
(the "Company"), and MARTIN PAGEL, an individual (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee previously entered into that certain Employment
Agreement with Post N Mail, L.C., a Texas limited liability company ("PNM"),
dated as of the 13th day of May, 1996, (the "Employment Agreement");
WHEREAS, pursuant to the Employment Agreement, PNM agreed to grant to
Employee options to purchase certain units of membership interest in PNM (the
"Prior Options") which was evidenced by that certain Option Agreement dated the
13th day of May, 1996 (the "Prior Option Agreement");
WHEREAS, pursuant to the Employment Agreement, PNM granted to Employee the
right to receive as additional compensation certain units of membership interest
in PNM (the "Restricted Units") which were subject to certain restrictions
including vesting provisions;
WHEREAS, PNM has reorganized and merged with and into the Company as of
September 1, 1996;
WHEREAS, the parties to this Agreement desire to reform and ratify their
agreements under the Employment Agreement, so as to cause Employee to continue
in his employment, henceforth with the Company;
WHEREAS, pursuant to such continuation of employment, the parties desire to
allow Employee to participate in the ownership of equity in the Company in a
manner similar to the Prior Options and the Restricted Units.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment. The parties hereby agree that Employee shall become an
----------
employee of the Company effective as of the date hereof pursuant to the terms
and conditions of the Employment Agreement, except that the Company shall
replace PNM as the employer pursuant to this reformation of the Employment
Agreement (such reformed agreement to be referred to herein as the "Reformed
Employment Agreement"). The Company shall succeed PNM as to all the rights and
interests PNM possessed in the Employment Agreement. Employee shall become an
employee of the Company pursuant to the Reformed Employment Agreement, and shall
perform those duties and
<PAGE>
responsibilities, and receive such compensation, as was previously provided for
in the Employment Agreement except as provided herein.
2. Options. Subject to the provisions of the Company's 1996 Stock Option
-------
and Restricted Stock Plan (the "Plan"), the Company shall grant Employee options
to purchase 25,000 shares of the common stock of the Company at an exercise
price of $10.00 per share (the "Stock Options"). Simultaneous with the execution
of this Agreement, the Company and the Employee shall enter into a Stock Option
Agreement pursuant to which the Stock Options shall be granted. The terms and
conditions of the Stock Options shall be substantially similar to the terms and
conditions of the Prior Options, to the extent such terms and conditions are
consistent with the Plan. The Stock Options, once granted, shall amend and
replace the Prior Options, and any and all rights under the Prior Options shall
be extinguished at such time. All or a portion of the Stock Options may qualify
as Incentive Stock Options under Section 422 of the Internal Revenue Code.
3. Restricted Stock. Subject to the provisions of the Plan, the Company
----------------
shall grant to Employee the right to receive as additional compensation options
to purchase 25,625 shares of the common stock of the Company at an exercise
price of $.25 per share (the "Restricted Stock Options"). Simultaneously with
the execution of this Agreement, the Company and the Employee shall enter into a
Restricted Stock Option Agreement pursuant to which the Restricted Stock Options
shall be granted. The Restricted Stock Options, once granted, shall amend and
replace the Restricted Units and any and all rights to the Restricted Units
shall be extinguished at such time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE COMPANY:
-----------
E-STAMP CORPORATION
Address: a Delaware corporation
- -------
3050 Post Oak Blvd., Suite 110
Houston, Texas 77056 By: /s/ Sunir K. Kapoor
-----------------------------------
SUNIR K. KAPOOR,
President
EMPLOYEE:
--------
Address:
8515 Northeast 124th Street /s/ Martin Pagel
-----------------------------------
Kirkland, Washington 98034 MARTIN PAGEL
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 13th day of
May, 1996, by and between POST N MAIL, L.C., a Texas limited liability company
("Company"), and MARTIN PAGEL ("Employee").
1. Employment.
The Company hereby agrees to employ the Employee and the Employee
hereby accepts employment upon the terms and conditions specified in this
Agreement.
2. Duties and Responsibilities.
2.1 The Employee shall devote his full business time, efforts, and
abilities to the Company for the profit, benefit, and advantage of the Company,
and shall promptly obey and comply with all lawful rules, regulations, and
orders that may be issued from time to time by the Company.
2.2 The Employee shall be employed initially in the capacity as Chief
Development Architect and shall report to the President of the Company. During
the term hereof, the Employee shall perform such services and functions as may
be designated from time to time by the Company including, without limitation,
development services and items ancillary thereto requested by the Company.
2.3 The Employee represents and warrants that Employee has no prior
obligations, written or oral, such as confidentiality agreements or other
agreements, which restrict Employee's ability to enter into this Agreement or to
perform any duties for the Company. Employee agrees to indemnify and hold
harmless the Company from any and all legal actions in which it is alleged or
asserted that Employee has such obligations or agreements including, but not
limited to, paying the Company's attorney's fees, costs, and any damages the
Company may be assessed.
3. Compensation.
3.1 In consideration for his services hereunder during the term of
this Agreement and the covenants contained in this Agreement, the Employee shall
be paid beginning on the Commencement Date hereof $10,000.00 per month
("Salary"), payable in accordance with the usual payroll practices of the
Company and subject to all customary payroll deductions. The Salary may be
increased or decreased at any time during the course of the Employee's term of
employment at the sole discretion of the Company.
3.2 During the term of the Employee's employment under this
Agreement, the Employee also shall be entitled to receive the following:
<PAGE>
(i) participation in the Company's present and future benefit
plans generally offered to other employees and generally offered to employees of
similar duties and responsibilities as the Employee;
(ii) reimbursement of reasonable expenses related to the
performance of his duties hereunder; provided, however, that in order to be
reimbursed the Employee must submit vouchers or other satisfactory evidence of
such expenses as required by Company policies; and
(iii) three (3) weeks of paid vacation per work year earned
ratably per year and all holidays for which the Company is not open for
business.
4. Term and Termination.
4.1 Employees shall commence full time employment as soon as
reasonably possible, but no later than August 5, 1996, unless the Company
otherwise agrees. For purposes herein the "Commencement Date" shall be the date
that Employee commences actual full time employment. Notwithstanding anything in
this Agreement to the contrary, Employee's employment with the Company is not
---
for a specific term and can be terminated at will at any time by either the
Company or the Employee, with or without cause, by giving written notice to the
other party, which notice may be for immediate termination. The at-will nature
of this employment may only be changed by a writing signed by the President of
the Company in which it specifically states that Employee's employment is no
longer at-will.
4.2 In the event of termination of employment, the Employee shall be
entitled to receive only (i) the Salary compensation due on a pro-rata basis,
(ii) reimbursement of expenses to the effective date of termination, and (iii)
an amount equal to any earned but unused vacation time based upon the then
Salary computed on a daily basis all subject to all customary payroll
deductions. Additionally, in the event of termination of employment without
"cause" as defined in Section 5.2, then the Employee shall be entitled to
receive an additional amount equal four (4) weeks of the then Salary computed on
a weekly basis subject to all customary payroll deductions.
5. Unit Grants and Unit Options.
5.1 Subject to vesting and forfeiture as provided in this Section 5.1
and subject to all other terms and conditions of this Agreement, the Company
shall issue to the Employee 5.0 Units of Membership Interest (singularly a
"Unit", collectively the "Units") of the Company (the "Unit Grant"). The Units
shall vest at the rate of 1.25 Units each year upon the first, second, third,
and fourth respective annual anniversary dates from the Commencement Date (the
"Vesting Dates"), provided this Agreement is not sooner terminated. The Unit
Grant shall terminate automatically and the Company shall have no obligation to
issue any unvested Units related thereto in the event the Employee resigns or
this Agreement is otherwise terminated for any reason whatsoever (including
termination by the Company) at any time before the fourth annual Vesting Date.
Notwithstanding the preceding sentence to the contrary, in the event of
termination of employment without "cause" as defined in Section 5.3 before the
first annual Vesting Date, then the Company shall still issue to the Employee
upon the first annual Vesting Date the 1.25 Unit scheduled to be issued as of
such date and the remaining Unit Grants shall terminate automatically and be of
no further force or effect. The
-4-
<PAGE>
Units and all rights related thereto are non-transferrable by Employee until
fully vested. The Units, when issued, shall be duly issued, fully paid, and non-
assessable and shall be free and clear of all liens, claims, and encumbrances,
but shall be subject to the Regulations of the Company as amended from time to
time. Upon issuance of the Units and Employee's execution of a Member Agreement
similar in form and content to that executed by other Members of the Company,
the Employee shall become a Member of the Company and shall have no rights as a
Member of the Company prior to such date.
5.2 Simultaneously with the execution hereof, the Company shall grant
the Employee an option to purchase 5.0 Units of Membership Interest of the
Company (the "Unit Options"). The Unit Options shall be non-transferable and
shall be exercisable at the rate of 1.25 Units each year upon the first, second,
third, and fourth respective annual anniversary dates from the Commencement Date
(the "Vesting Dates") provided this Agreement is not sooner terminated. The
exercise price for the 5.0 Units shall be an amount equal to $50,000 per Unit.
As the respective Unit Options become exercisable the Unit Options must be
exercised by the Employee on or before the earlier of (i) ten (10) years of each
respective Vesting Date or (ii) within ninety (90) days of termination of
employment if the termination occurs without "cause" (defined below).
Notwithstanding the preceding to the contrary, in the event of termination of
employment without "cause" before the first annual Vesting Date, then the
Employee shall retain the Unit Option for 1.25 Units which shall still be
exercisable upon the first annual Vesting Date and the remaining Unit Options
shall terminate automatically and be of no further force or effect. The Company
and the Employee shall enter into an Option Agreement simultaneously herewith
pursuant to which the Unit Options shall be granted. Any inconsistencies between
this Agreement and the Option Agreement shall be controlled by the Option
Agreement.
5.3 For purposes of the Unit Grants and the Unit Options and without
affecting the generality of Section 4.1 above, this Agreement may be terminated
immediately by the Company for "cause" which shall mean upon the occurrence of
any of the following events:
(i) breach or attempted breach by Employee of any provision of
this Agreement or negligent or unsatisfactory performance of his duties
hereunder;
(ii) misappropriation or attempted misappropriation by employee
of funds or property of the Company;
(iii) attempting to or securing any personal profit or benefit by
Employee not thoroughly disclosed to and approved by the Board of Managers in
connection with any transaction entered or to be entered on behalf of the
Company or any affiliate;
(iv) conduct on any part of the employee, even if not in
connection with the performance of his duties hereunder, which would result in
serious prejudice to the interests or reputation of the Company including,
without limitation, conviction of a felony criminal offense; or
(v) if, for a continuous period of thirty (30) calendar days,
or for more than thirty (30) calendar days in any calendar year, excluding any
authorized vacation or authorized leave of absence, the Employee is absent or
expected to be absent from his employment or is
-5-
<PAGE>
otherwise unable to perform his duties, as reasonably determined by a
disinterested physician selected by the Company, by reason of illness, injury,
or mental or physical disability.
5.4 In the event the Company agrees to be merged with or consolidated
into one or more corporations or other entities in which the Company shall not
be the surviving entity then, the Company shall, prior to such merger or
consolidation, obtain the full and unconditional agreement of such surviving
entity to assume all of the obligations of the Company under this Agreement.
Additionally, the Employee shall be entitled, at no additional cost, upon
receipt of the Unit Grants and the Unit Options to receive in lieu of the number
of Units to be issued under Section 5.1 and 5.2 hereof, the number and class of
shares of stock or other securities to which the Employee would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, the Employee had been the
holder of record of the Units to which the Unit Grants and Unit Options are
applicable.
5.5 In the event of a Change in Control (defined below), which
effectively occurs on or before the first annual anniversary date of the
Commencement Date, the Unit Options shall immediately become exercisable as of
the date of such Change in Control and must be exercised by the Employee on or
before the earlier of (i) ten (10) years of such Change in Control or (ii)
within ninety (90) days of termination of employment if the termination occurs
without "cause" as defined above. For purposes of this Agreement, a "Change in
Control" shall be deemed to occur in the event of either (i) the sale of all or
substantially all of the Company's assets or (ii) a transaction or series of
related transactions (excluding an initial public offering) in which securities
constituting more than 50% of the Company's outstanding voting power are
transferred to a person or persons other than the persons holding such
securities immediately prior to such transaction or series of related
transactions.
6. Confidential Information and Discoveries of the Company.
6.1 The Employee will have access to confidential information of the
Company, including, but not limited to, corporate books and records, financial
information, personnel information, lists of customers and suppliers, processes
or dealings, patents, inventions, discoveries, information, data, programs, know
how, knowledge, and other trade secrets (collectively, "Confidential
Information"). "Confidential Information" shall also include but is not limited
to confidential evaluations of, and the confidential use or non-use by the
Company or any subsidiary thereof of, technical or business information not in
the public domain.
To ensure the continued secrecy of the Confidential Information,
the Employee agrees that he will not at any time during the term of the
Employee's employment with the Company or anytime thereafter, divulge such
Confidential Information to any person or entity without the prior written
consent of the Company.
During the term of this Agreement, the Employee shall not make,
other than for the benefit of the Company, any notes or memoranda relating to
any matter within the scope of the business of the Company or concerning any of
its dealings or affairs, nor shall the Employee use or permit to be used any
such notes or memoranda, other than for the benefit of the Company. Upon the
termination of this Agreement, the Employee shall not take from the Company, or
otherwise
-6-
<PAGE>
retain, and shall surrender to the Company, any such Confidential Information
and any records, files, notes, memoranda, or other documents, or copies thereof,
relating to the business or affairs of the Company.
The obligations of this Section 6.1 shall not apply to
---
Confidential Information that: (i) at the time of the Employee's employment by
the Company was in the public domain; (ii) is or becomes generally available in
the public domain other than pursuant to a breach by the Employee of his
obligations under this Section 6.1; or (iii) the Employee proves that such
Confidential Information was acquired after the date of this Agreement, from a
third party and such third party did not obtain such Confidential Information
from the Company subject to or in violation of obligations similar to those set
forth in this Section 6.1.
6.2 Any and all inventions, discoveries, ideas, concepts,
improvements, processes, methods, designs, programs and/or know-how, whether or
not patentable, or copyrightable that the Employee may conceive, discover,
develop or make, either jointly or alone, during the Employee's term of
employment with the Company and: (i) for which the Company provided equipment,
supplies, facilities, or Confidential Information; or (ii) that was developed on
or partially on the Company's time; or (iii) that relates to the Company's
current business or business that the Company is planning to develop or to the
Company's actual or planned research or development or that results from any
work performed by the Employee for the Company, shall be the sole and exclusive
property of the Company (collectively, referred to as a "Company Invention").
All works of authorship created by the Employee during the term of this
Agreement, solely or jointly with others, shall be considered works made for
hire under the Copyright Act of 1976, as amended, and shall be owned entirely by
the Company. Without limiting the generality of the foregoing, any Company
Invention of the Employee relating to any subject matter on which the Employee
worked or was informed during his employment by the Company shall be
conclusively presumed to have been conceived and made prior to the termination
of his employment (unless the Employee clearly proves that such Company
Invention was conceived and made following the termination of his employment),
and shall accordingly belong and be assigned to the Company and shall be subject
to this Agreement. The Employee shall promptly disclose to the Company all
Company Inventions that he may conceive or make, alone or with others, during
the term of his employment with the Company, and that directly or indirectly are
based on his knowledge of the information or the actual or anticipated business
or interests of the Company or any of its affiliates.
The Employee shall give all testimony and execute all patent
applications, rights or priority, assignments and other documents and in general
do all lawful things requested of the Employee by the Company to enable the
Company to obtain, maintain, and enforce protection of such ideas, inventions
and discoveries, and any improvements or modifications therein, for and in the
name of the Company, or its nominee, in all countries of the world. However,
should the Employee render any of these services following termination of his
employment, the Employee shall be compensated at a rate per hour based upon the
base wages the Employee received from the Company at the time of termination
(assuming a 40 hour work week) and shall be reimbursed for reasonable out-of-
pocket expenses incurred in rendering the services.
NOTICE: Notwithstanding any other provision of this Agreement
------
to the contrary, this Agreement does not obligate Employee to assign or offer to
assign to the Company
-7-
<PAGE>
any of Employee's rights in an invention for which no equipment, supplies,
facilities, or trade secret information of the Company were used and which was
developed entirely on Employee's own time, unless (a) the invention relates (i)
at the time of conception or reduction to practice of the invention to the
business of the Company or (ii) to the Company's actual or demonstrably
anticipated research or development or (b) the invention results from any work
performed by Employee for the Company. This notice satisfies the written notice
and other requirements of California Labor Code (S)2872.
7. Agreement Not to Solicit.
To induce the Company to enter into this Agreement, the Employee
agrees, during the term of this Agreement, and for a period of nine (9) months
after the termination of his employment with the Company for any reason, not to,
directly or indirectly, for his own account or for the account of others, employ
any of the Company's employees or induce or attempt to induce any of the
Company's employees to leave their employment, nor will the Employee in any
other way interfere with the employee relations of the Company.
8. Non-Competition.
8.1 The Employee acknowledges that he shall receive special training
and knowledge from the Company. The Employee acknowledges that included in the
special knowledge received is the Confidential Information identified in Section
6. The Employee acknowledges that this Confidential Information is valuable to
the Company and, therefore, its protection and maintenance constitutes a
legitimate interest to be protected by the Company by this covenant not to
compete. Therefore, the Employee agrees that during his employment with the
Company the Employee will not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever with
the business of the Company. The Employee represents to the Company that his
experience and capabilities are such that the enforcement of the restriction
contained in this Section 8 would not be unduly burdensome to the Employee.
8.2 In addition to the restrictions set forth in Section 8.1, the
Employee shall not during his employment and for a period ending nine (9) months
thereafter, either directly or indirectly, (i) make known to any person, firm or
corporation the names and addresses of any of the customers or suppliers of the
Company or contacts of the Company or any other information pertaining to such
persons or (ii) call on, solicit, or take away, or attempt to call on, solicit
or take away any of the customers or suppliers of the Company on whom the
Employee called or with whom the Employee became acquainted during the
Employee's association with the Company, whether for the Employee or for any
other person, firm or corporation.
9. Remedies.
The Employee acknowledges that the provisions of Sections 6, 7, and 8
shall survive the termination of this Agreement for any reason whatsoever and
are reasonable and necessary for the protection of the Company and that the
Company will be irrevocably damaged if such provisions
-8-
<PAGE>
are not specifically enforced. Accordingly, in the event of breach or threatened
breach of the provisions of Sections 6, 7, or 8, it is understood and agreed
that the Company shall be entitled to injunctive relief (without bond or other
security being required) as well as any and all other applicable remedies at law
and in equity. Should a court of competent jurisdiction declare any of these
provisions unenforceable due to an unreasonable restriction, or for any other
reason, such court shall have the express authority of the parties to this
Agreement to reform such provisions and/or to grant the Company any and all
other relief, at law or in equity, reasonably necessary to protect the interests
of the Company. The Employee expressly acknowledges that (i) he has been
encouraged to obtain separate legal counsel in connection with the negotiation
of this Agreement who can explain the legal effects of these provisions and (ii)
he considers these provisions to be reasonable.
10. Alternative Dispute Resolution.
Except for actions involving requests by the Company for injunctive
relief under section 9 hereof, the parties hereto hereby knowingly, voluntarily,
and irrevocably agree that any disputes or conflicts in any way arising out of
or relating to: (i) this Agreement or (ii) the performance or breach of any of
the matters described herein, may be mediated or arbitrated, at the written
election of either party hereto. If a party makes a proper election to mediate
under this paragraph, but such mediation efforts fail to resolve the subject
dispute(s) between the parties, the parties shall be bound to resolve the
subject dispute(s) by binding arbitration; provided that nothing in this
sentence shall be read to require a party to first elect to mediate any dispute
hereunder prior to electing to arbitrate. If the subject dispute(s) are
ultimately resolved by arbitration, the parties hereto irrevocably agree to be
bound by all findings of fact and conclusions of law of the arbitrator selected.
The election of a party under this paragraph shall be by delivery of written
notice to the opposing party; provided that if a legal proceeding relating to
the subject dispute (other than a proceeding for injunctive relief under section
9 hereof) has previously been filed in any court of competent jurisdiction, then
such notice of election under this paragraph shall be delivered within ninety
(90) days of the date the electing party receives service of process in such
legal proceeding. Any such mediation or arbitration shall be conducted in Palo
Alto, California, and shall proceed in accordance with the Employment Dispute
rules of JAMS/ENDISPUTE COMPANY (the "JAMS Rules"), including selection of a
single mediator and/or arbitrator. If as of the date of a proper election made
by a party under this paragraph, the JAMS Rules are not then in effect, the
mediation and/or arbitration shall proceed in accordance with the commercial
rules of the American Arbitration Association. All federal and state
substantive and procedural laws applicable to this agreement relating to
arbitration or mediation of conflicts shall be fully complied with by the
parties.
Unless the parties otherwise agree, each party may conduct discovery
prior to any mediation or arbitration hearing in accordance with the California
rules of civil procedure and evidence. Additionally, there shall be no evidence
by affidavit allowed, and each party shall disclose a list of all documentary
evidence to be used, a list of all witnesses, and experts to be called by the
party at least twenty (20) days prior to the mediation or arbitration hearing.
To the maximum extent permitted by law, each party knowingly,
voluntarily, and intentionally waives any right to consequential, exemplary, or
punitive damages regardless
-9-
<PAGE>
of the forum for the proceedings. The provisions of this Section 10 shall
survive the termination of this Agreement for any reason whatsoever.
11. Miscellaneous.
11.1 Notices. Any notice required or permitted under this Agreement
-------
shall be in writing and shall be deemed to be delivered three (3) business days
after deposit in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, addressed as follows:
Company: Post N Mail, L.C.
3050 Post Oak Blvd., Suite 110
Houston, Texas 77056-6524
Attn: President
Employee: 8515 Northeast 124th Street
Kirkland, Washington 98034
Notice given in any other manner shall be effective when
delivered to the addressee. The address for notice may be changed by notice
given in accordance with this provision.
11.2 Drug Testing. Employee acknowledges and agrees that he may be
------------
required to submit to random drug and/or alcohol screening tests while employed
by Company. Employee agrees that the results of any blood and/or urine sample
test results may be revealed to the Company for its use and evaluation.
Furthermore, Employee acknowledges and agrees that his refusal to submit to such
testing can be grounds for immediate termination.
11.3 Amendments. This Agreement constitutes the entire agreement
----------
between the parties with respect to the employment of the Employee and
supersedes any prior agreements and may not be amended, supplemented, waived,
modified, or amended except by written instrument executed by the parties
hereto. There are no oral agreements between the parties.
11.4 Preservation of Business: Fiduciary Responsibility. The
---------------------------------------------------
Employee shall use his best efforts to preserve the business and organization of
the Company, to keep available to the Company the services of its employees and
to preserve the business relations of the Company the Employee shall not commit
any act that might reasonably be expected to injure the Company. The Employee
shall observe and fulfill proper standards of fiduciary responsibility attendant
upon his service and office.
11.5 Assignments. The Company may not assign this Agreement without
-----------
the consent of the Employee, except in connection with a sale of substantially
all of the assets of the Company or the merger or consolidation of the Company
with a successor entity provided in such events such transferee entity assumes
all of the obligations of the Company pursuant to this Agreement. The rights
and obligations of the Employee hereunder are personal to him, and no such
rights, benefits, duties or obligations shall be subject to voluntary or
involuntary alienation, assignment, or transfer.
-10-
<PAGE>
11.6 Effect of Agreement. This Agreement shall be binding upon the
-------------------
Employee and his heirs, executors, administrators, and legal representatives and
upon the Company and its successors and assigns.
11.7 Waiver of Breach. The waiver by either party hereto of a breach
----------------
of any provision of this Agreement by the other party hereto shall not operate
or be construed as a waiver by such party of any subsequent breach of such other
party.
11.8 Governing Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the laws (excluding
conflicts of laws provisions) of the State of California. The Company and the
Employee consent to the personal jurisdiction of all state and federal courts in
Santa Clara County, California, and agree that the proper, exclusive, and
convenient venues for any mediation, arbitration, or litigation relating to this
Agreement are Santa Clara County, California, and each party waives any defense,
whether asserted by motion or pleading, that Santa Clara County, California, is
an improper or inconvenient venue.
11.9 Severability. If any provision of this Agreement is declared
------------
unenforceable, such declaration shall not affect the validity of any other
provision of this Agreement.
11.10 Construction. The headings contained in this Agreement are for
------------
reference purposes only and shall not affect this Agreement in any manner
whatsoever. Wherever required by the context, any gender shall include any
other gender, the singular shall include the plural, and the plural shall
include the singular.
11.11 Execution. This Agreement may be executed in multiple
----------
counterparts, each of which shall be deemed an original but all of which shall
be deemed one instrument. The Employee acknowledges that he has read this
Agreement and has been represented by separate legal counsel and he understands
that executing this Agreement is a condition of his employment by the Company.
-11-
<PAGE>
INTENDING TO BE LEGALLY BOUND, the parties hereto have executed this
Agreement as of the day and year first written above.
COMPANY:
POST N MAIL, L.C.
By: /s/ Sunir K. Kapoor
---------------------------------------
SUNIR K. KAPOOR
President
EMPLOYEE:
/s/ Martin Pagel
-------------------------------------------
MARTIN PAGEL
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<PAGE>
EXHIBIT 10.10
RATIFICATION AGREEMENT
THIS RATIFICATION AGREEMENT (this "Agreement") is entered into effective as
of September 1, 1996, by and between E-STAMP CORPORATION, a Delaware corporation
(the "Company"), and THOMAS REINEMER, an individual (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee previously entered into that certain Employment
Agreement with Post N Mail, L.C., a Texas limited liability company ("PNM"),
dated as of the 27th day of July, 1996, (the "Employment Agreement");
WHEREAS, pursuant to the Employment Agreement, PNM agreed to grant to
Employee options to purchase certain units of membership interest in PNM (the
"Prior Options") which was evidenced by that certain Option Agreement dated the
27th day of July, 1996 (the "Prior Option Agreement");
WHEREAS, pursuant to the Employment Agreement, PNM granted to Employee the
right to receive as additional compensation certain units of membership interest
in PNM (the "Restricted Units") which were subject to certain restrictions
including vesting provisions;
WHEREAS, PNM has reorganized and merged with and into the Company as of
September 1, 1996;
WHEREAS, the parties to this Agreement desire to reform and ratify their
agreements under the Employment Agreement, so as to cause Employee to continue
in his employment, henceforth with the Company;
WHEREAS, pursuant to such continuation of employment, the parties desire to
allow Employee to participate in the ownership of equity in the Company in a
manner similar to the Prior Options and the Restricted Units.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment. The parties hereby agree that Employee shall become an
----------
employee of the Company effective as of the date hereof pursuant to the terms
and conditions of the Employment Agreement, except that the Company shall
replace PNM as the employer pursuant to this reformation of the Employment
Agreement (such reformed agreement to be referred to herein as the "Reformed
Employment Agreement"). The Company shall succeed PNM as to all the rights and
interests PNM possessed in the Employment Agreement. Employee shall become an
employee of the Company pursuant to the Reformed Employment Agreement, and shall
perform those duties and
<PAGE>
responsibilities, and receive such compensation, as was previously provided for
in the Employment Agreement except as provided herein.
2. Options. Subject to the provisions of the Company's 1996 Stock Option
-------
and Restricted Stock Plan (the "Plan"), the Company shall grant Employee options
to purchase 25,000 shares of the common stock of the Company at an exercise
price of $10.00 per share (the "Stock Options"). Simultaneous with the execution
of this Agreement, the Company and the Employee shall enter into a Stock Option
Agreement pursuant to which the Stock Options shall be granted. The terms and
conditions of the Stock Options shall be substantially similar to the terms and
conditions of the Prior Options, to the extent such terms and conditions are
consistent with the Plan. The Stock Options, once granted, shall amend and
replace the Prior Options, and any and all rights under the Prior Options shall
be extinguished at such time. All or a portion of the Stock Options may qualify
as Incentive Stock Options under Section 422 of the Internal Revenue Code.
3. Restricted Stock. Subject to the provisions of the Plan, the Company
----------------
shall grant to Employee the right to receive as additional compensation options
to purchase 25,625 shares of the common stock of the Company at an exercise
price of $.25 per share (the "Restricted Stock Options"). Simultaneously with
the execution of this Agreement, the Company and the Employee shall enter into a
Restricted Stock Option Agreement pursuant to which the Restricted Stock Options
shall be granted. The Restricted Stock Options, once granted, shall amend and
replace the Restricted Units and any and all rights to the Restricted Units
shall be extinguished at such time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE COMPANY:
-----------
E-STAMP CORPORATION
Address: a Delaware corporation
- -------
3050 Post Oak Blvd., Suite 110
Houston, Texas 77056 By:/s/ Sunir K. Kapoor
--------------------------------
SUNIR K. KAPOOR,
President
EMPLOYEE:
--------
Address:
- -------
3996 Jefferson Avenue /s/ Thomas Reinemer
Redwood City, California 94602 -----------------------------------
THOMAS REINEMER
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 27th day of
July, 1996, by and between POST N MAIL, L.C., a Texas limited liability company
d/b/a E-Stamp Corporation ("Company"), and THOMAS REINEMER ("Employee").
1. Employment.
The Company hereby agrees to employ the Employee and the Employee
hereby accepts employment upon the terms and conditions specified in this
Agreement.
2. Duties and Responsibilities.
2.1 The Employee shall devote his full business time, efforts, and
abilities to the Company for the profit, benefit, and advantage of the Company,
and shall promptly obey and comply with all lawful rules, regulations, and
orders that may be issued from time to time by the Company.
2.2 The Employee shall be employed initially in the capacity as Vice
President-Business Operations and shall report to the President of the Company.
During the term hereof, the Employee shall perform such services and functions
as may be designated from time to time by the Company including, without
limitation, development services and items ancillary thereto requested by the
Company.
2.3 The Employee represents and warrants that Employee has no prior
obligations, written or oral, such as confidentiality agreements or other
agreements, which restrict Employee's ability to enter into this Agreement or to
perform any duties for the Company. Employee agrees to indemnify and hold
harmless the Company from any and all legal actions in which it is alleged or
asserted that Employee has such obligations or agreements including, but not
limited to, paying the Company's attorney's fees, costs, and any damages the
Company may be assessed.
3. Compensation.
3.1 In consideration for his services hereunder during the term of
this Agreement and the covenants contained in this Agreement, the Employee shall
be paid beginning on the Commencement Date hereof $10,000.00 per month
("Salary"), payable in accordance with the usual payroll practices of the
Company and subject to all customary payroll deductions. The Salary may be
increased or decreased at any time during the course of the Employee's term of
employment at the sole discretion of the Company.
3.2 During the term of the Employee's employment under this
Agreement, the Employee also shall be entitled to receive the following:
<PAGE>
(i) participation in the Company's present and future benefit
plans generally offered to other employees and generally offered to employees of
similar duties and responsibilities as the Employee;
(ii) reimbursement of reasonable expenses related to the
performance of his duties hereunder; provided, however, that in order to be
reimbursed the Employee must submit vouchers or other satisfactory evidence of
such expenses as required by Company policies; and
(iii) three (3) weeks of paid vacation per work year earned
ratably per year and all holidays for which the Company is not open for
business.
4. Term and Termination.
4.1 Employees shall commence full time employment as soon as
reasonably possible, but no later than August 1, 1996, unless the Company
otherwise agrees. For purposes herein the "Commencement Date" shall be the date
that Employee commences actual full time employment. Notwithstanding anything in
this Agreement to the contrary, Employee's employment with the Company is not
---
for a specific term and can be terminated at will at any time by either the
Company or the Employee, with or without cause, by giving written notice to the
other party, which notice may be for immediate termination. The at-will nature
of this employment may only be changed by a writing signed by the President of
the Company in which it specifically states that Employee's employment is no
longer at-will.
4.2 In the event of termination of employment, the Employee shall be
entitled to receive only (i) the Salary compensation due on a pro-rata basis,
(ii) reimbursement of expenses to the effective date of termination, and (iii)
an amount equal to any earned but unused vacation time based upon the then
Salary computed on a daily basis all subject to all customary payroll
deductions. Additionally, in the event of termination of employment without
"cause" as defined in Section 5.3, then the Employee shall be entitled to
receive an additional amount equal four (4) weeks of the then Salary computed on
a weekly basis subject to all customary payroll deductions.
5. Unit Grants and Unit Options.
5.1 Subject to vesting and forfeiture as provided in this Section 5.1
and subject to all other terms and conditions of this Agreement, the Company
shall issue to the Employee 5.0 Units of Membership Interest (singularly a
"Unit", collectively the "Units") of the Company (the "Unit Grant"). The Units
shall vest at the rate of 2.50 Units each year upon the first and second
respective annual anniversary dates from the Commencement Date (the "Vesting
Dates"), provided this Agreement is not sooner terminated. The unvested Unit
Grants shall terminate automatically and the Company shall have no obligation to
issue any unvested Units related thereto in the event (i) the Employee resigns
at any time for any reason whatsoever or (ii) the Company terminates the
employment with "cause" as defined in Section 5.3 at any time before the second
annual Vesting Date. In the event of termination of employment without "cause"
as defined in Section 5.3 before the second annual Vesting Date, then the
Company shall still issue to the Employee upon the first and second annual
Vesting Dates the 2.50 Units respectively scheduled to be issued as of such
dates. The Units and all rights related thereto are non-transferrable by
Employee until fully vested. The
-4-
<PAGE>
Units, when issued, shall be duly issued, fully paid, and nonassessable and
shall be free and clear of all liens, claims, and encumbrances, but shall be
subject to the Regulations of the Company as amended from time to time. Upon
issuance of the Units and Employee's execution of a Member Agreement similar in
form and content to that executed by other Members of the Company, the Employee
shall become a Member of the Company and shall have no rights as a Member of the
Company prior to such date. The Unit Grants shall be subject to all applicable
employment taxes and the Employee shall execute such documents and instruments
as requested by the Company to evidence the issuance and grant of the Unit
Grants.
5.2 Simultaneously with the execution hereof, the Company shall grant
the Employee an option to purchase 5.0 Units of Membership Interest of the
Company (the "Unit Options"). The Unit Options shall be non-transferable and
shall be exercisable at the rate of 1.25 Units each year upon the first, second,
third, and fourth respective annual anniversary dates from the Commencement Date
(the "Vesting Dates") provided this Agreement is not sooner terminated. The
exercise price for the 5.0 Units shall be an amount equal to $50,000 per Unit.
As the respective Unit Options become exercisable the Unit Options must be
exercised by the Employee on or before the earlier of (i) ten (10) years of each
respective Vesting Date or (ii) within ninety (90) days of termination of
employment if the termination occurs without "cause" (defined below).
Notwithstanding the preceding to the contrary, in the event of termination of
employment without "cause" before the first annual Vesting Date, then the
Employee shall retain the Unit Option for 1.25 Units which shall still be
exercisable upon the first annual Vesting Date and the remaining Unit Options
shall terminate automatically and be of no further force or effect. The Company
and the Employee shall enter into an Option Agreement simultaneously herewith
pursuant to which the Unit Options shall be granted. Any inconsistencies between
this Agreement and the Option Agreement shall be controlled by the Option
Agreement.
5.3 For purposes of the Unit Grants and the Unit Options and without
affecting the generality of Section 4.1 above, this Agreement may be terminated
immediately by the Company for "cause" which shall mean upon the occurrence of
any of the following events:
(i) breach or attempted breach by Employee of any provision of
this Agreement or negligent or unsatisfactory performance of his duties
hereunder;
(ii) misappropriation or attempted misappropriation by employee
of funds or property of the Company;
(iii) attempting to or securing any personal profit or benefit by
Employee not thoroughly disclosed to and approved by the Board of Managers in
connection with any transaction entered or to be entered on behalf of the
Company or any affiliate;
(iv) conduct on any part of the employee, even if not in
connection with the performance of his duties hereunder, which would result in
serious prejudice to the interests or reputation of the Company including,
without limitation, conviction of a felony criminal offense; or
(v) if, for a continuous period of thirty (30) calendar days,
or for more than thirty (30) calendar days in any calendar year, excluding any
authorized vacation or authorized
-5-
<PAGE>
leave of absence, the Employee is absent or expected to be absent from his
employment or is otherwise unable to perform his duties, as reasonably
determined by a disinterested physician selected by the Company, by reason of
illness, injury, or mental or physical disability.
5.4 In the event the Company agrees to be merged with or consolidated
into one or more corporations or other entities in which the Company shall not
be the surviving entity then, the Company shall, prior to such merger or
consolidation, obtain the full and unconditional agreement of such surviving
entity to assume all of the obligations of the Company under this Agreement.
Additionally, the Employee shall be entitled, at no additional cost, upon
receipt of the Unit Grants and the Unit Options to receive in lieu of the number
of Units to be issued under Section 5.1 and 5.2 hereof, the number and class of
shares of stock or other securities to which the Employee would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, the Employee had been the
holder of record of the Units to which the Unit Grants and Unit Options are
applicable.
5.5 In the event of a Change in Control (defined below), which
effectively occurs on or before the first annual anniversary date of the
Commencement Date, the Unit Options shall immediately become exercisable as of
the date of such Change in Control and must be exercised by the Employee on or
before the earlier of (i) ten (10) years of such Change in Control or (ii)
within ninety (90) days of termination of employment if the termination occurs
without "cause" as defined above. For purposes of this Agreement, a "Change in
Control" shall be deemed to occur in the event of either (i) the sale of all or
substantially all of the Company's assets or (ii) a transaction or series of
related transactions (excluding an initial public offering) in which securities
constituting more than 50% of the Company's outstanding voting power are
transferred to a person or persons other than the persons holding such
securities immediately prior to such transaction or series of related
transactions.
6. Confidential Information and Discoveries of the Company.
6.1 The Employee will have access to confidential information of the
Company, including, but not limited to, corporate books and records, financial
information, personnel information, lists of customers and suppliers, processes
or dealings, patents, inventions, discoveries, information, data, programs, know
how, knowledge, and other trade secrets (collectively, "Confidential
Information"). "Confidential Information" shall also include but is not limited
to confidential evaluations of, and the confidential use or non-use by the
Company or any subsidiary thereof of, technical or business information not in
the public domain.
To ensure the continued secrecy of the Confidential Information,
the Employee agrees that he will not at any time during the term of the
Employee's employment with the Company or anytime thereafter, divulge such
Confidential Information to any person or entity without the prior written
consent of the Company.
During the term of this Agreement, the Employee shall not make,
other than for the benefit of the Company, any notes or memoranda relating to
any matter within the scope of the business of the Company or concerning any of
its dealings or affairs, nor shall the Employee use or permit to be used any
such notes or memoranda, other than for the benefit of the Company. Upon
-6-
<PAGE>
the termination of this Agreement, the Employee shall not take from the Company,
or otherwise retain, and shall surrender to the Company, any such Confidential
Information and any records, files, notes, memoranda, or other documents, or
copies thereof, relating to the business or affairs of the Company.
The obligations of this Section 6.1 shall not apply to
---
Confidential Information that: (i) at the time of the Employee's employment by
the Company was in the public domain; (ii) is or becomes generally available in
the public domain other than pursuant to a breach by the Employee of his
obligations under this Section 6.1; or (iii) the Employee proves that such
Confidential Information was acquired after the date of this Agreement, from a
third party and such third party did not obtain such Confidential Information
from the Company subject to or in violation of obligations similar to those set
forth in this Section 6.1.
6.2 Any and all inventions, discoveries, ideas, concepts,
improvements, processes, methods, designs, programs and/or know-how, whether or
not patentable, or copyrightable that the Employee may conceive, discover,
develop or make, either jointly or alone, during the Employee's term of
employment with the Company and: (i) for which the Company provided equipment,
supplies, facilities, or Confidential Information; or (ii) that was developed on
or partially on the Company's time; or (iii) that relates to the Company's
current business or business that the Company is planning to develop or to the
Company's actual or planned research or development or that results from any
work performed by the Employee for the Company, shall be the sole and exclusive
property of the Company (collectively, referred to as a "Company Invention").
All works of authorship created by the Employee during the term of this
Agreement, solely or jointly with others, shall be considered works made for
hire under the Copyright Act of 1976, as amended, and shall be owned entirely by
the Company. Without limiting the generality of the foregoing, any Company
Invention of the Employee relating to any subject matter on which the Employee
worked or was informed during his employment by the Company shall be
conclusively presumed to have been conceived and made prior to the termination
of his employment (unless the Employee clearly proves that such Company
Invention was conceived and made following the termination of his employment),
and shall accordingly belong and be assigned to the Company and shall be subject
to this Agreement. The Employee shall promptly disclose to the Company all
Company Inventions that he may conceive or make, alone or with others, during
the term of his employment with the Company, and that directly or indirectly are
based on his knowledge of the information or the actual or anticipated business
or interests of the Company or any of its affiliates.
The Employee shall give all testimony and execute all patent
applications, rights or priority, assignments and other documents and in general
do all lawful things requested of the Employee by the Company to enable the
Company to obtain, maintain, and enforce protection of such ideas, inventions
and discoveries, and any improvements or modifications therein, for and in the
name of the Company, or its nominee, in all countries of the world. However,
should the Employee render any of these services following termination of his
employment, the Employee shall be compensated at a rate per hour based upon the
base wages the Employee received from the Company at the time of termination
(assuming a 40 hour work week) and shall be reimbursed for reasonable out-of-
pocket expenses incurred in rendering the services.
-7-
<PAGE>
NOTICE: Notwithstanding any other provision of this Agreement to
------
the contrary, this Agreement does not obligate Employee to assign or offer to
assign to the Company any of Employee's rights in an invention for which no
equipment, supplies, facilities, or trade secret information of the Company were
used and which was developed entirely on Employee's own time, unless (a) the
invention relates (i) at the time of conception or reduction to practice of the
invention to the business of the Company or (ii) to the Company's actual or
demonstrably anticipated research or development or (b) the invention results
from any work performed by Employee for the Company. This notice satisfies the
written notice and other requirements of California Labor Code (S)2872.
7. Agreement Not to Solicit.
To induce the Company to enter into this Agreement, the Employee
agrees, during the term of this Agreement, and for a period of nine (9) months
after the termination of his employment with the Company for any reason, not to,
directly or indirectly, for his own account or for the account of others, employ
any of the Company's employees or induce or attempt to induce any of the
Company's employees to leave their employment, nor will the Employee in any
other way interfere with the employee relations of the Company.
8. Non-Competition.
8.1 The Employee acknowledges that he shall receive special training
and knowledge from the Company. The Employee acknowledges that included in the
special knowledge received is the Confidential Information identified in Section
6. The Employee acknowledges that this Confidential Information is valuable to
the Company and, therefore, its protection and maintenance constitutes a
legitimate interest to be protected by the Company by this covenant not to
compete. Therefore, the Employee agrees that during his employment with the
Company the Employee will not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever with
the business of the Company. The Employee represents to the Company that his
experience and capabilities are such that the enforcement of the restriction
contained in this Section 8 would not be unduly burdensome to the Employee.
8.2 In addition to the restrictions set forth in Section 8.1, the
Employee shall not during his employment and for a period ending nine (9) months
thereafter, either directly or indirectly, (i) make known to any person, firm or
corporation the names and addresses of any of the customers or suppliers of the
Company or contacts of the Company or any other information pertaining to such
persons or (ii) call on, solicit, or take away, or attempt to call on, solicit
or take away any of the customers or suppliers of the Company on whom the
Employee called or with whom the Employee became acquainted during the
Employee's association with the Company, whether for the Employee or for any
other person, firm or corporation.
-8-
<PAGE>
9. Remedies.
The Employee acknowledges that the provisions of Sections 6, 7, and 8
shall survive the termination of this Agreement for any reason whatsoever and
are reasonable and necessary for the protection of the Company and that the
Company will be irrevocably damaged if such provisions are not specifically
enforced. Accordingly, in the event of breach or threatened breach of the
provisions of Sections 6, 7, or 8, it is understood and agreed that the Company
shall be entitled to injunctive relief (without bond or other security being
required) as well as any and all other applicable remedies at law and in equity.
Should a court of competent jurisdiction declare any of these provisions
unenforceable due to an unreasonable restriction, or for any other reason, such
court shall have the express authority of the parties to this Agreement to
reform such provisions and/or to grant the Company any and all other relief, at
law or in equity, reasonably necessary to protect the interests of the Company.
The Employee expressly acknowledges that (i) he has been encouraged to obtain
separate legal counsel in connection with the negotiation of this Agreement who
can explain the legal effects of these provisions and (ii) he considers these
provisions to be reasonable.
10. Alternative Dispute Resolution.
Except for actions involving requests by the Company for injunctive
relief under section 9 hereof, the parties hereto hereby knowingly, voluntarily,
and irrevocably agree that any disputes or conflicts in any way arising out of
or relating to: (i) this Agreement or (ii) the performance or breach of any of
the matters described herein, may be mediated or arbitrated, at the written
election of either party hereto. If a party makes a proper election to mediate
under this paragraph, but such mediation efforts fail to resolve the subject
dispute(s) between the parties, the parties shall be bound to resolve the
subject dispute(s) by binding arbitration; provided that nothing in this
sentence shall be read to require a party to first elect to mediate any dispute
hereunder prior to electing to arbitrate. If the subject dispute(s) are
ultimately resolved by arbitration, the parties hereto irrevocably agree to be
bound by all findings of fact and conclusions of law of the arbitrator selected.
The election of a party under this paragraph shall be by delivery of written
notice to the opposing party; provided that if a legal proceeding relating to
the subject dispute (other than a proceeding for injunctive relief under section
9 hereof) has previously been filed in any court of competent jurisdiction, then
such notice of election under this paragraph shall be delivered within ninety
(90) days of the date the electing party receives service of process in such
legal proceeding. Any such mediation or arbitration shall be conducted in Palo
Alto, California, and shall proceed in accordance with the Employment Dispute
rules of JAMS/ENDISPUTE COMPANY (the "JAMS Rules"), including selection of a
single mediator and/or arbitrator. If as of the date of a proper election made
by a party under this paragraph, the JAMS Rules are not then in effect, the
mediation and/or arbitration shall proceed in accordance with the commercial
rules of the American Arbitration Association. All federal and state substantive
and procedural laws applicable to this agreement relating to arbitration or
mediation of conflicts shall be fully complied with by the parties.
Unless the parties otherwise agree, each party may conduct discovery
prior to any mediation or arbitration hearing in accordance with the California
rules of civil procedure and evidence. Additionally, there shall be no evidence
by affidavit allowed, and each party
-9-
<PAGE>
shall disclose a list of all documentary evidence to be used, a list of all
witnesses, and experts to be called by the party at least twenty (20) days prior
to the mediation or arbitration hearing.
To the maximum extent permitted by law, each party knowingly,
voluntarily, and intentionally waives any right to consequential, exemplary, or
punitive damages regardless of the forum for the proceedings. The provisions of
this Section 10 shall survive the termination of this Agreement for any reason
whatsoever.
11. Miscellaneous.
11.1 Notices. Any notice required or permitted under this Agreement
-------
shall be in writing and shall be deemed to be delivered three (3) business days
after deposit in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, addressed as follows:
Company: Post N Mail, L.C.
3050 Post Oak Blvd., Suite 110
Houston, Texas 77056-6524
Attn: President
Employee: 3996 Jefferson Avenue
Redwood City, California 94062
Notice given in any other manner shall be effective when
delivered to the addressee. The address for notice may be changed by notice
given in accordance with this provision.
11.2 Drug Testing. Employee acknowledges and agrees that he may be
------------
required to submit to random drug and/or alcohol screening tests while employed
by Company. Employee agrees that the results of any blood and/or urine sample
test results may be revealed to the Company for its use and evaluation.
Furthermore, Employee acknowledges and agrees that his refusal to submit to such
testing can be grounds for immediate termination.
11.3 Amendments. This Agreement constitutes the entire agreement
----------
between the parties with respect to the employment of the Employee and
supersedes any prior agreements and may not be amended, supplemented, waived,
modified, or amended except by written instrument executed by the parties
hereto. There are no oral agreements between the parties.
11.4 Preservation of Business: Fiduciary Responsibility. The
---------------------------------------------------
Employee shall use his best efforts to preserve the business and organization of
the Company, to keep available to the Company the services of its employees and
to preserve the business relations of the Company the Employee shall not commit
any act that might reasonably be expected to injure the Company. The Employee
shall observe and fulfill proper standards of fiduciary responsibility attendant
upon his service and office.
11.5 Assignments. The Company may not assign this Agreement without
-----------
the consent of the Employee, except in connection with a sale of substantially
all of the assets of the Company or the merger or consolidation of the Company
with a successor entity provided in such events such transferee entity assumes
all of the obligations of the Company pursuant to this
-10-
<PAGE>
Agreement. The rights and obligations of the Employee hereunder are personal to
him, and no such rights, benefits, duties or obligations shall be subject to
voluntary or involuntary alienation, assignment, or transfer.
11.6 Effect of Agreement. This Agreement shall be binding upon the
-------------------
Employee and his heirs, executors, administrators, and legal representatives and
upon the Company and its successors and assigns.
11.7 Waiver of Breach. The waiver by either party hereto of a breach
----------------
of any provision of this Agreement by the other party hereto shall not operate
or be construed as a waiver by such party of any subsequent breach of such other
party.
11.8 Governing Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the laws (excluding
conflicts of laws provisions) of the State of California. The Company and the
Employee consent to the personal jurisdiction of all state and federal courts in
Santa Clara County, California, and agree that the proper, exclusive, and
convenient venues for any mediation, arbitration, or litigation relating to this
Agreement are Santa Clara County, California, and each party waives any defense,
whether asserted by motion or pleading, that Santa Clara County, California, is
an improper or inconvenient venue.
11.9 Severability. If any provision of this Agreement is declared
------------
unenforceable, such declaration shall not affect the validity of any other
provision of this Agreement.
11.10 Construction. The headings contained in this Agreement are for
------------
reference purposes only and shall not affect this Agreement in any manner
whatsoever. Wherever required by the context, any gender shall include any
other gender, the singular shall include the plural, and the plural shall
include the singular.
11.11 Execution. This Agreement may be executed in multiple
---------
counterparts, each of which shall be deemed an original but all of which shall
be deemed one instrument. The Employee acknowledges that he has read this
Agreement and has been represented by separate legal counsel and he understands
that executing this Agreement is a condition of his employment by the Company.
-11-
<PAGE>
INTENDING TO BE LEGALLY BOUND, the parties hereto have executed this
Agreement as of the day and year first written above.
COMPANY:
POST N MAIL, L.C.
By: /s/ Sunir K. Kapoor
---------------------------
SUNIR K. KAPOOR
President
EMPLOYEE:
/s/ Thomas J. Reinemer
-------------------------------
-12-
<PAGE>
EXHIBIT 10.11
PROMISSORY NOTE
---------------
$1,102,500.00 San Mateo, California May 30, 1999
---------
For value received, the undersigned ("Maker") promises to pay to the order
of E-Stamp Corporation, a Delaware corporation ("Payee"), located in Palo Alto,
Santa Clara County, California, as set forth below or at such other place and to
such other party or parties as the owner and holder hereof may from time to time
designate, the principal sum of One Million One Hundred Two Thousand and Five
Hundred and no/100 DOLLARS ($1,102,500.00), or so much thereof as may be
advanced to Maker by Payee, from time to time, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, together with interest as described below
on the unpaid balance thereof from the date hereof, payable in like coin or
currency, until the full amount of this Note, both principal and interest, is
paid.
This Note is entered into in conjunction with, and is expressly subject to
the terms and conditions of that certain Restricted Stock Purchase Agreement,
dated of even date herewith entered into by and between the Maker and the Payee
(hereinafter, the "Restricted Stock Purchase Agreement").
This Note is payable as follows:
Interest only accruing hereunder shall be payable annually on or before the
30th day of May, commencing May 30, 2000 and continuing through May 30, 2004, at
which time the entire amount of principal and all accrued interest then
outstanding and remaining unpaid shall become due and payable in full.
Notwithstanding the foregoing, in the event the Maker's employment with the
Payee terminates for any reason, with or without cause (including death or
disability), then the entire amount of principal and all accrued interest then
outstanding and remaining payable shall become due and payable ninety (90) days
after the date upon which Maker's employment terminated.
Prior to default or maturity (whether stated or by acceleration), the
interest rate on this Note shall be six percent (6%) per annum, simple interest.
Interest due hereunder shall be calculated on the basis of a 365-day year.
All past due installments of principal (whether by default, acceleration or
otherwise) and, if to the extent permitted by applicable law, of interest, shall
bear interest at the rate of eighteen percent (18%) per annum (the "Maximum
Rate"), without compounding until paid. Except as otherwise provided, herein,
all payments shall be applied first to the payment of accrued unpaid interest on
this Note and the balance, if any, shall be applied to the reduction of the
outstanding principal balance of this Note.
Maker shall have the right and privilege of prepaying this Note at any time
or times, in whole or in part, without notice or penalty. However, any such
prepayment hereunder shall be applied first
<PAGE>
to accrued unpaid interest, if any, owing on this Note and the balance to the
last maturing installment of principal in inverse order of maturity.
It is agreed that time is of the essence of this Note and that in the event
the Maker hereof shall fail to pay this Note or any installment hereof, whether
principal or interest, when due or if any event occurs or condition exists which
authorizes the acceleration of the maturity hereof under any other agreement
made by the Maker hereof then the holder hereof may, at his option, without
demand, notice, or presentment, accelerate the maturity of this Note in which
event the entire unpaid balance of the principal hereof, together with all
accrued and unpaid interest thereon, shall be at once due and payable. Failure
to exercise this option shall not constitute a waiver of the right to exercise
the same in the event of any subsequent default.
Maker shall be in default hereunder upon the happening of any of the
following events or conditions: (i) non-payment when due (whether by
acceleration or maturity or otherwise) of any payment of principal, interest or
other amount due hereunder; (ii) the occurrence of any event which under the
terms of any evidence of indebtedness, indenture, loan agreement, security
agreement (including the Restricted Stock Purchase Agreement) or similar
instrument permits the acceleration of maturity of any obligation of Maker
(whether to Payee or to others); (iii) any representation or warranty made by
Maker to Payee in connection with this Note or the Restricted Stock Purchase
Agreement, or in any statements or certificates, proves incorrect in any
material respect as of the date of the making or the issuance thereof; (iv)
default occurs in the observance or performance of, or if Maker fails to furnish
adequate evidence of performance of, any provision of this Note or of any note,
assignment, transfer, other agreement, document or instrument delivered by Maker
to Payee in connection with this Note, and collateral securing this Note or the
Restricted Stock Purchase Agreement; (v) the filing of a petition in bankruptcy
by or against, or the application for appointment of a receiver or any other
legal custodian for any part of the property of, or the assignment for the
benefit of creditors by, or the commencement of any proceedings, under any
bankruptcy, rearrangement, reorganization, insolvency or similar laws for the
relief of debtors by or against, the Maker or any maker, endorser, guarantor,
surety or other party primarily or secondarily liable for this Note or the
Restricted Stock Purchase Agreement; (vi) the filing of any levy, attachment,
execution, garnishment or other process which affects the collateral securing
performance of this Note.
Upon the occurrence of an event of default, or if Payee deems payment or
performance of this Note or the Restricted Stock Purchase Agreement to be
insecure, Payee, at its option, shall be entitled to exercise any one or more of
the following remedies (all of which are cumulative):
(a) Payee, at its option, may declare this Note or any part thereof
immediately due and payable, without demand, notice of intention to accelerate,
notice of acceleration, notice of non-payment, presentment, protest, notice of
dishonor, or any other notice whatsoever, all of which are hereby waived by
Maker and any maker, endorser, guarantor, surety or other party liable herefore
in any capacity.
(b) Payee shall have all the rights and remedies provided for in this Note
and in any other agreements executed by Maker, the rights and remedies in the
California Commercial Code, and any and all of the rights and remedies at law or
in equity, all of which shall be deemed cumulative. The
-2-
<PAGE>
exercise by Payee of any one or more of the rights or remedies granted hereby or
under any other document or agreement executed in connection herewith or with
the Restricted Stock Purchase Agreement shall not be deemed an election of
rights or remedies or a waiver of any other right or remedy. Payee may remedy
any default and may waive any default without waiving the default remedied or
without waiving any other prior or subsequent default.
Notwithstanding any provisions herein to the contrary, Payee's right, power
and privilege to accelerate the maturity of the indebtedness evidenced hereby
shall be conditioned upon (i) with respect to any Monetary Default (as
hereinafter defined), that the default has not been cured within ten (10) days
after the event of default occurred; and (ii) with respect to any Non-Monetary
Default (as hereinafter defined), Payee giving Maker written notice of such Non-
Monetary Default and a thirty (30) day period after the date of such notice
within which to cure such Non-Monetary Default. Payee shall have no obligation
to give Maker notice of any Incurable Default (as hereinafter defined) prior to
exercising its right, power and privilege to accelerate the maturity of the
indebtedness evidenced hereby and to declare the same to be immediately due and
payable and exercise all other rights and remedies herein granted or otherwise
available to Payee at law or in equity. As used herein, the term "Monetary
Default" shall mean any default which can be cured by the payment of money
including but not limited to, the payment of principal and interest due under
this Note and the payment of taxes, assessments and insurance premiums when due
as provided in any deed of trust or similar document securing this Note. As
used herein, the term "Non-Monetary Default" shall mean any default which is not
a Monetary default or an Incurable Default. As used herein, the term "Incurable
Default" shall mean (i) any voluntary or involuntary sale, assignment,
mortgaging or transfer in violation of the covenants of agreements executed in
connection with or securing this Note; or (ii) if Maker, or any person or entity
comprising Maker, should make an assignment for the benefit of creditors, become
insolvent, or file a petition in bankruptcy (including but not limited to, a
petition seeking a rearrangement or reorganization).
All makers, endorsers, sureties and guarantors hereof, if any, as well as
any persons or entities which become liable for the payment of this Note, hereby
expressly (a) waive (i) demand or presentment for payment of this Note, (ii)
notice of non-payment, protest, notice of protest, suit, acceleration, intention
to accelerate, diligence, (iii) any notice of, or defense on account of, the
extension of time of payments or change in the method of payments, and/or any
modification of the terms hereof or any instrument securing or guaranteeing the
payment hereof, and (iv) any right Maker may now or hereafter have to assert any
defense relating to the market value of any property acquired by Payee at any
non-judicial foreclosure sale under any security agreement or deed of trust
executed by Maker in connection herewith, and (b) consent to any and all
renewals and extensions in the time of payment hereof, and/or any modification
of the terms hereof or any instrument securing or guaranteeing the payment
hereof, and to any substitutions, exchange, or release of any security herefore
or the release of any party primarily or secondarily liable herein, and (c)
agree that (i) the acceptance of late payment(s) hereunder by the holder hereof,
(ii) waiver of any event(s) of default hereunder and/or any instrument securing
or guaranteeing the payment hereof or (iii) other forgiveness of any other
defaults by Maker, shall not constitute a waiver by the holder hereof of any
subsequent defaults, late payments or other violations of the Maker's
obligations hereunder or in the terms of any instrument securing or guaranteeing
the payment hereof.
-3-
<PAGE>
If this Note or any installment hereof is not paid when due (whether the
same becomes due by acceleration or otherwise) and is placed in the hands of an
attorney for collection, or if suit is filed hereon, or if this Note shall be
collected by legal proceedings or through a probate or bankruptcy court, Maker
agrees to pay all costs of collection, including reasonable attorneys' fees.
Should this Note be signed by more than one party, all of the obligations
herein contained shall be the joint and several obligations of each signer
hereof.
All notices hereunder shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date mailed, first class,
registered or certified mail, postage prepaid, if addressed to the respective
parties hereto at their addresses set forth in this Note.
No failure to exercise and no delay on the part of the holder of this Note
in exercising any power or right in connection herewith or under any other
instrument evidencing, securing, or guaranteeing this Note shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. No course of dealing between Maker and Payee shall
operate as a waiver of any right of Payee. No modification or waiver of any
provision of this Note or any other instrument evidencing, securing, or
guaranteeing this Note nor any consent to any departure therefrom shall in any
event be effective unless the same shall be in writing and signed by the person
against whom enforcement thereof is to be sought, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
All agreements between Maker and the holder hereof, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of acceleration of the maturity hereof or
otherwise, shall the interest paid or agreed to be paid to the holder hereof
exceed the maximum amount permissible under applicable law. It is the intent of
the Payee and the Maker in the execution, delivery, and performance of this Note
that none of the terms of this Note, or said other instruments, shall ever be
construed to create a contract to pay or charge for the use, forbearance or
detention of money at any interest rate in excess of the Maximum Rate.
Specifically and without limiting the generality of the foregoing, it is
expressly provided that if under any circumstances the aggregate amounts paid or
charged on the loan evidenced by this Note include amounts which by law are
deemed to be interest and which would exceed the maximum applicable non-usurious
interest rate which could lawfully have been charged or collected on this Note,
Maker stipulates that (i) any non-principal payment or charge shall first be
characterized to the extent permitted by applicable law as an expense, fee, or
premium rather than as interest; (ii) all consideration which constitutes
interest under applicable law shall, at the option of Payee, be either refunded
to Maker or credited on the unpaid principal amount of this Note (or, if this
Note shall have been paid in full, refunded to the Maker); (iii) the provisions
of this Note shall be immediately deemed reformed and amounts thereafter
collectible shall be reduced without the necessity of the execution of any new
document so as to comply with the then applicable law so as to permit collection
of the Maximum Rate; (iv) any amounts collected as interest which produce a rate
in excess of the Maximum Rate will be deemed to have been the result of an
unintentional mathematical error on the part of Maker and Payee; and (v)
determination of the rate of interest for determining whether the loan hereunder
is usurious shall be made by amortizing, prorating,
-4-
<PAGE>
allocating, and spreading, in equal parts during the full stated term of such
loans, all interest at any time contracted for, charged, or received from the
Maker in connection with such loans, and any excess shall be cancelled,
credited, or refunded as set forth in (ii) of this paragraph.
In addition to the foregoing and any other remedies Payee may possess, upon
the occurrence of any default hereunder or under the Restricted Stock Purchase
Agreement, Maker shall, at Payee's request, promptly deliver possession and
control over any and all property of Maker in which Payee possesses any security
interest, without further order of any court. Furthermore, upon the occurrence
of any default, Payee in its sole discretion may exercise any and all other
remedies allowed under the law with respect to any of the property securing
payment of this Note without further authorization of any court. Maker shall
comply with the terms of this paragraph and shall not interfere in any manner
whatsoever with any of Payee's remedies, and shall not take any action
inconsistent with its obligations hereunder, including the commencement or
prosecution of any claim, defense, counterclaim or seeking any other relief in
law or in equity in any forum, notwithstanding the fact that Maker in good faith
may contend that it is entitled to any such relief, relating to or in connection
with property in which Payee possesses an interest. Maker's sole recourse in
this regard will be by timely application to a court only after Maker has
otherwise complied with this provision; such application shall be limited to
relief sought by Maker based exclusively on Maker's pleading and presentation of
substantial proof that a default has not occurred.
In accordance with the Restricted Stock Purchase Agreement, payment of this
Note is secured by those (the "Property"), 1,225,000 shares of the common stock
of E-Stamp Corporation, $.001 par value, placed into escrow with the Payee
pursuant to the Restricted Stock Purchase Agreement.
Maker hereby acknowledges that the indebtedness evidenced by this
Promissory Note represents a part of the unpaid purchase money of the Property.
This Note has been executed and delivered in and shall be construed in
accordance with the laws of the State of California and the laws of the United
States applicable to transactions in California.
The Maker hereby irrevocably submits to the personal jurisdiction of the
United States District Court for Santa Clara County, California, as well as of
the District Courts of the State of California in Santa Clara County, California
over any suit, action or proceeding arising out of or relating to this Note or
any amendment or modification. The Maker hereby irrevocably waives, to the
fullest extent permitted by law, any objection which he may now or hereafter
have to the laying of the venue of any such mediation, arbitration, suit, action
or proceeding brought in any such county and any claim that any such mediation,
arbitration, suit, action or proceeding brought in such county has been brought
in an inconvenient forum.
The terms and provisions hereof shall be binding upon Maker and the
respective heirs, executors, administrators, legal representatives, successors
and assigns of each of them and inure to the benefit of Payee and its successors
and assigns, including, without limitation, any subsequent owner or holder of
this Note.
-5-
<PAGE>
Any check, draft, money order, or other instrument given in payment of all
or any portion of this Note may be accepted by Payee and handled in collection
in the customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee hereof except to the extent that actual cash
proceeds of such instruments are unconditionally received by Payee.
Balloon Note Notice
- -------------------
THIS NOTE IS PAYABLE IN FULL ON THE EARLIER TO OCCUR OF May 1, 2004, OR
NINETY (90) DAYS FOLLOWING MAKER'S TERMINATION OF EMPLOYMENT WITH PAYEE FOR ANY
REASON. AT MATURITY, YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN
AND UNPAID INTEREST THEN DUE. PAYEE IS UNDER NO OBLIGATION TO REFINANCE THE
LOAN AT THAT TIME. YOU WILL, THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT OF
OTHER ASSETS THAT YOU MAY OWN, OR YOU WILL HAVE TO FIND A LENDER, WHICH MAY BE
THE LENDER YOU HAVE THIS LOAN WITH, WILLING TO LEND YOU THE MONEY. IF YOU
REFINANCE THIS LOAN AT MATURITY, YOU WILL HAVE TO PAY SOME OR ALL OF THE CLOSING
COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF YOU OBTAINED REFINANCING FROM
THIS LENDER.
"MAKER"
By: /s/ Robert H. Ewald
--------------------------------------
Printed Name: Robert H. Ewald
----------------------------
Title:
-----------------------------------
-6-
<PAGE>
EXHIBIT 10.12
CRYPTO IBUTTON/TM/ SERVICE PROVIDER AGREEMENT
A membership program
This Crypto iButton Service Provider Agreement is between Dallas Semiconductor
Corporation ("DS") and the Crypto iButton Issuer (the "CiBi") whose name and
principal business address appear on the Crypto iButton Service Provider
Membership Application, incorporated by reference, identified in the Country
Annex, as those terms are defined below. The terms and conditions of this
Agreement shall apply to all business entities authorized as Crypto iButton
Issuers.
1. DEFINITIONS:
The following definitions shall apply to this Agreement, the Country Annex, the
Site Annex, the CiBi Program Guide:
A. "CRYPTO iBUTTON" shall mean a physically secure computer and it's operating
system as listed in the CiBi Program Guide.
B. "CiBi PRODUCT" shall mean the services and accompanying software and/or
hardware which the CiBi provides as an extension to the capabilities of the
Crypto iButton. The CiBi Product is identified on the Membership
Application.
C. "CRYPTO iBUTTON ISSUER" shall mean the business entity which has been
authorized to issue Crypto iButtons under this Agreement and which provide
the Services (defined below).
D. "SERVICES" shall mean the services as specified on the Membership
Application.
E. "SITES" shall mean (1) separate legal entities controlled by the CiBi or
together with the CiBi are under the common control of a third party, or
(2) the additional divisions or offices of the CiBi which are not located
at the CiBi's principal place of business. Unless otherwise provided, the
term 'CiBi' in this Agreement shall be deemed to include any Sites.
F. "EFFECTIVE DATE" shall mean the date when both parties have signed this
Agreement.
G. "CiBi PROGRAM GUIDE" shall contain the specific CiBi bylaws and privileges
of the Crypto iButton Service Provider Program. The CiBi Program Guide may,
from time to time, be subject to change at DS' sole discretion.
H. "BRANDING POLICY" shall mean the guidelines governing the use and placement
of DS and program logos. The Branding Policy shall be provided to a CiBi.
I. "AGREEMENT" shall mean this agreement between DS and the CiBi with respect
to all terms, conditions, bylaws, and privileges appearing herein, the Site
Annex (if applicable), the Country Annex, the CiBi Program Guide. The Site
Annex, the Country Annex, Branding Policy, and the CiBi Program Guide are
attached hereto and incorporated herein by reference.
J. "TERM" shall mean the period from the Effective Date to and through
December 31, 1998, and any subsequent one-year renewal terms as described
in Section 3 below.
1
<PAGE>
K. "TERRITORY" shall mean the territory specifically set forth in the Country
Annex.
L. "CiBS" shall mean the individuals who have been certified by DS, as a
Crypto iButton Specialist.
M. "ELECTRONIC ACCEPTANCE" shall mean the electronic expression of agreement
with and acceptance of any amendments to the Agreement which may occur with
each renewal term. Such electronic acceptance shall be signified by
clicking on the appropriate "AGREE" button (or such other similarly
designated button during the electronic agreement process).
N. "CRYPTO IBUTTON LICENSE AGREEMENT" shall mean the license agreement which
gives the right to use a Crypto iButton. The Program Guide contains the use
licenses: Crypto iButton Holder License, Crypto iButton Secured Computer
License and Crypto iButton Evaluation License.
O. "ISSUANCE" shall mean the confirmation that the registered individual or
entity is in possession of the Crypto iButton, has agreed to the terms of
the license and remitted payment to DS for the corresponding Issuing and
Maintenance/Support Fees under the Program Guide.
P. "ISSUER" shall mean a service provider which holds Crypto iButton under
quarantine until Issuance.
Q. "CiBi CUSTOMER" means an individual or entity that has licensed Crypto
iButton to use the Services.
R. "QUARANTINE" any Crypto iButton which the CiBi has possession prior to
Issuance.
S. "iBUTTON BOOK OF STANDARDS" shall mean the standards, characteristics and
operations, including the 1-Wire(R) interface, described in the Book of
iButton Standards.
T. "DS PRODUCT" shall mean a DS Memory iButton, Blue Dot Receptor or DS
iButton accessory.
U. "DS MATERIALS" shall mean DS Product, all related documentation, Crypto
iButton, published Policies, Guides, material supplied to CiBi.
V. "ALLOWANCE FOR APPLYING ISSUANCE FEE TO THE LICENSE" shall mean a price
reduction taken by CiBi in consideration for substantiating the agreement
to the DS Crypto iButton Licenses.
2. APPOINTMENT, OPENNESS, CONFORMITY AND PRICING.
2.1 Appointment. DS hereby appoints a service provider as a non-exclusive
Crypto iButton Issuer (CiBi) in the Territory, and the CiBi accepts such
appointment. Program membership is contingent on CiBi's continued
compliance with the bylaws of Crypto iButton Service Provider program.
2.2 Openness Standard. CiBi agrees that the Crypto iButton and the embedded
Script Interpreter or Java Virtual Machine are designed to support and
maintain multiple applications from one or more service providers. If
authorized by the CiBi Customer, other service providers may add other
applications to the Crypto iButton issued by CiBi.
2.3 Vote on Forum. CiBi will have a set number of votes on the Forum. The set
number of votes will be determined based on the number of activated Crypto
iButtons issued by each CiBi. DS shall have sole discretion on whether to
implement any actions or modifications to the bylaws.
2.4 Conformity to iButton Standards. CiBi agrees that CiBi's Products shall
comply with the iButton Book of Standards and shall include pass
conformance tests according to the Program Guide.
2
<PAGE>
2.5 Price and Fee Reductions for Issuers Only.
A. If CiBi's Products meets the Openness Standard under Section 2.2 and
the Conformity requirements under Section 2.4 and is a current member
of the service provider program, then DS will invoice 20% below the
Worldwide Price List, contained in the Program Guide, for Crypto
iButton Fees and DS Products associated with the Services.
B. If CiBi leaves from the Crypto iButton Service Provider Program for
any reason, the former CiBi may acquire the right to use a Crypto
iButton under the Crypto iButton Holder License, Crypto iButton
Secured Computer or Crypto iButton Evaluation License and remit fees
according to the Worldwide Price List without a price reduction. The
license can be transferred to a customer of a former CiBi under the
provisions allowed by the license.
C. DS may revise the Worldwide Price List and the price and fee
reduction. Nothing in this Agreement obligates DS to license or to
continue to license Crypto iButtons to CiBi.
D. CiBi agrees that its purchase of the DS Products shall be under the
terms of Dallas Semiconductor's Standard Terms and Conditions of
Quotation and Sale, which DS may revise from time to time.
3. TERM AND TERMINATION
A. Term: This Agreement shall take effect on the Effective Date and, unless
earlier terminated as provided herein, shall continue until 11:59 PM CT
December 31, 1998. This Agreement shall renew for additional terms of one
year each, provided that 1) the CiBi continues to meet any and all CiBi
obligations and requirements, including but not limited to, timely payment
of any applicable program fees hereto, and 2) the CiBi accepts and agrees
to any and all changes, if any, in the terms and conditions of this
Agreement in the manner identified in Section 17(J) below. Any renewal term
is conditioned on DS' approval. Upon expiration or earlier termination of
this Agreement, all rights and benefits granted by this Agreement shall
revert to DS and the CiBi shall immediately cease issuing Crypto iButtons
(see Section 2.5(B) for continuation of Services) (1) any Crypto iButtons
in quarantine must be returned to DS as defined in the Program Guide. (2)
if applicable, any licenses granted under the DS Internal Use Product
Program, (iv) the iButton/TM/, Crypto iButton/TM/, 1-Wire(R) and the
underlined i in a circle logo, and shall cease to represent itself as a
Crypto iButton Issuer immediately.
B. Termination: Either party shall have the right to terminate this Agreement
at any time, without cause and without the intervention of the courts, on
the delivery of thirty (30) calendar days' prior written notice. Neither
party shall be responsible to the other for any costs or damages resulting
from the termination of this Agreement (see Section 2.5(B) for continuation
of Services).
C. Termination of Sites: Upon the expiration or earlier termination of this
Agreement, all Sites authorized herein shall also be terminated.
4. CiBi SITES
Upon CiBi's request, DS may approve the Sites indicated on the Site Annex as
additional Crypto iButton Service Providers, provided that such Sites are also
located in the Territory and each individually meets the CiBi bylaws, provided
that the CiBi shall be responsible for paying the additional fees arising from
the addition of each Site. If the Site is a separate legal entity, CiBi herein
unconditionally and irrevocably guarantees the payment and performance of that
Site under the terms and conditions of this Agreement.
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5. PROGRAM PAYMENT
During the initial Term and any renewal Terms, the program fee for the
appointment as a Program Member under this Agreement shall consist of per annum
payments as follows:
A. The Crypto iButton Program Membership fee which is the amount determined by
the program fee schedule set forth in Table 1; and
B. The Site fee, which will vary depending on the number of sites, is the
amount determined by the program fee schedule set forth in Table 1.
With respect to any renewing CiBi, all program fees due under this Agreement
shall be received by DS by the date indicated in the CiBi Program Guide for the
applicable renewal Term. Any program fee payments shall be submitted to DS
without any deduction whether by set-off, counterclaim or otherwise.
6. CiBi RESPONSIBILITIES
A. Trademarks/Logos/Registered Marks: Nothing in this Agreement shall be
construed as granting the CiBi with a license to use DS' trademarks, trade
names, or logos other than in the following manner: the CiBi is a "Crypto
iButton Issuer". The specific guidelines concerning the size, placement and
use of the Crypto iButton Issuer name and logo are set forth in the Program
Guide. The CiBi shall use the appropriate trademark symbol (either "TM"
[Standard trademark] or "(R)" [Registered trademark] in a superscript
following the Product name) whenever a DS Product name is mentioned in any
advertisement, brochure, or material circulated or published in any form
whatsoever by the CiBi. The appropriate trademark symbol must be used in
conjunction with references to each CiBi Product in any of the CiBi's
circulations or publications. DS reserves the right to (1) review and
approve all DS trademark, service names, trade names and logos CiBi uses,
and (2) to amend any DS trademarks, trade names, services marks or logos
and agrees to notify the CiBi of any such amendments that are relevant to
the CiBi's business. CiBi or DS shall not, at any time, use or register any
name or Internet domain name, trademark, service mark, logo or symbol which
may be confusingly similar to any, trade name, trade or service mark, logo,
symbol, product name or Internet domain name.
B. Reporting: Upon DS' request, the CiBi shall provide sales and service
reports, using such forms as DS shall from time to time provide, and
deliver such reports to DS at the address indicated on the reporting form.
The CiBi warrants that such reports shall be true and correct to the best
of its knowledge and belief.
C. Program Membership Application and Profile: CiBi represents and warrants
that all the information on the Application form, is true and correct to
the best of its knowledge and belief, and warrants that the information
will continue to be so during the term of this Agreement unless otherwise
notified in writing by CiBi to DS. Should there be any changes in such
information during the course of this Agreement, CiBi agrees to promptly
inform DS in writing giving details of such changes.
D. Crypto iButton Specialists: The CiBi understands and agrees that it, at all
times, shall employ the number and kind of CiBSs as set forth in the CiBi
Program Guide.
E. Infringement: CiBi shall without additional costs use its reasonable and/or
best efforts to prevent the infringement of the Crypto iButton and DS
Product's Intellectual Property rights and shall use its reasonable and/or
best efforts to protect against infringement and to protect DS' right,
title and interest in and to the Crypto iButton and DS Products. CiBi shall
promptly notify DS of any infringement in the Territory of any copyright,
patent or of any trademark of DS.
F. Reverse Engineering: CiBi may not reverse engineer, decompile, disassemble,
attempt to open or tamper with the Crypto iButton or Development Tools, nor
may it authorize any CiBi Customer to do so. CiBi shall not
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remove or modify any Intellectual Property Rights notices or trademarks,
including patent or copyright notices or proprietary legends, contained on
or included in the Development Tools. Any documentation of the Services
created by CiBi which refers to the Crypto iButton must include all
applicable Intellectual Property Rights notices, including the following:
The Crypto iButton is a licensed product of Dallas Semiconductor
Corporation.
iButton/TM/, Crypto iButton/TM/, 1-Wire(R) and the underlined i in a
circle logo are trademarks of Dallas Semiconductor Corporation in the
United States and/or other countries.
G. Ownership Rights of Dallas Semiconductor. Dallas Semiconductor owns all
Intellectual Property Rights in and to the implementation of the Crypton
iButton with Java VM or Dallas O/S, Development Tools, Software ICs,
Operating System and Dallas Primary Group (collectively, referred to as "DS
Properties"). The DS Properties are protected under U.S. and international
copyright laws and by various U.S. and international patents and by other
pending patent applications. CiBi agrees that DS owns the exclusive rights
in and to such copyrights and the inventions as claimed in the issued U.S.
or foreign patents and agrees not to infringe DS' copyrights, trademarks or
patent rights in any way. CiBi agrees not to manufacture, use or design any
product that incorporates or imitates the DS Properties or the inventions
as claimed in the U.S. or foreign patents, except as authorized under this
CiBi Agreement. Each party shall reasonably assist the other party in the
protection of the other party's Intellectual Property Rights at the expense
of the requesting party.
H. Support for CiBi Products. CiBi agrees to provide to CiBi Customers,
installation and technical support services for the CiBi Products in
accordance with industry standards. CiBi shall inform DS, and no later than
it informs any third party, of any bugs, errors, breach of security, or
other technical problems with the Crypto iButton. DS may use such feedback
information without restriction.
I. Personalization: The CiBi may install applets, scripts, certificates and/or
data to the Crypto iButton during the quarantine. Upon completion of the
installation and quality assurance testing, CiBi shall place the Crypto
iButton in a properly sealed and labeled packet for Issuance as specified
in the Program Guide. The CiBi may not remove DS installed applets,
scripts, certificates and/or data.
7. DS RESPONSIBILITIES
A. DS License Grants for CiBi Internal and Marketing Use:
For CiBi internal and marketing uses only, DS hereby grants to the CiBi,
including each Site, a non-exclusive, non-transferable, royalty-free,
terminable license to use under the following conditions:
(1) The number of authorized DS Products as set forth in the CiBi Program
Guide. In all cases, installation and use of the authorized Crypto iButton
is to additional terms and conditions of a Crypto iButton License
Agreement, including but not limited to, any limitation and warranties, for
the Product, Crypto iButton, except that the authorized Crypto iButtons
shall not be transferred or assigned to any third party. DS reserves the
right to change the authorized number of DS Products to be licensed and as
may be provided through the Dallas Semiconductor Internal Use Product
Program, from time to time and in its sole discretion; and
(2) This grant of authorization for the use of the Crypto iButtons amends
the Crypto iButton License Agreements; however, the provisions of such
Crypto iButton License Agreements where unamended remain in full force and
effect.
B. Training Use Licenses: The CiBi, at its sole cost and expense, may offer
training to customers on the CiBi Product. DS hereby grants the CiBi
permission to issue the number of authorized CiBi Products set forth in the
CiBi Program Guide for the sole purpose of providing training on the CiBi
Product only. Training use of
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the CiBi Product is subject to the following conditions: (1) the CiBi shall
re-posses all CiBi Product used outside of the CiBi location upon
completion of training; (2) the CiBi may only issue the Crypto iButton for
which the CiBi conducts training classes; (3) the CiBi agrees to be bound
by the terms of the Crypto iButton License Agreement for each CiBi Product
(4) the CiBi shall strictly control use of any authorized CiBi Product in
accordance with a Crypto iButton License Agreement.
C. Marketing Support. Dallas Semiconductor shall provide the following
marketing support to CiBi.
(1) Developer's Conferences. Dallas Semiconductor shall invite CiBi
to any iButton developer forum for displaying various iButton
products that DS may host. CiBi agrees to attend at least one
iButton developer forum per year.
(2) Web-Site. Dallas Semiconductor shall include CiBi in part of its
web site at http://www.iButton.com with a hyperlink to CiBi's web
site, if requested.
D. Advertising and Promotional Materials: DS may, in its sole discretion,
reference the CiBi in advertising and promotional materials in connection
with the issuance and promotion of any DS Product or Crypto iButton. Uses
of the CiBi's name include, but are not limited to: lists of the CiBis for
customer information, advertising of the Crypto iButton Service Provider
program containing the CiBi's name. When a specific advertisement or
promotion containing only the CiBi's name is planned, DS will obtain the
CiBi's written permission before such use. DS shall also obtain the CiBi's
written permission before use of any trademark or logo of the CiBi.
E. Changes in the CiBi Agreement Features: The CiBi understands that DS may
expand, change the scope or contents of, and/or delete, any benefits
offered under the Crypto iButton Service Provider program, including but
not limited to expanding, changing the scope or contents of and/or deleting
the CiBi Program Guide. In the event that DS adversely changes any program
features, and should the CiBi be dissatisfied with those changes, the CiBi
may CiBi terminate this Agreement in accordance with Section 3(B) and will
have no other recourse against DS and will not be bound by such changes,
while in the program.
F. DS agrees to defend the Crypto iButton against claims of direct
infringement when used as a standalone element provided its steel perimeter
is not violated and the software is not altered from the state the Crypto
iButton left DS.
8. LABELING.
Labeling of the DS Product or Crypto iButtons. The stainless steel case, which
defines the perimeter of the memory iButton products and the Crypto iButton, as
shown in Figure 3-1 of the iButton/TM/ Book of Standards. The case has a lower
surface for ground and an upper surface for data. The Crypto iButton from Dallas
Semiconductor has markings and trademarks physically on such ground and data
surfaces of the stainless steel perimeter. Subject to this Section 8, CiBi may
not remove, modify, or otherwise hinder the legibility of those markings. CiBi
may not interfere with or hinder the ability of a DS1402 Blue Dot Receptor to
read data from the data surface of the Crypto iButton by attaching material to
the data surface of the Crypto iButton. Material may be attached to the ground
side, for the purposes of mounting to a physical object and the ground side
markings can be covered only for this utilitarian purpose. DS will reasonably
work with CiBi to modify markings on the Crypto iButton to include its proposed
trademarks and designs; however, any revised markings on the Crypto iButton must
include the i in a circle compatibility logo, and CiBi must provide credit to DS
in its documentation in accordance with Section 6(A). No domestic nor foreign
government markings shall be covered or removed at any time.
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9. AUDIT
During the Term, DS and/or its designated representatives, shall have reasonable
access to the CiBi's pertinent books and records and shall have the right to
make authorized copies of such materials as is reasonable to verify the CiBi's
compliance with this Agreement. The DS shall conduct such audits during the
CiBi's normal business hours and, from time to time, as the DS deems necessary.
11. NEW CRYPTO IBUTTONS OR DS PRODUCTS.
Notwithstanding any other provisions of this Agreement, DS may elect at any time
during the term of the Agreement to announce new DS Products and Crypto iButtons
to which the terms and conditions of this Agreement may not apply.
12. WARRANTIES/LIMITED WARRANTIES/DISCLAIMERS
A. DS WARRANTIES
YOU UNDERSTAND AND AGREE THAT THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED
WHATSOEVER INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE RELATING TO THE DS
MATERIALS UNDER THE CRYPTO iBUTTON SERVICE PROVIDER PROGRAM AGREEMENT.
B. CiBi WARRANTIES
CiBi hereby represents and warrants to DS as follows:
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(1) It warrants that all activities undertaken by it as a Crypto iButton
Service Provider, including any and all services offered or provided by it
under that designation, shall be provided with due care and skill, in
compliance with any and all applicable laws in the Territory and in a
manner which will not in any way, directly or indirectly, bring that
designation or any other designation, name or mark with which DS is
associated into disrepute. Without limitation to the foregoing, CiBi shall
in particular ensure that any end user complaint in respect of a CiBi
Product or service shall be dealt with in a reasonable manner. In this
regard CiBi shall be deemed to have acted reasonably in respect of any such
complaint if it responds promptly and in good faith to any such complaint
and assists DS to honor the terms and conditions of a Crypto iButton
License Agreement applicable to the DS Product or Crypto iButton which is
the subject of any such complaint.
(2) It hereby represents and warrants that the representatives of CiBi who
have signed this Agreement, or in the case of Electronic Approval, the CiBi
representatives who have signified CiBi's agreement and consent
electronically online, are the authorized representatives of CiBi duly
empowered to act on behalf of the CiBi and to legally bind the CiBi. CiBi
hereby further represents and warrants that it has reviewed thoroughly and
agrees to all components of this Agreement, including but not limited to,
the Country Annex, the Site Annex (if applicable), and the CiBi Program
Guide as it appears in the format applicable to CiBi either online at
http://www.iButton.com/CiBi/ and off-line in the applicable data file
download, or on paper as applicable. In addition, CiBi represents and
warrants that all information provided herein (1) during the online and
off-line contracting process, (2) in the CiBi application, and (3) in the
Agreement is true and correct.
13. EXCLUSION OF INCIDENTAL, CONSEQUENTIAL AND OTHER DAMAGES
IN NO EVENT WILL DS BE LIABLE TO YOU, YOUR COMPANY OR ANY OTHER PARTY FOR
DIRECT, INDIRECT, GENERAL, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES
ARISING FROM THE USE OF, OR INABILITY TO USE, THE DS MATERIALS OR FROM DS'S
BREACH OF THIS AGREEMENT, EVEN IF DS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
14. LIMITATION OF LIABILITY AND EXCLUSIVE REMEDY
THE ENTIRE LIABILITY OF DS UNDER ANY PROVISION OF THIS AGREEMENT, CIBI'S
EXCLUSIVE REMEDY AGAINST DS, SHALL BE LIMITED TO THE AMOUNT ACTUALLY PAID BY
CIBI FOR THAT UNUSED PORTION OF THE TERM OF THE CRYPTO iBUTTON SERVICE PROVIDER
MEMBERSHIP, EXCEPT FOR CLAIMS BASED ON DIRECT INFRINGEMENT OF THE CRYPTO iBUTTON
ON THE INTELLECTUAL PROPERTY OF ANOTHER PARTY.
15. U.S. GOVERNMENT RESTRICTED RIGHTS
All Products delivered to the U.S. Government other than the Department of
Defense on solicitations issued on or after December 1, 1995, shall be delivered
with commercial license rights only. All Products delivered to the Department of
Defense on solicitations issued on or after September 29, 1995, shall be
delivered with commercial license rights only. COMPANY shall be responsible for
ensuring that all Products delivered to the U.S. Government other than the
Department of Defense on solicitations issued prior to December 1, 1995, are
marked with the "Restrictive Rights" legend as set forth in FAR, 48 C.F.R.
52.227-19 (June 1987). COMPANY shall be responsible for ensuring that all
Products delivered to the Department of Defense on solicitations issued prior to
September 29, 1995, are marked with the "Restrictive Rights" legend as set forth
in FAR, 48 C.F.R. 252.227-7013 (October 1998). Manufacturer is Dallas
Semiconductor, 4401 South Beltwood Parkway, Dallas, Texas 75244-3292.
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16. EXPORT RESTRICTIONS
A) You may not export or reexport the DS Materials or any underlying
information or technology except in full compliance with all United States
and other applicable laws and regulations (currently including, but not
limited to the following countries Cuba, Iran, Iraq, Libya, North Korea,
Sudan and Syria).
B) You may not provide any Crypto iButton in any manner to any customer, or
end user whom CiBi or its customer knows or has reason to know will utilize
such Crypto iButton in the design, development or production of nuclear,
chemical or biological weapons, or to any end user who has been prohibited
from participating in U.S. export transactions by any federal agency of the
U.S. government.
NOTE: Cryptography technology is export-restricted by the Office of Export
Administration, United States Department of Commerce and the Office of Defense
Trade Controls and Munitions Control, United States Department of State
Certain versions of the Crypto iButton may be subject to the Arms Export Control
Act or other government export restrictions if it contains support for export-
restricted cryptography, even if the export-restricted cryptography itself is
not normally shipped with your application. For example, if your application
contains routines that call on the strong crypto capability of the iButton for
encryption, your application may be subject to the Arms Export Control Act or
other export regulations even though your application contains no actual
cryptographic code. Contact the Office of Defense Trade Controls for more
information: Office of Defense Trade Controls Bureau of Politico-Military
Affairs Department of State Washington, DC 20522-0602.
17. GENERAL
A. Except as otherwise provided, all notices, authorizations, and requests in
connection with this Agreement shall be in writing, at the addresses set forth
below or to such other address as the party to receive the notice so designates
by written notice to the other.
B. This Agreement shall constitute the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous communications including all prior and current Crypto iButton
Service Provider Agreements. Except as otherwise provided herein, this Agreement
shall only be amended in writing or through the electronic display of the
amended Agreement. CiBi shall indicate acceptance of any amendments in the
manner identified in Section 17(J).
C. This Agreement shall be governed by the laws of the Territory in which CiBi
has its principal place of business. If the CiBi has its principal place of
business within the United States, this Agreement shall be governed by the laws
of the State of Texas.
D. If a particular provision of this Agreement is terminated or held by a
court of competent jurisdiction to be invalid, illegal, or unenforceable, this
Agreement shall remain in full force and effect as to the remaining provisions.
E. No waiver of any breach of any provisions of this Agreement shall
constitute a waiver of any prior, concurrent, or subsequent breach of the same
or any other provisions hereof, and no waiver shall be effective unless made in
writing and signed by an authorized representative of the waiving party.
F. Neither this Agreement, nor any terms and conditions contained herein,
shall be construed as creating a partnership, joint venture, franchise or agency
relationship.
G. The CiBi agrees that it shall inform its customers that the CiBi is an
independent business from DS, and shall
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not hold itself out as an agent of DS, or attempt to bind DS to any third party
agreement.
H. Sections 6, 7F, 8, 11, 12, 13, 14, 15 and 16 shall survive the expiration
or earlier termination of this Agreement.
I. This Agreement, and any rights or obligations hereunder, shall not be
assigned, or sub-contracted by the CiBi, without DS' prior written consent.
FOR ANY NEWLY ENROLLING CiBi, TO AGREE TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO, THE SITE ANNEX (IF APPLICABLE), THE
COUNTRY ANNEX, THE CiBi PROGRAM GUIDE AND ANY OTHER APPLICABLE ANNEXES AND
ADDENDA, AN AUTHORIZED REPRESENTATIVE OF THE CiBi MUST COMPLETE ALL REQUIRED
INFORMATION AND SIGN, DATE, AND RETURN TO DS A SIGNED COPY OF THIS AGREEMENT AND
THE SITE ANNEX (IF APPLICABLE) TOGETHER WITH A PAYMENT FOR THE APPROPRIATE FEES.
J. FOR ANY RENEWING CiBi, CiBi'S ACCEPTANCE OF ANY AMENDED TERMS OF THE
AGREEMENT MAY BE INDICATED BY ELECTRONIC ACCEPTANCE AND APPROPRIATE FEES AND THE
SITE ANNEX (IF APPLICABLE). IF ELECTRONIC ACCEPTANCE IS NOT RECOGNIZED AS A
VALID MEANS OF ACCEPTANCE IN THE TERRITORY OR IF THE CAPABILITIES OF THE ONLINE
CONTRACTING PROCESS IN CiBi'S TERRITORY ARE LIMITED IN SCOPE, CiBi MUST RETURN A
SIGNED AGREEMENT, THE APPROPRIATE FEES AND THE SITE ANNEX (IF APPLICABLE) TO DS.
NOTE THAT NO BINDING AGREEMENT IS FORMED UNTIL A DS' APPOINTED
REPRESENTATIVE HAS AFFIXED THEIR SIGNATURE BELOW AND THEREBY APPROVED CiBi
AS A CRYPTO iBUTTON SERVICE PROVIDER. IN ADDITION, NOTE THAT NEITHER THE
CASHING OF THE CiBi'S CHECK, NOR ACCEPTANCE OF PAYMENT OF FEES IN ANY
MANNER WHATSOEVER, SHALL BE CONSIDERED "ACCEPTANCE" OF THESE AGREEMENTS BY
DS. DS' APPROVAL SHALL BE INDICATED BY DS' AUTHORIZED REPRESENTATIVE
AFFIXING THEIR SIGNATURE BELOW OF WHICH A COPY OF THIS, PROPERLY EXECUTED,
AGREEMENT SHALL BE SENT TO A NEW OR RENEWING CiBi.
For newly enrolling CiBis and for any renewing CiBis in a Territory which
does not recognize Electronic Acceptance, your signature below indicates
your acceptance of the terms and conditions.
K. INDEMNITY. WHEN ANY OF CiBi'S PRODUCTS ARE USED WITH ANY LICENSED CRYPTO
iBUTTON OR DS PRODUCT SOLD UNDER THIS AGREEMENT, CiBi AGREES TO DEFEND,
INDEMNIFY AND HOLD HARMLESS DS, ITS SUCCESSORS AND PARENTS, SUBSIDIARIES AND
AFFILIATES AND THEIR EMPLOYEES, OFFICERS AND DIRECTORS, FROM AND AGAINST ANY
LOSS, DAMAGE, COSTS, OR EXPENSES (INCLUDING REASONABLE ATTORNEY'S FEES), ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE OF THE SERVICES OR PRODUCT
PROVIDED BY CiBi OR CiBi'S (OR ANY OF ITS AGENTS OR EMPLOYEES) ACTS OR OMISSIONS
IN CONNECTION WITH THIS AGREEMENT, EXCLUDING CLAIMS BASED ON DIRECT INFRINGEMENT
OF THE CRYPTO iBUTTON ON THE INTELLECTUAL PROPERTY OF ANOTHER PARTY.
--KEEP THIS AGREEMENT FOR YOUR RECORDS--
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COUNTRY ANNEX
CRYPTO iBUTTON SERVICE PROVIDER AGREEMENT
CiBi
The terms and conditions set forth herein are incorporated by reference into the
Crypto iButton Service Provider Agreement. To the extent any terms set forth in
this Country Annex are in conflict with the Core Terms and Conditions, the terms
set forth herein shall govern.
DALLAS SEMICONDUCTOR ENTITY:
TERRITORY:
For the purposes of this Agreement, the Territory shall be the country in which
the CiBi is located. NOTWITHSTANDING THE FOREGOING, IF AN CiBi IS A MEMBER OF
THE EUROPEAN UNION OR THE EUROPEAN FREE TRADE ASSOCIATION, ITS TERRITORY SHALL
BE DEEMED TO BE BOTH THE EUROPEAN UNION AND THE EUROPEAN FREE TRADE ASSOCIATION.
Notwithstanding the foregoing, if an CiBi is located in the United States or
Canada, its Territory shall be deemed to be both the United States and Canada.
As used herein, "United States" shall mean the continental states and Hawaii and
Alaska.
COUNTRY SPECIFIC LEGAL TERMS
1. UNITED STATES AND CANADA: The terms and conditions set forth below
shall be added and shall only apply to the Agreement in force in the United
States and Canada:
SECTION 17(J): A new subsection (J) is added to Section 17 as
follows:" It is the express wish of the parties that this Agreement
and all related documents be drawn up in English. C'est la volente
expresse des parties que la presente convention ainsi que les
documents qui s'y rattachent soient rediges en anglais."
*******
2. AUSTRALIA: The terms and conditions set forth below shall be added and
shall only apply to the Agreement in force in Australia:
SECTION 2: The following sentence is added to the end of this
Section:" It is an added condition of this Agreement that CiBi comply
at all times for the duration of this Agreement with all criteria for
the appointment of Crypto iButton Service Providers issued from time
to time by DS and in particular, without limitation, any criteria as
to net revenue flowing to DS arising out of CiBi's appointment
hereunder. Additionally, all Sites must meet those same criteria for
the appointment of Crypto iButton Service Providers."
SECTION 12 A: The following sentence is added after the second
sentence of this Section: "TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, SUBJECT TO SECTION 7 AND
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ADDITIONALLY TO ANY PROVISION OF THIS AGREEMENT, THE LIMITED
WARRANTIES GIVEN BY DS IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU
OF ALL OTHER WARRANTIES AND CONDITIONS WHATSOEVER, WHETHER EXPRESS,
IMPLIED OR STATUTORY."
SECTION 17: A new subsection (J) is added at the end of Section 17:
Notwithstanding Sections 12A and 14 or any other provision of this
Agreement, if anything arising out of or connected with this Agreement
constitutes a supply of goods or services to a consumer, then Company
may have the benefit of certain rights or remedies pursuant to the
Trade Practices Act and similar state and territory laws in Australia,
in respect of which liability may not be excluded or restricted and
nothing in this Agreement will have the effect of so excluding or
restricting those rights or remedies. Insofar as such liability may
not be excluded, then to the maximum extent permitted by law such
liability is limited, at DS' exclusive option, in the case of
Services, either by supplying the services again or the payment of the
cost of having the services supplied again and in the case of goods,
to either (a) replacement of the goods; or (b) correction of defects
in the goods.
SECTION 17: A new subsection (J) is added at the end of Section 17:
NOTHING IN THIS AGREEMENT IS INTENDED TO PREJUDICE, OR HAVE THE EFFECT
OF PREJUDICING, ANY RIGHTS CIBI MAY HAVE UNDER AUSTRALIAN LAW OR OF
THE STATES OF AUSTRALIA WHICH CANNOT LEGALLY BE EXCLUDED OR RESTRICTED
AND THE TERMS OF THIS AGREEMENT MUST BE READ ACCORDINGLY.
*******
3. PEOPLE'S REPUBLIC OF CHINA: The terms and conditions set forth below
shall be added and shall only apply to the Agreement in force in the
People's Republic of China.
SECTION 6(A): The following language is added at the end of Section
6(A): "As more fully described in the Branding Policy, CiBi shall be
obliged to comply with all recorded formalities as a trademark
licensee under the applicable laws of the People's Republic of China."
SECTION 12: A new subsection (C) is added at the end of Section 12:
"CiBi hereby represents and warrants to DS at the time of the
execution of this Agreement and during the term of this Agreement:
(1) It is validly established as an enterprise legal person under
the laws of the People's Republic of China;
(2) It has been issued a business license which will be valid
throughout the term of this Agreement;
(3) The scope of business set forth on its business license is
consistent with the activities which it will undertake under this
Agreement;
(4) It has been established with sufficient registered capital to
assume the obligations set out under this Agreement;
(5) It has authority to directly enter into and perform foreign
economic contracts;
(6) Its legal representative or a person validly authorized in
writing by the legal representative has signed this Agreement,
and
(7) Each of the foregoing representations and warranties are true
in respect of any Affiliate which will
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provide a Site.
SECTION 17(C): The following is added between the first and second
sentences of this Section: "This Agreement will be governed by the
laws of the People's Republic of China. If a dispute arises in
connection with the interpretation or implementation of this
Agreement, either party may submit the dispute for arbitration to
Beijing Arbitration Commission (the "Arbitration Commission") for
arbitration in accordance with the rules of arbitration of such
Arbitration Commission. The place of arbitration will be Beijing, the
People's Republic of China. The arbitration proceeding shall be
conducted in English. The arbitral award will be final and binding on
both parties. If either DS or CiBi employs attorneys to enforce any
rights arising out of or relating to this Agreement, the prevailing
party will be entitled to recover reasonable costs and attorneys'
fees.
SECTION 17(D): The following is added at the end of this Section:
"Without limiting the generality of the foregoing, the parties hereby
agree that in the event of any dispute concerning the enforceability
of this Agreement, Section 3 of this Country Annex and Section 12(C)
shall be interpreted as an independent agreement between the parties."
* * * * * * *
3. INDONESIA
SECTION 3A NEW SUBSECTION (F) SHALL BE ADDED AS TO THIS SECTION:
To the extent necessary to implement the termination provisions of
this Agreement, each of the parties hereby waives any right or
obligation, it or the other party may have under any applicable law or
regulation, including without limitation Section 1266 of the
Indonesian Civil Code, to request or obtain the approval, order,
decision or judgment of any court to terminate this Agreement.
SECTION 17: The following language shall be added as subsection 17(J):
"It is the express wish of the parties that this Agreement and all
related documents be drawn up in English."
* * * * * * *
4. NEW ZEALAND: The terms and conditions set forth below shall be added
and shall only apply to the Agreement in force in New Zealand:
SECTIONS 12 AND 14: Sections 12 and 14 shall only apply to the extent
permitted by law.
A new paragraph C shall be added to Section 12:
"CiBi acknowledges that all DS Software, Services, Products and Crypto
iButtons under this agreement are provided for business purposes and
agrees that the Consumer Guarantees Act does not apply to their supply
by DS or acquisition by CiBi under this Agreement."
A new paragraph D shall be added to Section 12:
A. Where CiBi is providing DS Software, Services, Crypto iButtons or
Products (as applicable) to:
(1) a consumer acquiring them for business purposes (as that term
is defined in the Consumer Guarantees Act, 1993 ("Business
Purposes"); or
(2) a person who may, whether directly or indirectly, issue the
Crypto iButton, or sell DS Software, Services or DS Products to a
consumer acquiring them for Business Purposes;
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it must be a term of the CiBi's contract with that person that
either the Consumer Guarantees Act, 1993 ("CGA") does not apply
in respect of the Crypto iButton, DS Software, Services or DS
Products (as applicable) or, alternatively, that person will
ensure that an agreement is entered into with the end consumer of
the Crypto iButton, DS Software, Services or DS Products (as
applicable) to the effect that the CGA does not apply in respect
of such Crypto iButtons, Software, Services or Products.
Notices. All notices, requests or other communications required
-------
or permitted to be delivered hereunder shall be in writing, by
certified mail (return receipt requested), addressed to the
contact below:
<TABLE>
<CAPTION>
<S> <C>
CiBi Contact: Name: Rick Prime DS Contact: Brian M. Kraman
Title: Vice President, Finance Contracts Administrator
Company: E-Stamp Corporation Dallas Semiconductor
Address: 4009 Misanda Ave, Suite 225 4401 Beltwood Parkway
City, State, Zip Code: Palo Alto CA 99304-1218 Dallas, Texas 75244-3292
E-mail address: [email protected] [email protected]
</TABLE>
IN WITNESS WHEREOF, both parties have caused this Agreement to be signed and
delivered by its duly authorized representative on the dates set forth below to
be effective as of the Effective Date.
Crypto iButton Service Provider (CiBi): Dallas Semiconductor Corporation (DS)
X /s/ Sunir K. Kapoor X /s/ Michael Bolan
Printed Name : Sunir K. Kapoor Printed Name: Michael Bolan
Title: President & CEO Title: V P Marketing
Date: 8/21/98 Date: 8-20-98
14
<PAGE>
EXHIBIT 10.13
PREMIUM PARTNER WEBSITE MARKETING AGREEMENT
This Agreement (the "Agreement") is entered into and effective as of July 1 1999
(the "Effective Date"), by and between MICROSOFT CORPORATION ("Microsoft"), a
Washington corporation located at One Microsoft Way, Redmond, WA 98052-6399, and
E-STAMP CORPORATION, ("E-Stamp"), a Delaware corporation located at 2855 Campus
Drive, Suite 100, San Mateo CA 94403.
RECITALS
A. E-Stamp has developed technology approved by the United States Postal
Service for limited beta testing allowing consumers and businesses to
buy United States postage over the Internet and to print purchased
postage onto envelopes and other documents created with Microsoft
Office and other applications.
B. Microsoft maintains a Web site for Microsoft Office, the Microsoft
Office Update site, containing information and hyperlinks to goods and
services useful to consumers and businesses using Microsoft Office
applications.
C. E-Stamp wishes to be identified on the Microsoft Office Update Web site
as Microsoft's Premium online Postage Partner, and wishes for
Microsoft to display information about E-Stamp and its services on the
Office Update Web site, including placing hyperlinks from the Office
Update Web site back to E-Stamp's Web site.
NOW, THEREFORE; the parties agree as follows:
AGREEMENT
1. DEFINITIONS
1.1. "ACCOUNT MANAGER" means the individual assigned by each of the
parties to serve as that party's primary liaison with the other party
for purposes of administration of this Agreement during the Term of
Promotion.
1.2. "CONTENT" means any and all text, logos, artwork, graphics, pictures,
sounds, video, or other material, in any format whatsoever, supplied
by E-Stamp to Microsoft from time to time during the term of this
Agreement for purposes of promoting E-Stamp on the Office Site.
1.3. "E-STAMP COMPETITOR" means any business offering services pursuant to
the United States Postal Service's Information Based Indicia Program
(IBIP) for providing postage via the Internet or other Internet
postage-related services substantially similar to those provided by E-
Stamp.
1.4. "HOME PAGE" means the default Web Page displayed upon accessing
http://OfficeUpdate.Microsoft.com. or its functional equivalent.
1.5. "IMPRESSION" means the appearance of text, graphics, or other
material on an accessed Web Page.
1.6. "INTRODUCTORY PAGES" means the Web Pages created by Microsoft and
updated from time to time pursuant to this Agreement that are: (i) co-
branded with Microsoft and E-Stamp logos, (ii) contain certain
Content, (iii) the targets of Quicklinks and Promotions, and (iv)
contain prominent hyperlinks to the E-Stamp site on the World Wide Web
located at http://www.e-stamp.com, or its functional replacement, all
as more fully described in Exhibit A.
1.7. "LOGS" means the appropriate logs from the Web server(s) on which the
Office Update Site are hosted indicating the number of Impressions of
the Quicklinks on the Home Page and Product Pages, the Promotion, and
the Services Page Listings delivered during a specified time period.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
1
<PAGE>
1.8. "OFFICE SITES" means the group of Web Sites within the Microsoft.com
domain which showcase. market, and provide information about Microsoft
Office and its component applications, including, by way of example,
the Office Update Site.
1.9. "OFFICE UPDATE SITE" means the Web Site located at
http://OfficeUpdate.Microsoft.com or its functional replacement.
1.10."PRODUCT PAGES" means the Web Pages located on the Office Update
Site devoted to the software applications of which Microsoft Office is
composed, or their functional replacements, current examples of which
are welcomeWord.htm and welcomeExcel.htm.
1.11."PROMOTION" means the display and placement of certain Content, as
more fully described in Exhibit A.
---------
1.12."PROMOTIONAL IMPRESSION" means an Impression of a Promotion.
1.13."QUICKLINK IMPRESSION" means an Impression of a Quicklink delivered
from the Home Page or the Product Pages.
1.14."QUICKLINK" means the display and placement of hyperlinked text in a
certain region of a Web Page on the Office Update Site linking to an
Introductory Page, as more fully described in Exhibit A.
---------
1.15."SERVICES PAGE" means the Web page located at
http://OfficeUpdate.Microsoft.com/services.htm or its functional
replacement.
1.16."SERVICES PAGE LISTING" means the display and placement of
hyperlinked text in a certain region of the Services page, as more
fully described in Exhibit A.
---------
1.17."SERVICES PAGE LISTING IMPRESSION" means an Impression of a Services
Page Listing.
1.18."SPECIFICATIONS" means the specifications, mock-ups, and other
material attached as Exhibit A.
---------
1.19."TERM OF PROMOTION" means the period beginning on the date described
in Section
-------
2.1 and ending one (1) year thereafter, as may be renewed
pursuant to Section 9.1.
------- ---
1.20."WEB PAGE" means a document written in HTML or other industry
standard mark-up language made available via the Internet by server
software using HTTP to effect data transmission.
1.21."WEB SITE" means a collection of hyperlinked Web Pages.
2. MICROSOFT TO PROMOTE E-STAMP ON THE OFFICE UPDATE SITE
2.1. Commencement of Term of Promotion. The Term of Promotion shall
---------------------------------
commence on the later of (i) August 1, 1999; or (ii) thirty (30) days
following the date E-Stamp receives approval from the United States
Postal Service to participate in its Information Based Indicia Program
(IBIP) for providing postage via the Internet; provided, however, that
E-Stamp may waive such thirty-day period by providing Microsoft
written notice of its desire for the Term of Promotion to commence
earlier.
2.2. Promotion of E-Stamp. During the Term of Promotion, Microsoft shall
--------------------
promote E-Stamp by means of Quicklinks on the Home Page and the
Product Pages and any other Web Pages created by Microsoft on the
Office Sites that contain Quicklinks, and by means of Introductory
Pages, the Promotions, and the Services Page Listing created by
Microsoft, as described in the
2
<PAGE>
Specifications, and shall deliver the Impressions described in Exhibit
B. E-Stamp may request changes to the Specifications to maximize
click-through from time to time, and such requests shall be considered
by Microsoft's Account Manager in good faith. In promoting E-Stamp
during the Term of Promotion, Microsoft shall provide E-Stamp with
positioning and editorial content on the Office Sites more favorable
than that given to any E-Stamp Competitor. Without limiting the
foregoing, Microsoft shall allow E-Stamp to propose editorial content
and request editorial topics for the Office Update Site and shall not
post editorial content of any E-Stamp Competitor in an area of the
Office Update Site other than on pages similar to Introductory Pages
that Microsoft may provide to an E-Stamp Competitor.
2.3. Premium Partner Status. During the Term of Promotion, Microsoft shall
----------------------
(i) treat E-Stamp as a "Premium Partner" with respect to the Office
Update Site and (ii) not treat any E-Stamp Competitor as a "Premium
Partner" with respect to the Office Update Site. "Premium Partner"
status during the Term of Promotion shall be defined exclusively by
the provisions of this Section 2.3, as follows:
-----------
2.3.1. Press Releases. Microsoft agrees that any mention of E-Stamp
--------------
in press releases and customer communications will refer to E-
Stamp as a "Premium Partner."
2.3.2. Services Page. Microsoft shall provide E-Stamp with the
-------------
prominent on-line postage position on the Services Pages in
accordance with the Specifications and Exhibit B, and shall not
---------
allow any E-Stamp Competitor to occupy the same on-line postage
position.
2.3.3. Product Pages. Microsoft shall provide E-Stamp with the
-------------
Promotion areas indicated in the Specifications and shall provide
the Impressions of such Promotions described on Exhibit B.
---------
Further, Microsoft shall not sell to any E-Stamp Competitor more
than [***] percent [***] of eligible Impressions on the Product
Pages and shall not allow any E-Stamp Competitor to occupy the
large Promotion position on the Product Pages as indicated in the
Specifications.
2.3.4. Home Page. Microsoft shall provide E-Stamp with the largest
---------
promotional space (as measured in pixel area when displayed), the
small promotional space, and a Quicklink on the Home Page in
accordance with the Specifications and Exhibit B and shall not
---------
allow any E-Stamp Competitor to occupy any promotional spaces on
the Home Page or to have a Quicklink.
2.3.5. Enhanced Introductory Pages. Microsoft agrees that the
---------------------------
Introductory Pages provided to E-Stamp hereunder shall include
greater function and/or depth than Introductory Pages provided to
any E-Stamp Competitor pages. At such time as E-Stamp develops a
wholly software-based solution for on-line postage, E-Stamp shall
be allowed to link, market, and otherwise mention that solution
as a part of the Content on the Introductory Pages. Microsoft and
E-Stamp agree to discuss in good faith the possibilities for
integration of E-Stamp's software-only Internet postage service
(HTML version) into the Office Update Site once such service is
available. Microsoft agrees to offer any opportunities covered in
the previous sentence to E-Stamp prior to offering them to any E-
Stamp Competitor.
2.3.6. Possible Enhancements to Office Update Site. If Microsoft
-------------------------------------------
decides to include on the Office Update Site a Web Page or Pages
containing standard postage information ("Postage Information
Page(s)"), including by way of example postage rate information,
shipping zones, and zip code look-up functionality, and if
Microsoft further decides not to create the Postage Information
Page(s) itself, it will offer E-Stamp the opportunity to create
such co-branded Postage Information Page(s) before offering the
opportunity to any E-Stamp Competitor. Microsoft retains complete
discretion over whether to include Postage Information Page(s) on
the Office Update Sites, and, if so, whether to create the
Postage Information Page(s) itself. If Microsoft decides to
include an "Office Services"
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
3
<PAGE>
pull-down menu on the Home Page in accordance with the
Specifications, Microsoft shall include E-Stamp on such menu.
2.3.7. Additional Opportunities. If Microsoft decides to provide to
------------------------
an E-Stamp Competitor or other businesses which it deems "Premium
Partners" on the Office Update Site other benefits regarding the
Office Update Site, Microsoft shall offer such benefits to E-
Stamp as well on similar terms.
2.4. Provision of Content; Links; Most Favored Customer. In order to
--------------------------------------------------
facilitate Microsoft's promotion of E-Stamp as provided in Section
2.2, E-Stamp shall provide the Content to Microsoft and shall
supplement and update the Content from time to time as requested by
Microsoft or as submitted by E-Stamp. Subject to the placement
required by Section 2.3 and the Specifications, all Content shall be
-----------
subject to approval by Microsoft prior to inclusion in any Office
Site, and the inclusion, placement, type and position of Content,
hyperlinks, and other material or elements of any type whatsoever on
the Office Sites shall be at Microsoft's reasonable discretion to
promptly accept or reject. During the Term of Promotion, E-Stamp shall
use reasonable efforts to ensure that all URLs to which Microsoft
provides a hyperlink are functional and accessible at all times.
Microsoft may test E-Stamp's URLs, and in Microsoft's reasonable
discretion may remove any hyperlink that fails to comply with the
requirements of this Section 2.4. Microsoft will make commercially
------------
reasonable attempts to notify E-Stamp of any broken hyperlinks and
allow E-Stamp the opportunity to correct the broken hyperlinks before
removing them from the Office Sites. E-Stamp shall further ensure
that, during the term of this Agreement, E-Stamp will offer to
Microsoft customers using E-Stamp customer benefits equal to or better
than that which E-Stamp provides to other similarly situated customers
of other of its other similarly situated online partners. Without
limiting the foregoing, if E-Stamp offers any promotional or special
offers through any other similar distribution channels, E-Stamp will
offer similar services via the Office Update Site (the "Special
Offers"). Any Special Offers made available by E-Stamp will be no less
favorable, in any respect, than any special offers funded solely by E-
Stamp through any other online distribution channels.
2.5. Control of Web Sites. Microsoft retains sole right and control over
--------------------
the programming, content and conduct of the Office Sites. E-Stamp
acknowledges that Microsoft, in its discretion, periodically may make
changes to the organization, content, design, and features of the
Office Sites. Nothing in this Agreement shall prohibit such changes;
nor shall any such changes relieve E-Stamp from its payment
obligations under Section 5 of this Agreement; provided, however,
---------
Microsoft shall provide E-Stamp with advance notice of any change that
is, in Microsoft's reasonable discretion, likely to have a material
and adverse impact on the promotion of E-Stamp via any Office Site. In
the event of such changes, Microsoft shall substitute Web Pages
substantially similar to those that were affected by the change and
continue to deliver the Impressions listed on Exhibit B.
2.6. Logs: On-Line Access. Microsoft shall provide weekly reports to E-
--------------------
Stamp based on the Logs in the standard format customarily provided to
other businesses receiving similar promotion on the Office Sites.
Microsoft shall provide E-Stamp with a URL address and password to
gain access to an on-line Log reporting site operated by Microsoft.
Microsoft shall use commercially reasonable efforts to have the on-
line Log reporting site updated at the end of every business day with
respect to the prior business day's information, and to provide E-
Stamp with 24-hour-per-day and 7-day-per-week access to this reporting
site. The information available through the on-line reporting shall be
for preliminary reference purposes only and subject to amendment by
the reports delivered under this Section 2.6.
2.7. Account Managers. Each party shall appoint an Account Manager whose
----------------
responsibilities shall include monitoring the performance of
obligations under this Agreement. The parties' Account Managers shall
have regular communications to review each others' respective
performance under this Agreement, and to discuss any proposed changes
to Content, Web Pages, and Promotions that are the subject of this
Agreement.
4
<PAGE>
2.8. Impression Shortfall or Overage. Within ten (10) days of the last day
-------------------------------
of each quarter during the Term of Promotion, Microsoft shall provide
to E-Stamp a full report of the total number of Impressions (separated
to show Quicklink Impressions and Service Listing Impressions)
delivered by Microsoft to E-Stamp during such quarter.
2.8.1. Shortfall. If during any month during the term of this
---------
Agreement. Microsoft does not provide the total number of
Impressions set forth on Exhibit B in Sections B.1 and B.2, then
--------- ------------ ---
Microsoft shall, during the next month, deliver the required
total number of Impressions set forth in Sections B.1 and B.2,
plus the difference between the total number of Impressions in
Sections B.1 and B.2 and the number of Impressions delivered in
------------ ---
the month giving rise to the shortfall. If the total number of
Impressions delivered in any quarter is less than [***] then
Microsoft shall provide E-Stamp with a pro rata reimbursement for
fees paid for those Impressions not delivered.
2.8.2. Overage. Alternatively, if during any month during the term of
-------
this Agreement the total number of Quicklink Impressions and
Service Listing Impressions is greater than [***], E-Stamp
shall pay to Microsoft an additional US$[***] (the "Overage
Fee"). Microsoft shall provide E-Stamp with an invoice for all
Overage Fees on a quarterly basis. Along with such invoice,
Microsoft shall provide a report containing a description of the
Overage Fees incurred during that quarter. Any Overage Fee shall
be due within thirty (30) days of issuance of the invoice for
such Overage Fee.
2.9. Purchase of Additional Promotional Impressions. If at any time during
----------------------------------------------
the term of this Agreement, Microsoft has an opportunity on the Home
Page or Product Pages, or on other Web Pages within the Office Update
Site, to make available additional Promotional Impressions, or
additional Quicklinks, Microsoft agrees that E-Stamp shall be offered
the right to purchase those Impressions or Quicklinks before any right
of purchase is offered to any E-Stamp Competitor; provided, however,
that E-Stamp's right to purchase under this Section 2.9 shall not
-----------
allow E-Stamp to purchase more than [***] percent ([***])% of total
Promotion Impressions for these pages.
3. LICENSE GRANTS
3.1. To the extent Content contains or constitutes a trademark, service
mark, or other similar intellectual property (a "Mark"), E-Stamp
hereby grants to Microsoft a non-exclusive, non-transferable, royalty-
free, worldwide right and license to use and display such Mark solely
for purposes of inclusion of such Mark on the Office Sites to carry
out the intentions of this Agreement.
3.2. To the extent that Content contains or constitutes copyrightable or
copyrighted material, E-Stamp further hereby grants Microsoft a non-
exclusive, non-transferable, royalty-free, worldwide right and license
to use, copy, publicly perform, reformat, convert, display, and
transmit any such Content provided by E-Stamp solely for purposes of
inclusion of such Content on the Office Sites to carry out the
intentions of this Agreement. In carrying out its obligations under
this Agreement, Microsoft shall use the Marks and the Content solely
in the manner approved by E-Stamp.
4. OWNERSHIP
4.1. Except as licensed to Microsoft under the terms of this Agreement, E-
Stamp retains all right, title, and interest in and to the Content and
the Marks. Microsoft retains all right, title, and interest in and to
the Office Websites and any portion thereof, excluding the Content.
Individual customer information collected by either party on its
respective Web Sites shall be the sole property of such party and
shall not be used by the other party for any reason.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
5
<PAGE>
5. PAYMENT TERMS
5.1. E-Stamp shall pay to Microsoft US$[***] as follows: E-Stamp shall
pay to Microsoft US$[***] within [***] of the commencement of the Term
of Promotion, shall pay to Microsoft US$[***] on or before [***]
following the commencement of the Term of Promotion; shall pay to
Microsoft US$[***] on or before [***] following the commencement of
the Term of Promotion; and shall pay to Microsoft US$[***] on or
before [***] following the commencement of the Term of Promotion.
6. CONFIDENTIALITY
6.1. Each party shall keep confidential and not disclose to any third
party the terms of this Agreement and all non-public information,
know-how and materials (collectively, "Confidential Information")
provided by one party to the other pursuant to this Agreement;
provided, however, that either party may disclose the terms of this
Agreement (i) in confidence to its immediate legal and financial
consultants and advisors as required in the ordinary course of such
party's business, or (ii) as necessary to comply with applicable law
or stock exchange rules, pursuant to the good faith advice of legal
counsel (provided that with respect to disclosures to be made in a
court or regulatory proceeding, the disclosing party shall give notice
of such process or requirement and give the other party the
opportunity to file for a protective order). Each party agrees to use
any Confidential Information provided to it only in its performance
hereunder.
6.2. All tangible materials containing Confidential Information
("Confidential Materials"), including without limitation documents,
tapes, computer disks and other fixed storage devices (whether or not
machine or user readable), are the property of the party making
disclosure of the Confidential Information contained therein. Upon
expiration or earlier termination of this Agreement, Confidential
Materials (and all copies thereof) belonging to one party in the other
party's possession must be returned or destroyed, at the option of its
owner. If Confidential Materials are destroyed, a certificate of
destruction must be provided promptly upon request to their owner.
7. WARRANTIES
7.1. E-Stamp Warranties. E-Stamp represents, warrants, and covenants that:
------------------
7.1.1. E-Stamp has the power and authority to enter into and perform
its obligations under this Agreement; and,
7.1.2. The Content provided by E-Stamp hereunder is provided in
compliance with applicable laws and shall not infringe the
copyrights, trademarks, service marks or any other proprietary
right of any third party.
7.2. Microsoft Warranties. Microsoft represents, warrants, and covenants
--------------------
that:
7.2.1. Microsoft has the power and authority to enter into and
perform its obligations under this Agreement; and,
7.2.2. The Office Sites provided by Microsoft hereunder are provided
in compliance with applicable laws and shall not infringe the
copyrights, trademarks, service marks or any other proprietary
right of any third party.
8. INDEMNITY
8.1. Indemnification by E-Stamp. E-Stamp agrees to indemnify, defend, and
--------------------------
hold Microsoft and Microsoft's affiliates, successors, officers,
directors and employees harmless from any and all actions, causes of
action, claims, demands, costs, liabilities, expenses (including
reasonable
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
6
<PAGE>
attorneys' fees) and damages arising out of or in connection with any
claim made by a third party which, if true, would be a breach by E-
Stamp of its obligations under Section 7 or of any warranty set forth
---------
in this Agreement. E-Stamp may request that any or all allegedly
infringing Content be removed from the Office Sites at its sole
discretion, and, upon receipt of such request, Microsoft shall use
commercially reasonable efforts to remove such Content as soon as
possible.
8.2. Indemnification by Microsoft. Microsoft agrees to indemnify, defend,
----------------------------
and hold E-Stamp and E-Stamp's successors, officers, directors and
employees harmless from any and all actions, causes of action, claims,
demands, costs, liabilities, expenses (including reasonable attorneys'
fees) and damages arising out of or in connection with any claim made
by a third party which, if true, would be a breach by Microsoft of its
obligations under Section 7 or of any warranty set forth in this
---------
Agreement.
8.3. Mechanics of Indemnification: Removal of Alleged Infringing Content.
----------------------------
In connection with any claim or action described in this Section 8,
---------
the party seeking indemnification (i) shall give the indemnifying
party prompt written notice of the claim, (ii) shall cooperate with
the indemnifying party (at the indemnifying party's expense) in
connection with the defense and settlement of the claim, and (iii)
shall permit the indemnifying party to control the defense and
settlement of the claim, provided that the indemnifying party may not
settle the claim without the indemnified party's prior written consent
(which shall not be unreasonably withheld). Further, the indemnified
party (at its cost) may participate in the defense and settlement of
the claim. In the event that Microsoft receives a claim of
infringement alleging a breach of E-Stamp's obligations under Section
-------
7, Microsoft may, in addition to any other remedies provided for
-
herein, immediately remove any or all allegedly infringing Content
from the Office Sites or any other Microsoft site at its sole
discretion, pending receipt from E-Stamp of a non-infringing
replacement link or satisfactory resolution of the claim. Any such
removal shall not constitute a breach of this Agreement.
9. TERM AND TERMINATION
9.1. Term. The term of this Agreement shall commence as of the Effective
----
Date and shall remain in effect until the end of the Term of
Promotion, at which point the Agreement shall automatically renew,
subject to the agreement of the parties on modified payment terms and
number of Impressions. Microsoft agrees to negotiate in good faith
with E-Stamp to effect such renewal prior to negotiating with any E-
Stamp Competitor or any other third party for the provision of similar
services.
9.2. Termination without Cause. At any time ninety (90) days after the
Effective Date or later, either party may notify the other of its
intent to terminate this Agreement in such party's sole discretion
(i.e., for convenience). The effective date of such termination shall
be the date that is sixty (60) days from the date that the non-
terminating party receives written notice of termination from the
terminating party in accordance with the provisions of Section 11.1.
------------
9.3. Termination for Cause. Either party may suspend performance and/or
---------------------
terminate this Agreement immediately upon written notice at any time
in the event of an assignment pursuant to Section 11.6.1, or if the
--------------
other party is in material breach of any material warranty, term,
condition or covenant of this Agreement, and fails to cure that breach
within thirty (30) days after written notice thereof.
9.4. Effect of Termination. Neither party shall be liable to the other for
---------------------
damages of any sort resulting solely from terminating this Agreement
in accordance with its terms; provided, however, that (a) if E-Stamp
terminates under Section 9.3 for a material breach by Microsoft of the
-----------
Agreement, or (b) if Microsoft terminates under Section 9.2, or (c) if
-----------
Microsoft terminates under Section 9.3 because of an assignment by E-
-----------
Stamp as described in Section 11.6.1, E-Stamp shall be entitled to a
--------------
pro rata reimbursement of fees paid to Microsoft hereunder. Except as
provided in this Section 9.4,
-----------
7
<PAGE>
Section 2.8.1 or Section 11.6.1, E-Stamp shall not be entitled to any
------------- --------------
reimbursement of fees paid or any reduction in fees owed to Microsoft.
The parties agree that any portion of fees paid to Microsoft that
Microsoft retains pursuant to the previous sentence is fair and
reasonable in connection with the transactions contemplated in this
Agreement, and that actual damages in such case would be difficult, if
not impossible, to assess. Termination of this Agreement shall not
affect any other agreement between the parties, nor shall it affect
the obligation of E-Stamp to pay Microsoft any amounts that become due
on or before the effective date of termination.
10. LIMITATION OF LIABILITIES
10.1.IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL.
INDIRECT, INCIDENTAL, PUNITIVE OR SPECIAL DAMAGES WHATSOEVER,
INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF BUSINESS PROFITS.
BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE,
ARISING OUT OF THIS AGREEMENT, EVEN IN THE EVENT OF FAULT, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY, BREACH OF CONTRACT OR BREACH
OF WARRANTY AND EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.
11. GENERAL PROVISIONS
11.1.Notices. All notices and requests in connection with this Agreement
shall be deemed given as of the date they are received either by
messenger, delivery service, or in the United States of America mails,
postage prepaid, certified or registered, return receipt requested,
and addressed as follows:
<TABLE>
<CAPTION>
TO E-STAMP: TO MICROSOFT:
<S> <C>
E-Stamp Microsoft Corporation
2855 Campus Drive, Ste. 100 One Microsoft Way
San Mateo, CA 94403 Redmond, WA 98052-6399
Attention: Robert Ewald, President & CEO Attention: Group Manager - Office Update
Phone: (650) 554-8454 Phone: (425) 882-8080
Fax: (650) 554-8455 Fax: (425) 936-7329
Copy to: Legal Copy to: Legal
</TABLE>
or to such other address as a party may designate pursuant to this
notice provision.
11.2.Press Releases. The parties agree to issue a press release concerning
--------------
their relationship within ten (10) days of the Effective Date. The
content of this press release shall be mutually agreed upon by the
parties prior to release. Neither party shall issue any press release
or make any public announcement relating in any way whatsoever to this
Agreement or the relationship established by this Agreement without
the express prior written consent of the other party, which consent
shall not be unreasonably withheld.
11.3.Independent Parties. Nothing in this Agreement shall be construed as
-------------------
creating an employer-employee relationship, a partnership, or a joint
venture between the parties. All persons employed by a party hereto in
the performance of services hereunder shall be under the sole and
exclusive direction and control of such party, and for no purpose
shall they be considered the employees of the other party. Each party
shall remain an independent contractor and shall be responsible for
and shall promptly pay all federal, state and local taxes, chargeable
or assessed with respect to its employees, including but not limited
to social security, unemployment, federal and state withholding, and
all other assessed taxes.
11.4.Governing Law. The laws of the State of Washington shall govern this
-------------
Agreement. Each party hereto shall comply, during the Term and at its
own expense, with all applicable federal, state and
8
<PAGE>
local laws, rules and regulations which may be applicable to such
party. Venue shall be exclusively in King County, Washington.
11.5.Attorneys' Fees. In any action or suit to enforce any right or remedy
---------------
under this Agreement or to interpret any provision of this Agreement,
the prevailing party shall be entitled to recover its costs, including
reasonable attorneys' fees.
11.6.Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of each party's respective successors and lawful assigns;
provided, however, that neither party may assign its rights under this
Agreement, in whole or in part, to any third party without the prior
written approval of the other party. The parties acknowledge that an
initial public offering of stock by E-Stamp shall not constitute an
assignment under this Section 11.6.
------------
11.6.1. Either party may, however, assign this Agreement (a) by
operation of law through a merger or consolidation, or (b)
to the purchaser of all or substantially all of such party's
business or assets to which this Agreement relates, and may
assign this Agreement to one of its majority-owned or
controlled subsidiaries if such subsidiary agrees in writing
to be bound hereby; provided, however, that in the event of
such assignment by E-Stamp under this Section 11.6.1 (y) E-
--------------
Stamp shall remain liable for all of its obligations
hereunder notwithstanding the foregoing and (z) Microsoft
shall have the right to terminate this Agreement with cause
under Section 9.3.
-----------
11.7.Force Majeure. Neither party shall be liable to the other under this
-------------
Agreement for any delay or failure to perform its obligations under
this Agreement if such delay or failure arises from any cause(s)
beyond such party's reasonable control, including by way of example
labor disputes, strikes, acts of nature, floods, fire, lightning,
utility or communications failures, earthquakes, vandalism, war, acts
of terrorism, riots, insurrections, embargoes, or laws, regulations or
orders of any governmental entity. Notwithstanding the foregoing, the
parties shall exercise due diligence to resume performance hereunder
as soon as commercially possible.
11.8.Construction. If for any reason a court of competent jurisdiction
------------
finds any of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement shall be enforced to the maximum
extent permissible so as to effect the intent of the parties, and the
remainder of this Agreement shall continue in full force and effect.
Failure by either party to enforce any provision of this Agreement
shall not be deemed a waiver of future enforcement of that or any
other provision. The parties and their respective counsel have
negotiated this Agreement.
11.9.Headings. The headings used in this Agreement shall be for the
--------
convenience of the parties only and shall not be considered in
interpreting or applying the provisions of this Agreement.
11.10. Additional Documents. The parties agree to execute such additional
--------------------
documents as may be necessary or desirable for the other party to
enforce its rights hereunder or otherwise to effectuate the purposes
of this Agreement.
11.11. Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall
constitute one instrument.
11.12. Entire Agreement. This Agreement shall not be effective until
----------------
signed by both parties. This Agreement, including the Exhibits,
constitutes the entire agreement between the parties with respect to
the subject matter hereof and merges all prior and contemporaneous
communications. In the event of any inconsistencies between the
Agreement and the Exhibits attached hereto, the Agreement shall
control. This Agreement may not be modified except by a written
agreement signed on behalf of E-Stamp and Microsoft by their
respective duly authorized representatives.
9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
duly authorized representatives as of the dates written below.
MICROSOFT CORPORATION E-STAMP, INC.
By: /s/ Jeff Olund By: /s/ Robert H. Ewald
Name (print): Jeff Olund Name (print): ROBERT H. EWALD
Title: Director Title: PRES. & CEO
Date: 7/14/98 Date: 7/8/99
10
<PAGE>
EXHIBIT A
SPECIFICATIONS
Home Page and Product Pages
- ---------------------------
The site home page is expected to be substantially similar to the following
mock-up:
[CHART OMITTED]
The large and small promotional areas, and the quicklinks area on the home page
are indicated above.
The Product Pages will follow the same basic layout, and have the same
promotional and quicklink areas.
11
<PAGE>
Services Page
- -------------
The Services Page is expected to be substantially similar to the following mock-
up:
[CHART OMITTED]
The Services Page Listing is indicated above.
12
<PAGE>
EXHIBIT B
IMPRESSIONS
B.1. IMPRESSIONS OF QUICKLINKS AND PROMOTIONS
B.1.1. [***] Impressions per month delivered from the Home Page, the
Product Pages, or any combination of these pages. As part of this
[***] Impressions, Microsoft shall provide:
B.1.1.1. [***] QuickLink Impressions per month delivered
from the Home Page, the Product Pages, or any
combination of these pages.
B.1.1.2. [***] Promotion Impressions per month delivered from
the Home Page.
B.1.1.3. [***] Promotion Impressions per month delivered from
the Product Pages.
B.2. IMPRESSIONS OF SERVICES LISTINGS
B.2.1. [***] Impressions per month delivered from the Services Page.
[***] Confidential treatment has been requested for the bracketed
portions. The confidential redacted portion has been omitted and
filed separately with the Securities and Exchange Commission.
13
<PAGE>
EXHIBIT 10.14
AMERICA ONLINE STRATEGIC MARKETING AGREEMENT
CONTRACT #: ____________________
AOL SALESPERSON: BETH HINTON
SALES COORDINATOR: DOREEN WOO CREDIT APPROVAL RECEIVED
DATE: NOVEMBER 13, 1998
ADVERTISER ADVERTISING AGENCY
Contact Person Ellen Perelman
Company Name E-Stamp Corporation
Address - Line 1 4009 Miranda Ave., Suite 225
Address - Line 2 Palo Alto, CA 94304-1218
Phone # 650-842-6475
Fax # 650-843-8078
Email [email protected]
SIC Code N/A
Advertiser IAB Category N/A
Description of Advertiser's Online Postal Services
Product/Service
BILLING INFORMATION
Send Invoices to (choose one): ADVERTISER [] Agency
Advertiser or Agency Billing E-Stamp Accounts Payable
Contact Person c/o Kim Funk
Company Name E-Stamp Corporation
Billing Address - Line 1 4009 Miranda Ave.
Billing Address - Line 2 Palo Alto, CA 94304-1218
Billing Phone # 650-842-4605
Billing Fax # 650-843-8078
Billing Email Address [email protected]
P.O.#, if applicable
PAYMENT. Advertiser shall make the following payments to AOL:
a. $[***] upon execution of this Insertion Order Agreement,
b. $[***] within thirty (30) days of the Display Start Date of the Phase I
Promotions (the "Phase I Launch"), $[***] within thirty (30) days of the
one month anniversary of the Phase I Launch and $[***] within thirty (30)
days of the two month anniversary of the Phase 1 Launch,
c. In the event that the Phase I-A Promotions are launched, $[***] within
thirty (30) days of the Display Start Date of the Phase 1-A Promotions (the
"Phase I-A Launch"), $[***] within thirty (30) days of the one month
anniversary of the Phase I-A Launch, and $[***] within thirty (30) days of
the two month anniversary of the Phase I-A Launch; and
d. In the event that the Phase II Promotions are launched, $[***] on the
Display Start Date of the Phase II Promotions (the "Phase II Launch"),
$[***] within thirty (30) days of the one month anniversary of the Phase
II Launch, $[***] within thirty (30) days of the two month anniversary of
the Phase II Launch, and $[***] within thirty (30) days of each of the
three month, four month, five month, six month, seven month and eight month
anniversaries of the Phase II Launch.
e. Except for the payments that are required pursuant to clause (a) above, at
least thirty days (30) prior to each of the foregoing due dates, AOL shall
provide Advertiser with an invoice for each such payment.
LATE PAYMENTS; WIRED PAYMENTS. All amounts owed hereunder not paid when due and
- -----------------------------
payable will bear interest from the date such amounts are due and payable at the
prime rate in effect at such time. With respect to each of the foregoing
payments, if Advertiser does not make such payment within fifteen (15) days
after such payment is due, AOL shall have the right to cease placement of the
Advertisements until such time as payment is made, and if Advertiser does not
make such payment within thirty (30) days after such payment is due, then in
addition to any other remedies AOL may have to enforce the terms of this payment
provision, AOL shall have the right to terminate this Insertion Order Agreement.
All payments required hereunder will be paid in immediately available, non-
refundable U.S. funds wired to the "America Online" account, Account Number
323070752 at The Chase Manhattan Bank, 1 Chase Manhattan Plaza, New York, NY
10081 (ABA: 021000021). If AOL exercises its right to cease placement of the
Advertisements or terminate this Insertion Order Agreement as a result of
Advertiser's non-payment, Advertiser shall be obligated to pay (i) the
specific amounts payable hereunder that are past due at such time as AOL
ceases placement of the Advertisements or terminates this Insertion Order
Agreement, which are attributable to the Impressions delivered by AOL up to
the time of cessation or termination, and (ii) in the event that Advertiser
does not make payment within forty five (45) days of the payment dates
specified above, the specific amounts which become due and payable in the
fifteen (15) day period subsequent to cessation of the Advertisements.
INVENTORY TYPE (CHOOSE ONE):
[] AOL SERVICE ONLY [] AOL AFFILIATE ONLY (E.G.AOL.COM)
[] AOL SERVICE & AOL AFFILIATE
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
<PAGE>
AOL SERVICE
INVENTORY
<TABLE>
<CAPTION>
DISPLAY DISPLAY # OF AD
AOL INVENTORY/DEMOGRAPHIC* START STOP AD TYPE SLOTS TOTAL GROSS TOTAL ESTIMATED
PURCHASED DATE DATE PURCHASED PRICE IMPRESSIONS
<S> <C> <C> <C> <C> <C> <C>
PHASE I PROMOTIONS (Please
see Exhibit A, Section 1 for additional
details)
[***] Banners $[***] [***]
See See (234x60)
Exhibit Exhibit (175 x 45)
A, A,
Section Section
1 1
TOTAL: $[***] [***]
PHASE I-A PROMOTIONS
[***] Banners $[***] [***]
See See (234x60)
Exhibit Exhibit (175 x 45)
A, A,
Section Section
1 1
TOTAL $[***] [***]
PHASE II PROMOTIONS
[***] Banner N/A N/A
See See (120x60),
Exhibit Exhibit Permanent
A, A, Placement
Section Section
1 1
[***] " " Banner $[***] [***]
(175 x 45)
[***] " " Banner $[***] [***]
(234 x 60)
[***] " " Banner $[***] [***]
(175 x 45)
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C><C> <C> <C>
[***] " " Banner $[***] [***]
(234 x 45)
[***] " " Banners $[***] [***]
(234 x 60)
(197 x 140)
[***] " " Banner $[***] [***]
(234 x 60)
[***] " " Banner $[***] [***]
(468 x 60)
[***] " " Banner $[***] [***]
(468 x 60)
[***] " " Banner $[***] [***]
(468 x 60)
TOTAL $[***] [***]
* Attach completed AOL Demographic PHASE I, I-
Profile Worksheet A, AND II
TOTALS: $[***] [***]
</TABLE>
AOL AFFILIATE [***]
Inventory
<TABLE>
<CAPTION>
AOL INVENTORY/DEMOGRAPHIC* DISPLAY DISPLAY # OF AD TOTAL TOTAL
PURCHASED START STOP AD TYPE SLOTS GROSS IMPRESSIONS
DATE DATE PURCHASED PRICE
<S> <C> <C> <C> <C> <C> <C>
PHASE II PROMOTIONS
[***] [***] [***] Banners $[***] [***]
(234 x 60)
(175 x 45)
[***] Banner $[***] [***]
(234 x 60)
* See attached package description for TOTALS: $[***] [***]
any AOL.com package purchases
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
3
<PAGE>
Art for Service and All Affiliate
All necessary artwork and active URL's must be provided by advertiser 3 business
days prior to start date.
Advertiser will provide the list of zip codes at least 7 business days prior to
the start date.
ARTWORK REQUIRED FROM ADVERTISER/AGENCY:
----------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
[_] 468x60/10k Max/animation [_] 234x60/10k Max/static [_] 197 x 40/10k Max/static
[_] 175 x 45/10k Max/static [_] 120x60/5k Max/static
</TABLE>
LINKING URL: THE HTTP/URL ADDRESS TO BE CONNECTED TO THE ADVERTISEMENT SHALL BE
______________ (the "Advertiser Site").
* STATIC BANNERS ONLY, NO ANIMATION *
PLEASE SEND ARTWORK AND URL TO (CHOOSE ONE):
[ ] [email protected]
------------------
Advertising Purchase Summary
<TABLE>
<CAPTION>
TOTAL PRICE TOTAL IMPRESSIONS CPM
<S> <C> <C> <C>
AOL Networks $[***] [***] $[***]
[***] $[***] [***] $[***]
Total Purchase Price $[***] (subject to [***] (subject to adjustment as
adjustment as provided in provided in Section 2 of Exhibit A)
Section 2 of Exhibit A)
(Less Agency Discount) N/A N/A
NET PURCHASE PRICE TOTAL IMPRESSIONS
[***] [***] $[***]
</TABLE>
IMPRESSIONS COMMITMENT. During the term hereof, AOL will make reasonable efforts
- ----------------------
to deliver Impressions evenly throughout the term. Any guarantees are to
impressions, not "click-throughs." In the event there is (or will be in AOL's
reasonable judgment) a shortfall in Impressions as of the end of a display
period (a "Shortfall"), such Shortfall shall not be considered a breach of this
Insertion Order Agreement by AOL: instead, subject to the reasonable approval of
Advertiser, AOL will provide Advertiser, as its sole remedy, with comparable
"makegood" Impressions through "run of service" advertisement placements on the
AOL Service which have a total value, based on AOL's then-current advertising
rate card, equal to the value of the Shortfall. To the extent Impression
commitments are identified without regard to specific placements, such
placements will be as mutually agreed upon by AOL and Advertiser during the
course of the display period. AOL reserves the right to (i) alter Advertiser
flight dates to accommodate trafficking needs or other operational needs and
(ii) cancel any advertising flight in the event of a material change to the
nature or content of the site linked to the Advertisements. In such cases, AOL
will make available to Advertiser reasonably equivalent flight(s). From time to
time during the term hereof, to the extent that Advertiser shall so desire, AOL
and Advertiser shall mutually agree upon a reallocation of the Advertising
placements provided hereunder (and the equivalent Impressions related to such
placements) (except for permanent placements provided herein). For the purposes
hereof, an "Impression" shall mean a user viewing of the applicable
Advertisement, as reasonably determined and measured by AOL in accordance with
its standard and generally applicable methodologies and protocols.
ADDITIONAL PROVISIONS. This Insertion Order Agreement incorporates by reference
- ---------------------
the provisions of Exhibit A, Exhibit B, Exhibit C and Exhibit D attached hereto,
which contain additional terms and conditions related to the display of the
Advertisements.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
4
<PAGE>
AUTHORIZED SIGNATURES
In order to bind the parties to this Insertion Order Agreement, their duly
authorized representatives have signed their names below on the dates indicated.
This Insertion Order Agreement (including Exhibit A, Exhibit B, Exhibit C and
Exhibit D) shall be binding on both parties when signed on behalf or each party
and delivered to the other party (which delivery may be accomplished by
facsimile transmission of the signature pages hereto).
AOL ADVERTISER
By: /s/ David M. Colburn By: /s/ Sunir K. Kapoor
(signature) (signature)
Print Name: DAVID M. COLBURN Print Name: SUNIR K. KAPOOR
Title: Svp, BUSINESS AFFAIRS Title: PRESIDENT & CEO
(Print or Type) (Print or Type)
Date: 11/17/98 Date: 11/30/98
5
<PAGE>
EXHIBIT A
---------
1. DISPLAY START/DISPLAY STOP DATES.
--------------------------------
a. Phase I Promotions. The Display Start Date for the Phase I Promotions
------------------
shall be the later to occur of January 1, 1999 or the date on which
Advertiser provides a notice to AOL containing a representation by
Advertiser that Advertiser has obtained all necessary permits,
licenses or other authorizations from the United States Postal Service
(the "USPS") which permits Advertiser to conduct a beta test of the
Advertiser Product (the "Authorization Date"), and the Display Stop
Date shall be three (3) months from the Display Start Date. Provided,
however, that if the Authorization Date does not occur by February 1,
1999, AOL shall have the right to terminate this Insertion Order
Agreement in which event neither party will have any further
obligation or liability of any kind (other than any liability incurred
by either party prior to such date) to the other party (including
without limitation, any obligation to pay any fees hereunder other
than any payments required to be paid on the execution date hereof).
In the event that AOL terminates this Insertion Order Agreement
pursuant to this Section 1(a), AOL shall provide Advertiser with
Impressions through "run of service" advertisement placements on the
AOL Service (which placements shall be subject to Advertiser's
reasonable approval) which have a total value equal to the payments
required to be paid on the execution date hereof.
b. Phase I-A Promotions. Except as otherwise provided in Section 2 of
---------------------
this Exhibit A, the Display Start Date of the Phase I-A Promotions
shall be the day immediately following the Display Stop Date of the
Phase I Promotions, and the Display Stop Date shall be three (3)
months from the Display Start Date.
c. Phase II Promotions. Except as otherwise provided in Section 2 of this
--------------------
Exhibit A, the Display Start Date of the Phase II Promotions shall be
the day immediately following the Display Stop Date of either (i) the
Phase I Promotions or (ii) the Phase I-A Promotions, and the Display
Stop Date shall be nine (9) months from the Display Start Date.
2. PHASED ROLL-OUT OF PROMOTIONS. The Advertisements provided hereunder shall
-----------------------------
be provided by AOL in accordance with the Insertion Order provided above,
subject to the following:
a. At least thirty (30) days prior to the Phase I Promotions Display Stop
Date, Advertiser shall provide AOL with a written notice which shall
contain one or both of the following:
i. a representation by Advertiser that Advertiser has obtained all
necessary permits, licenses or other authorizations from the USPS
which permits Advertiser to advertise and offer for sale online
postal services (the "Advertiser Product") over the internet,
and/or
ii. an election by Advertiser to receive either (A) the Phase I-A
Promotions or (B) the Phase II Promotions. Provided, however,
that AOL shall not provide the Phase II Promotions unless and
until Advertiser makes the representation required pursuant to
Section 2(a)(i) of this Exhibit A. If Advertiser elects to
receive the Phase II Promotions pursuant to this Section
2(a)(ii), then the Display Start Date for such Promotions shall
be the day immediately following the Display Stop Date of the
Phase I Promotions and the Display Stop Date shall be nine (9)
months from the Display Start Date.
b. In the event that Advertiser notifies AOL that Advertiser wishes to
receive the Phase 1-A Promotions, (i) at least thirty (30) days prior
to the Phase I-A Display Stop Date, Advertiser shall provide AOL with
a written notice containing the representation required pursuant to
Section 2(a)(i) of this Exhibit A (unless Advertiser is unable to
provide such representation because it has not received the required
authorization from the USPS), and in such event, AOL shall provide
Advertiser with the Phase II Promotions or (ii) if prior to the end of
the Phase I-A Promotions Advertiser shall receive authorization from
the USPS to promote and sell the Advertiser Products, Advertiser shall
provide AOL with a written notice (provided at least fifteen (15) days
prior to the date on which Advertiser wishes to begin receiving the
Phase II Promotions), containing (A) the information required pursuant
to Section 2(a)(i) of this Exhibit A, and (B) an election by
Advertiser to receive the Phase II Promotions (unless Advertiser is
unable to provide such representation because it has not received the
required authorization from the USPS. If Advertiser receives the Phase
II Promotions pursuant to this Section 2(b)(i), then the Display Start
Date for such Promotions shall be the day immediately following the
Display Stop Date of the Phase 1-A Promotions and the Display Stop
Date shall be nine (9) months from the Display Start Date, and if
Advertiser receives the Phase II Promotions pursuant to this Section
2(b)(ii), then the Phase I-A Promotions shall cease fifteen (15) days
after receipt of the notice by AOL and the Display Start Date for the
Phase II Promotions shall be the day immediately following the end of
the Phase I-A Promotions and the Display Stop Date shall be nine (9)
months from the Display Start Date. Notwithstanding the foregoing, if
Advertiser does not provide AOL with a written notice containing the
representations required pursuant to Section 2(a)(i) of this Exhibit A
at least thirty (30) days prior to the Phase 1-A Display Stop Date,
AOL shall have the right to immediately terminate this Insertion Order
Agreement, in which event neither party will have any further
obligation or liability of any kind (other than any liability incurred
by either party prior to such date) to the other party (including
without limitation, any obligation to pay any fees hereunder other
than any payment obligations due and payable at the time of
termination).
6
<PAGE>
c. Notwithstanding anything otherwise contained herein, if Advertiser is
unable to, or does not provide AOL with a written notice containing
the representations required pursuant to Section 2(a)(i) of this
Exhibit A by June 30, 1999, either party shall have the right to
terminate this Insertion Order Agreement on no less than thirty (30)
days written notice to the other party, without any further obligation
or liability of any kind (other than any liability incurred by either
party prior to such date) to the other party on account of such
termination. In the event of such termination, Advertiser shall have
no further payment obligations under this Insertion Order Agreement
other than payment obligations due and payable at the time of
termination.
3. LAUNCH OF BUSINESS SERVICES: POSTAGE CATEGORY. In the event that AOL
---------------------------------------------
creates and launches the Business Services: Postage Category on the AOL
Service at any time prior to March 30, 1999, AOL shall provide Advertiser
with placement in such area at no additional cost to Advertiser.
Notwithstanding the foregoing, AOL shall not be obligated to provide
Advertiser with placements in such area prior to January 1, 1999.
4. CONTENT OF ADVERTISER SITE. The parties hereby expressly acknowledge that
--------------------------
Advertiser has purchased the Advertisements for the express purpose of
promoting the Advertiser Product. Therefore, the Advertisements will only
promote the Advertiser Product. Additionally, the Advertiser Site will only
offer the Advertiser Product and content related thereto. Advertiser will
ensure that except with respect to Advertiser Products sold through or in
conjunction with the USPS, the standard and/or recurring service fees for
the Advertiser Products in the Advertiser Site will not exceed the standard
and/or recurring fees for the Advertiser Products or substantially similar
products offered or funded by Advertiser through any other online
distribution channels, nor shall the standard terms and conditions (i.e.,
terms and conditions that are generally applicable to the Advertiser
Product and are not specifically created or designed to accompany special
or promotional offers) on which the Advertiser Products are offered be less
favorable than the standard terms and conditions on which the Advertiser
Products or substantially similar products are offered or funded by
Advertiser through any other online distribution channels. Additionally,
Advertiser will make reasonable efforts to ensure that traffic from the AOL
Service is either kept within the Advertiser Site or channeled back into
the AOL Service. The parties will work together on implementing mutually
acceptable links from the Advertiser Site back to the AOL Service.
5. SPECIAL OFFERS/MEMBER BENEFITS. If Advertiser shall offer any promotional
------------------------------
or special offers through any other distribution channels, Advertiser will
promote at least three (3) special or promotional offers to AOL users
through the AOL Service (the "Special Offers"). Any Special Offers made
available by Advertiser shall provide a substantial member benefit to AOL
users, either by virtue of a meaningful price discount, product
enhancement, unique service benefit or other special feature, and will be
no less favorable, in any respect, than any special offers funded solely by
Advertiser through any other online distribution channels. Advertiser will
provide AOL with reasonable prior notice of AOL Special Offers so that AOL
can market the availability of such Special Offers in the manner AOL deems
appropriate in its editorial discretion.
6. ADVERTISER PROMOTION OF AOL. Subject to Advertiser's existing contractual
----------------------------
agreements, within each of Advertiser's web sites on the World Wide Web
portion of the Internet, at the option of AOL, Advertiser shall include the
following (the "AOL Promo"): (i) a prominent promotional banner or button
having a size, prominence and placement location as mutually agreed upon by
the parties to promote such AOL products or services as AOL may designate
(for example, the America Online(R) brand service, the [***] brand service,
the AOL.com(R) site, any of the [***] services or the [***] service); or
(ii) a prominent "Try AOL" feature having a size, prominence and placement
location as mutually agreed upon by the parties, through which users can
obtain promotional information about AOL products or services designated by
AOL and, at AOL's option, download or order the then-current version of
client software for such AOL products or services. AOL will provide the
creative content to be used in the AOL Promos (including designation of
links from such content to other content pages). Advertiser shall use
reasonable efforts to post (or update, as the case may be) the creative
content supplied by AOL within the space for the AOL Promo within five days
of its receipt of such content from AOL. Without limiting any other
reporting obligations of the parties contained herein, Advertiser shall
provide AOL with monthly written reports specifying the number of
impressions to the pages containing the AOL Promo during the prior month.
In the event that AOL elects to serve the AOL Promo to the relevant
Advertiser web site from an ad server controlled by AOL or its agent,
Advertiser shall take all reasonable operational steps necessary to
facilitate such ad serving arrangement including, without limitation,
inserting HTML code designated by AOL on the pages of the Advertiser web
site on which the AOL Promo will appear. Advertiser shall be obligated to
fulfill the provisions of this Section 5 only to the extent that
Advertiser's compliance does not materially and adversely affect the
functionality or performance of Advertiser's web sites. To the extent that
the AOL Promo results in subscribers to the America Online brand service,
AOL will pay Advertiser a fee equal to AOL's standard bounty fees for
marketing relationships of this kind.
7. OPERATING STANDARDS. Advertiser will ensure that the Advertiser Site
--------------------
complies at all times with the operating standards attached hereto as
Exhibit B. In the event Advertiser fails to comply with AOL's operating
standards, AOL shall notify Advertiser of such non-compliance and AOL will
have the right to decrease or cease the placement of the Advertisements
pursuant to this Section 7 solely during such period of non-compliance (and
in such event, AOL will be relieved of the proportionate amount of any
Advertisement placement commitments made to Advertiser by AOL hereunder
corresponding to such decrease in placements). In the event that Advertiser
is unable to cure such non-compliance within five (5) business days after
the receipt of notice from AOL, AOL shall have the right to terminate the
Insertion Order Agreement as its sole remedy for such non-compliance.
Provided that, (i) to the extent that Advertiser's non-compliance relates
to its failure to optimize the Advertiser Site to accommodate any "quick
checkout" tool which AOL may implement, Advertiser shall have sixty (60)
business days to remedy its non-compliance, and (ii) Advertiser shall not
be obligated to accommodate any "quick checkout" tool to the extent that
Advertiser is prohibited by the USPS from doing so. In the event that AOL
decreases or ceases the placement of Advertisements pursuant to this
Section 7, Advertiser will be relieved of the proportionate amount of
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
7
<PAGE>
the total payments attributable to such Advertisements until such time as
AOL places such Advertisements, and if AOL terminates this Insertion Order
Agreement, Advertiser shall not be obligated to make any further payments
hereunder (except for such payments that are due and owing at the time of
termination).
8. BOUNTY. If during the term of this Insertion Order Agreement, customers who
-------
purchase the Advertiser Product as a result of the Advertisements and
remain an active customer of Advertiser for at least three (3) consecutive
months, as determined and measured by Advertiser in accordance with its
standard and generally applicable methodologies and protocols, shall exceed
[***], in addition to Advertiser's other payment obligations hereunder,
Advertiser shall pay to AOL $[***] for each customer in excess of [***]
customers.
9. FUNCTIONALITY OF ADVERTISER PRODUCT. In the event that any Advertiser
------------------------------------
Products (or any software associated therewith) that are promoted and sold
through the Advertisements result in a poor user experience for a
significant number of AOL users (e.g., incompatible software, unusable
software, software which contain bugs or viruses which substantially
reduces the usability of the Advertiser Product, or software which does not
perform the functions for which it is advertised), and provided that
Advertiser does not remedy such poor user experience within fifteen (15)
days after notice from AOL, AOL shall have the right to terminate this
Insertion Order Agreement upon thirty (30) days written notice to
Advertiser.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
8
<PAGE>
EXHIBIT B
---------
OPERATING STANDARDS
-------------------
1. Advertiser Site Infrastructure. Advertiser will be responsible for all
------------------------------
communications, hosting and connectivity costs and expenses associated with
the Advertiser Site. Advertiser will provide all hardware, software,
telecommunications lines and other infrastructure necessary to meet traffic
demands on the Advertiser Site from the AOL Network. In the event that
Advertiser elects to create a custom version of the Advertiser Site in
order to comply with the terms of this Insertion Order Agreement,
Advertiser will bear responsibility for all aspects of the implementation,
management and cost of such mirrored site.
2. Optimization: Speed. Advertiser will use commercially reasonable efforts to
-------------------
ensure that: (a) the functionality and features within the Advertiser Site
are optimized for the client software then in use by AOL users (including,
without limitation, any "quick checkout" tool which AOL may implement to
facilitate purchase of products by AOL users, provided that, prior to
optimizing the Advertiser Site to accommodate any such "quick checkout"
tool, the parties shall mutually agree upon the amount of time Advertiser
will need to perform such optimization); and (b) the Advertiser Site is
designed and populated in a manner that minimizes delays when AOL users
attempt to access such site.
3. User Interface. Advertiser will maintain a graphical user interface within
--------------
the Advertiser Site that is competitive in all material respects with
interfaces of other similar sites based on similar form technology.
4. Technical Problems. Advertiser agrees to use commercially reasonable
------------------
efforts to address material technical problems (over which Advertiser
exercises control) affecting use by AOL users of the Advertiser Site (a
"Advertiser Technical Problem") promptly following notice thereof. In the
event that Advertiser is unable to promptly resolve a Advertiser Technical
Problem following notice thereof from AOL (including, without limitation,
infrastructure deficiencies producing user delays), AOL will have the right
to regulate the advertisements it provides to Advertiser hereunder until
such time as Advertiser corrects the Advertiser Technical Problem at issue.
5. Monitoring. Advertiser will ensure that the performance and availability of
----------
the Advertiser Site is monitored on a continuous basis. Advertiser will
provide AOL with contact information (including e-mail, phone, pager and
fax information, as applicable, for both during and after business hours)
for Advertiser's principal business and technical representatives, for use
in cases when issues or problems arise with respect to the Advertiser Site.
6. Security. Advertiser will utilize Internet standard encryption technologies
--------
(e.g., Secure Socket Layer - SSL) to provide a secure environment for
conducting transactions and/or transferring private member information
(e.g. credit card numbers, banking/financial information, and member
address information) to and from the Advertiser Site. To the extent that
Advertiser has access to the Advertiser Site, Advertiser will facilitate
periodic reviews of the Advertiser Site by AOL in order to evaluate the
security risks of such site. Advertiser will promptly remedy any security
risks or breaches of security as may be identified by AOL's Operations
Security team.
7. Technical Performance.
---------------------
i. Advertiser will design the Advertiser Site to support the Windows
version of the Microsoft Internet Explorer 3.0 and 4.0 browser, and
make commercially reasonable efforts to support all other AOL
browsers listed at: "http://webmaster.info.aol.com/BrowTable.html."
ii. To the extent Advertiser creates customized pages on the Advertiser
Site for AOL users, Advertiser will configure the server from which
it serves the site to examine the HTTP User-Agent field in order to
identify the "AOL Member-Agents" listed
at:"http://webmaster.info.aol.com/Brow2Text.html."
iii. Advertiser will periodically review the technical information made
available by AOL at http://webmaster.info.aol.com/CacheText.html.
--------------------------------------------
iv. Advertiser will design its site to support HTTP 1.0 or later protocol
--
as defined in RFC 1945 (available at
"http://ds.internic.net/rfc/rfc1945.text") and to adhere to AOL's
parameters for refreshing cached information listed at
http://webmaster.info.aol.com/CacheText.html.
--------------------------------------------
v. Prior to releasing material, new functionality or features through
the Advertiser Site ("New Functionality"), Advertiser will use
commercially reasonable efforts to either (i) test the New
Functionality to confirm its compatibility with AOL Service client
software or (ii) provide AOL with written notice of the New
Functionality so that AOL can perform tests of the New Functionality
to confirm its compatibility with the AOL Service client software.
10. AOL Internet Services Advertiser Support. AOL will provide Advertiser with
----------------------------------------
access to the standard online resources, standards and guidelines documentation,
technical phone support, monitoring and after-hours assistance that AOL makes
generally available to similarly situated web-based partners. AOL support will
not, in any case, be involved with content creation on behalf of Advertiser or
support for any technologies, databases, software or other applications which
are not supported by AOL or are related to any Advertiser area other than the
Advertiser Site. Support to be provided by AOL is contingent on Advertiser
providing to AOL demo account information (where applicable), a detailed
description of the Advertiser Site's software and hardware and access to the
Advertiser Site for purposes of such performance and load testing as AOL elects
to conduct.
9
<PAGE>
EXHIBIT C
---------
AOL ADVERTISING STANDARD TERMS AND CONDITIONS
---------------------------------------------
1. Advertising Material/Display. America Online, Inc. ("AOL") shall display as
----------------------------
advertisement (the "Advertisement") from Advertiser which conforms to the
specifications set forth in the applicable Insertion Order Agreement which has
been executed by AOL and Advertiser (the "Insertion Order," and, collectively
with these Standard Terms and Conditions, the "Insertion Order Agreement")
through the standard narrowband U.S.-based America Online(R) brand service
(excluding any sub-products, sub-services or third party areas which may be
offered therein) or such other U.S.-based AOL property as may be expressly
described as the site for placement in the Insertion Order (the "AOL Service").
Subject to Advertiser's reasonable prior written approval, AOL will have the
right to fulfill its promotional commitments with respect to the Advertisements
by providing Advertiser with comparable placements of the Advertisements in
alternative areas of the AOL Service. Except as expressly provided in the
Insertion Order, the specific nature and positioning of the Advertisement will
be as determined by AOL in its editorial discretion. Advertiser agrees that (i)
AOL has the right to market, display, perform, transmit and promote the
Advertisement through the AOL Service and (ii) users of the AOL Service have the
right to access and use the Advertisement together with any content or materials
linked to the Advertisement (the "Advertiser Content"). The Advertiser Content
will not (i) disparage AOL; (ii) promote any product or service which is
reasonably competitive with one or more of the principal products or services
offered through AOL's products and services ("Competitive Products") on the AOL
Service or on any page on the Advertiser Site that is linked directly to the
Advertisements; (iii) be in contravention of AOL's written, generally applicable
advertising standards and practices, as such may be modified by AOL from time to
time; or (iv) violate any applicable law, regulation or third party right
(including, without limitation, any copyright, trademark, patent or other
proprietary right). Additionally, Advertiser shall consistently update the
Advertiser Content and will review, delete, edit, create, update and otherwise
manage such content in accordance with the terms of this Insertion Order
Agreement. In no event shall the Advertisement or the linked area state or imply
that (i) the Advertisement was placed by AOL or (ii) that AOL endorses
Advertiser's products or services. To the extent AOL notifies Advertiser of
reasonable complaints or concerns (e.g., from an AOL member) regarding the
Advertiser Content or any other content or materials linked thereto or
associated therewith ("Objectionable Content"), Advertiser will, to the extent
such Objectionable Content is within Advertiser's control, use commercially
reasonable efforts to respond in good faith to such complaints or concerns. AOL
may alter or shorten the flight dates set forth in the Insertion Order if
advertising materials required per the Insertion Order are not provided in a
timely manner, and Advertiser shall not be entitled to any refund or proration
for delays caused by Advertiser's failure to deliver such materials.
2. Operations. Unless expressly provided for elsewhere in this Insertion Order
----------
Agreement, AOL will have no obligation to provide any creative, design,
technical or production services to Advertiser ("Services"). Delivery by AOL of
any such Services shall be subject to (i) AOL's availability to perform the
requested work, (ii) execution by both parties of a separate work order
specifically outlining the Services to be provided and the fees to be paid by
Advertiser for such Services and (iii) payment in advance by Advertiser of such
fees. AOL will be entitled to discontinue links to Advertiser Content to the
extent such Advertiser Content will, in AOL's good faith judgment, adversely
affect the operations of the AOL Service. Advertiser will bear full
responsibility for all customer service, including without limitation, order
processing, billing, fulfillment, shipment, collection and other customer
support associated with any products or services offered, sold or licensed
through Advertiser's site, and AOL will have no obligations whatsoever with
respect thereto. Advertiser will take all steps necessary to ensure that any
contest, sweepstakes or similar promotion conducted or promoted through the
Advertiser Content complies with all applicable federal, state and local laws
and regulations.
3. Search Terms/Keywords. To the extent Advertiser is purchasing an
----------------------
Advertisement related to an Internet-based "search" term, Advertiser represents
and warrants that Advertiser has the legal rights necessary to utilize such
search term in connection with the Advertisement. Any "keyword" terms for
navigation from within the proprietary America Online brand service ("AOL
Keyword Terms") (as contrasted to Internet-based search terms) which may be made
available to Advertiser shall be (i) subject to availability and (ii) limited to
the combination of the keyword modifier combined with a registered trademark of
Advertiser. AOL reserves the right to revoke at any time Advertiser's use of any
AOL Keyword Terms which do not Incorporate registered trademarks of Advertiser.
Advertiser acknowledges that its utilization of any AOL Keyword Term will not
create in it, nor will it represent it has, any right, title or interest in or
to such AOL Keyword Term, other than the right, title and interest Advertiser
holds in Advertiser's registered trademark independent of the AOL Keyword Term.
4. Payment: Cancellation. The Advertiser agrees to pay AOL for all advertising
---------------------
displayed in accordance with the agreed upon amounts and billing schedule shown
on the relevant Insertion Order. Advertising packages are nonrefundable or
proratable except to the extent otherwise expressly contemplated hereunder.
Should AOL fall to display the Advertisements in accordance with the Insertion
Order due to Advertiser's failure to comply with any requirement of this
Insertion Order Agreement, (other than the payment provision of the Insertion
Order, Sections 1, 2(b) and 2(c) of Exhibit A and the provisions of Exhibit B)
Advertiser will remain liable for the full amount indicated on the Insertion
Order. AOL reserves the right to redesign or modify the organization, structure,
"look and feel" and other elements of the AOL Service at its sole discretion at
any time without prior notice. In the event such modifications will materially
and adversely affect the placement of the Advertisement, AOL will work with
Advertiser to display the Advertisement in a comparable location and manner that
is reasonably satisfactory to Advertiser. If AOL and Advertiser cannot reach
agreement on a substitute placement, Advertiser shall have the right to cancel
the Advertisement, upon thirty (30) days advance written notice to AOL. In such
case, Advertiser will only be responsible
10
<PAGE>
for the pro-rata portion of payments attributable to the period from the
commencement of this Insertion Order Agreement through the effectiveness of such
cancellation (the "Pro Rata Payments"). AOL reserves the right to cancel and
remove at any time any Advertisement in the event that AOL believes in good
faith that further display of the Advertisement will expose AOL to liability or
other adverse consequences. In the event of such a cancellation, Advertiser will
only be responsible for the Pro-Rata Payments. Advertiser may not resell, trade,
exchange, barter or broker to any third-party any advertising space which is the
subject of this Insertion Order Agreement.
5. Usage Data. a. AOL will provide Advertiser with such usage information and
----------
reports related to the Advertisement in substance and form determined by AOL,
consistent with its then-standard reporting practices (including information
related to Impressions delivery and click-throughs) as AOL generally makes
available to other advertisers that are similar to Advertiser. Advertiser may
not distribute or disclose usage information to any third party without AOL's
prior written consent.
b. Advertiser will provide AOL with a monthly report which contains the
screenname of all AOL users who purchase Advertiser Products during the prior
month.
6. Limitation of Liability; Disclaimer; Indemnification.
----------------------------------------------------
(A) SUBJECT TO SECTIONS 6(D) AND (E) BELOW, UNDER NO CIRCUMSTANCES SHALL
EITHER PARTY BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY ASPECT OF THE ADVERTISING
RELATIONSHIP PROVIDED FOR HEREIN. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY UNDER THIS INSERTION ORDER AGREEMENT FOR MORE THAN THE AMOUNT TO
BE PAID BY ADVERTISER DURING THE YEAR IN WHICH THE LIABILITY ACCRUES.
(B) AOL MAKES NO AND HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL SERVICE OR ANY PORTION
THEREOF, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR
COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AOL
SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING (I) THE NUMBER OF PERSONS WHO WILL
ACCESS THE ADVERTISER CONTENT OR "CLICK-THROUGH" THE ADVERTISEMENT, (II) ANY
BENEFIT ADVERTISER MIGHT OBTAIN FROM INCLUDING THE ADVERTISEMENT WITHIN THE AOL
SERVICE AND (III) THE FUNCTIONALITY, PERFORMANCE OR OPERATION OF THE AOL SERVICE
WITH RESPECT TO THE ADVERTISEMENT.
(C) ADVERTISER MAKES NO AND HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE ADVERTISER SITE OR ANY PORTION
THEREOF, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR
COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
ADVERTISER SPECIFICALLY DISLAIMS ANY WARRANTY REGARDING (I) THE NUMBER OF
PERSONS WHO WILL ACCESS THE AOL SERVICE OR "CLICK-THROUGH' THE AOL PROMOS, (II)
ANY BENEFIT AOL MIGHT OBTAIN FROM INCLUDING THE AOL PROMO WITHIN THE ADVERTISER
SITE AND (III) THE FUNCTIONALITY, PERFORMANCE OR OPERATION OF THE ADVERTISER
SITE WITH RESPECT TO THE AOL PROMO.
(D) Advertiser hereby agrees to indemnify, defend and hold harmless AOL and
the officers, directors, agents, affiliates, distributors, franchises and
employees of AOL from and against all claims, actions, liabilities, losses,
expenses, damages and costs (including, without limitation, reasonable
attorneys' fees) that may at any time be incurred by any of them by reason of
any third party claims, suits or proceedings: (a) for libel, defamation,
violation of right of privacy or publicity, copyright infringement, trademark
infringement or other infringement of any third party right, fraud, false
advertising, misrepresentation, product liability or violation of any law,
statute, ordinance, rule or regulation throughout the world in connection with
the Advertisement or Advertiser Content; (b) arising out of any material breach
by Advertiser of any duty, representation or warranty under this Insertion Order
Agreement; or (c) relating to any contaminated file, virus, worm or Trojan horse
originating from the Advertisement or Advertiser Content. AOL will notify
Advertiser of any claim, action or demand (an "Action") for which indemnity is
claimed. Advertiser's counsel defending such Action shall be subject to AOL's
prior written approval. AOL reserves the right to participate fully in and
assume joint control of the defense of any Action. Settlement of any Action
shall be subject to AOL's prior written approval. This section will survive the
completion, expiration, termination or cancellation of this Insertion Order
Agreement.
(E) AOL hereby agrees to indemnify, defend and hold harmless Advertiser and
the officers, directors, agents, affiliates, distributors, franchises and
employees of Advertiser from and against all claims, actions, liabilities,
losses, expenses, damages and costs (including, without limitation, reasonable
attorneys' fees) that may at any time be incurred by any of them by reason of
any third party claims, suits or proceedings; (a) for libel, defamation,
violation of right of privacy or publicity, copyright infringement, trademark,
infringement of any third party right, fraud, false advertising,
misrepresentation, product liability or violation of any law, statute,
ordinance, rule or regulation throughout the world in connection with the AOL
Promo; (b) arising out of any material breach by AOL of any duty, representation
or warranty under this Insertion Order Agreement; or (c) relating to any
contaminated file, virus, worm or Trojan horse originating from the AOL Promo.
Advertiser will notify AOL of any Action for which indemnity is claimed. AOL's
counsel defending such Action shall be subject to Advertiser's prior written
approval. Advertiser reserves the right to participate fully in and assume joint
control of the defense of any Action. Settlement of any Action shall be subject
to Advertiser's prior written approval. This section will survive the
completion, expiration termination or cancellation of this Insertion Order
Agreement.
7. Solicitation. (a) Advertiser will not send unsolicited, commercial e-mail
------------
(i.e., "spam") through or into AOL's products or services, absent a prior
business relationship, and will comply with any other standard AOL policies and
limitations relating to distribution of bulk e-mail solicitations or
communications through or into AOL's products and services (including, without
limitation, the requirement that Advertiser
11
<PAGE>
provide a prominent and easy means for the recipient to "opt-out" of receiving
any future commercial e-mail communications from Advertiser. Advertiser will not
use the Advertisement or any other aspect of AOL's products or services to
promote or solicit on behalf of a Competitive Product.
(b) Advertiser shall ensure that its collection, use and disclosure of
information obtained from AOL members under this Insertion Order Agreement
("Member Information") complies with (i) all applicable laws and regulations and
(ii) AOL's standard privacy policies, available on the AOL Service at the
keyword term "Privacy" (or, in the case of Advertiser's site, Advertiser's
standard privacy policies so long as such policies are prominently published on
the site and provide adequate notice, disclosure and choice to users regarding
Advertiser's collection, use and disclosure of user information).
(c) Each Information Request shall clearly and conspicuously specify to the
AOL members at issue the purpose for which specific information related to such
members ("Member Information") collected by Advertiser shall be used (the
"Specified Purpose"). Advertiser shall limit use of the Member Information
collected through an Information Request to the Specified Purpose. In the case
of AOL members who purchase products or services from Advertiser, Advertiser
will be entitled to incorporate such members into Advertiser's aggregate lists
of customers; provided that Advertiser in no way: (i) discloses Member
Information in a manner that identifies AOL members as end-users of an AOL
product or service (or in any other manner that could reasonably be expected to
facilitate use of such information by or on behalf of a Competitive Product); or
(ii) otherwise uses such Member Information in connection with marketing of a
Competitive Product. This section shall survive the completion, expiration,
termination or cancellation of this Insertion Order Agreement.
8. Miscellaneous. The parties to this Insertion Order Agreement are
-------------
independent contractors. Neither party is an agent, representative or partner of
the other party. Neither party shall have any right, power or authority to enter
into any agreement for or on behalf of, or incur any obligation or liability of,
or to otherwise bind, the other party. The failure of either party to insist
upon or enforce strict performance by the other party of any provision of this
Insertion Order Agreement or to exercise any right under this Insertion Order
Agreement shall not be construed as a waiver or relinquishment to any extent of
such party's right to assert or rely upon any such provision or right in that or
any other instance. Except where otherwise specified herein or in the Insertion
Order, the rights and remedies granted to a party under this Insertion Order
Agreement are cumulative and in addition to, and not in lieu of, any other
rights or remedies which the party may possess at law or in equity. Except as
otherwise agreed upon by the parties, Advertiser shall not issue any press
releases or public statements concerning the existence or terms of this
Insertion Order Agreement. Neither party shall use, display or modify the other
party's trademarks in any manner absent the other party's express prior written
approval. Either party may terminate this Insertion Order Agreement (a) at any
time with written notice to the other party in the event of a material breach of
this Insertion Order Agreement by the other party, which remains uncured after
thirty days written notice thereof; and (b) immediately following written notice
to the other party if the other party (1) ceases to do business in the normal
course, (2) becomes or is declared insolvent or bankrupt, (3) is the subject of
any proceeding related to its liquidation or insolvency (whether voluntary or
involuntary) which is not dismissed within ninety (90) calendar days or (4)
makes an assignment for the benefit of creditors. Additionally, in the event of
a change of control of Advertiser (other than as part of an initial public
offering), AOL may terminate this Insertion Order Agreement by providing thirty
(30) days prior written notice of such intent to terminate. In the event that
AOL terminates this Insertion Order Agreement as a result of a change of
control, Advertiser shall have no further payment obligations hereunder, other
than payment obligations due and payable at the time of termination. This
Insertion Order Agreement sets forth the entire agreement between Advertiser and
AOL, and supersedes any and all prior agreements of AOL or Advertiser with
respect to the transactions set forth herein. No change, amendment or
modification of any provision of this Insertion Order Agreement shall be valid
unless set forth in a written instrument signed by the party subject to
enforcement of such amendment. Advertiser shall not assign this Insertion Order
Agreement or any right, interest or benefit under this Insertion Order Agreement
without the prior written consent of AOL, which consent will not be unreasonably
withheld. Assumption of this Insertion Order Agreement by any successor to
Advertiser (including, without limitation, by way of merger or consolidation)
shall be subject to AOL's prior written approval. Subject to the foregoing, this
Insertion Order Agreement shall be fully binding upon, inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns. In the event that any provision of this Insertion Order Agreement is
held invalid by a court with jurisdiction over the Parties to this Insertion
Order Agreement, (i) such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
applicable law and (ii) the remaining terms, provisions, covenants and
restrictions of this Insertion Order Agreement shall remain in full force and
effect. This Insertion Order Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. This Insertion Order Agreement shall be interpreted,
construed and enforced in all respects in accordance with the laws of the
Commonwealth of Virginia, except for its conflicts of laws principles.
Advertiser hereby irrevocably consents to the exclusive jurisdiction of the
courts of the Commonwealth of Virginia and the federal courts situated in the
Commonwealth of Virginia in connection with any action arising under this
Insertion Order Agreement.
12
<PAGE>
EXHIBIT D
---------
DESCRIPTION OF BUSINESS SERVICE: POSTAGE CATEGORY
-------------------------------------------------
The Postage Category will be located within the Business Services area of the
AOL Service. The Postage Category will be structured similarly to what is
outlined below to create a marketplace/directory resource for AOL SOHO members:
1) Directory listing of category providers
2) Content/programming highlights related to news/noteworthy category
information
3) Branded buttons for premier category partners
4) 468x60 banner for premier category partners
5) Links to other business services
6) Business perk features: highlighting great deals/business opportunities
7) Links to relevant professional areas (forums/mini-channels)
Advertiser hereby acknowledges that the foregoing represents a general
description of the Business Services: Postage Category and is not intended to be
dispositive of the final product as created on the AOL Service. AOL reserves the
right to modify the foregoing description in its editorial discretion.
13
<PAGE>
EXHIBIT 10.15
E-Stamp Corporation/Modus Media Turnkey/Inventory Agreement
-----------------------------------------------------------
Parties:
This Turnkey/Inventory Agreement ("the Agreement") is made and entered into
between E-Stamp Corporation ("E-Stamp") 4009 Miranda Avenue, Suite 225, Palo
Alto, Ca. 94304 and Modus Media International ("Modus Media"), 690 Canton
Street, Westwood, MA 02090.
Purpose:
To define the terms by which Modus Media shall manufacture, warehouse and ship
software Finished Goods for E-Stamp Corporation.
Section A: Deliverables Requirements
- ------------------------------------
Forecasts:
E-Stamp's requirements typically call for shipment of product in a time frame
that is shorter than the time which the required components can ordinarily be
procured or produced to order. Therefore, Modus Media will use E-Stamp-
generated forecasts as a basis for component and raw material procurement or
production scheduling. E-Stamp agrees to provide Modus Media a [***] day
rolling forecast in [***] day buckets on the second Friday of the month prior
to the beginning of the [***] days reflected in the forecast. Should E-Stamp
fail to timely submit a forecast, Modus Media shall contact E-Stamp and
request the forecast. The forecast will be sent in an agreed to electronic
format, which may take the form of purchase orders or electronic mail
messages. Materials (components and raw materials) will be purchased by Modus
Media on E-Stamp's behalf, according to a forecast and purchase order provided
by E-Stamp, using a net MRP process. This process will include a determination
by Modus Media of an economic order quantity based upon either the month's
forecast quantity, or a maximum of the [***] days forecast requirements less
on hand balance. Authorization for procurement of this quantity is granted to
Modus Media by E-Stamp as long as the quantity to be procured is less than or
equal to the demand shown in the forecast.
Service Commitment:
Modus Media shall provide the services as set forth on Addendum A (Scope of Work
- - SOW). Modus Media shall ship products on the same day as orders are received
from E-Stamp, providing orders are supplied by E-Stamp by the deadlines
indicated in the SOW. A ship confirmation file will be sent each day for the
prior days' shipments.
Cancellations:
Should E-Stamp decide to cancel purchase orders, forecasts, or deliveries,
discontinue work, or reduce total quantities, E-Stamp agrees to give Modus Media
written notice, in the form of a purchase change order or electronic mail. In
addition, E-Stamp agrees to pay Modus Media, as set forth below, for any
materials and labor, at Modus Media's cost, for work completed; for all work
procured; also for all work in process as of the date and time Modus Media
receives notification of cancellation or change. This payment may include
extraordinary costs actually incurred by Modus Media, including but not limited
to extraordinary administrative expenses and shall not be unreasonable. Modus
Media agrees to work in good faith to limit the potential chargeable costs by
rescheduling procurement of components, deliveries, and manufacturing and
assembly as long as is
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
<PAGE>
reasonably possible and cost effective. Interrupted but completed work and non-
standard material which cannot be utilized may be invoiced in normal billing
cycles once E-Stamp has been so advised. E-Stamp agrees to provide a revised
Purchase Order for the work completed at the time of cancellation.
Quality Standard:
Modus Media warrants that its services performed and materials requested
hereunder will meet the criteria set forth in the Modus Media International
Standard Attributes Manual and the SOW, attached hereto as Addendum C.
Section B: Procurement, Manufacturing and Inventory
- ----------------------------------------------------
Component and Raw Material Procurement:
Modus Media will produce or procure components and raw material in accordance
with Section A, "Forecast", and retain ownership of these components on E-
Stamp's behalf as set forth herein. E-Stamp agrees to purchase or dispose of
all such components and raw materials in accordance with the terms and
conditions set forth in this Agreement. Modus Media agrees it shall not dispose
of nor sell such raw material components to others, without E-Stamp's prior
written consent. In no event will Modus Media procure or charge E-Stamp for
unauthorized components or raw materials inventory. Only material which is of a
quality suitable for its original use may be classified as excess or obsolete.
Excess Material:
Modus Media will provide a monthly inventory report which will provide aging
information by raw material component. Any raw materials not made into finished
goods after 90 days will be subject to the storage charges set forth on Addendum
B (Pricing). Should any raw materials not be made into Finished Goods within
180 days, at the end of 180 days, at the request of Modus Media, E-Stamp will
purchase any remaining raw material and component inventory and authorize Modus
Media to scrap the product, ship it to E-Stamp, or to continue to store at the
storage charges set forth on the Addendum B. E-Stamp's purchase of such Excess
Material will be charged at cost plus markup, as set forth on Addendum B. A
scrapping fee, if applicable, will be determined on a case by case basis
depending on circumstances. The scrapping fee shall be reduced or waived if
Modus Media retains recycling benefit of scrapped materials. Modus Media
reserves the right to charge E-Stamp for "cost of money" invested in raw
materials stored for more than ninety (90) days. Addendum B sets forth
applicable storage, and "cost of money" charges.
Manufacturing:
E-Stamp will provide a Purchase Order authorizing Modus Media to build products
according to E-Stamp's forecast. Blanket Purchase Orders will be issued to
cover the turnkey manufacturing. Separate POs will be issued for non-routine
events and will be consistent with the prices set forth on Addendum B. Purchase
Orders may be delivered in hard copy, fax, electronic mail, or via EDI message.
E-Stamp will provide a Purchase Order at the end of each month for the following
month's production, which shall be based on E-Stamp's [***] day rolling
forecast.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
-2-
<PAGE>
Changes in quantities, manufacturing specifications supplied by E-Stamp or
delivery schedules may result in price adjustments and production schedule
changes in accordance with the terms of this Agreement. Modus Media will make
every effort to maintain price consistency and reduce purchase price variance
for E-Stamp in these situations.
Media Replication:
For work involving CD-ROM replication, all input files, CD-Rs or compact discs
furnished by E-Stamp will be used solely for E-Stamp's work and remain E-Stamp's
property. All tooling, including masters, stampers or any other tooling made by
Modus Media will be used solely for E-Stamp work but will remain Modus Media
property.
Finished Goods Inventory:
E-Stamp will purchase all Finished Goods inventory upon completion of
manufacturing. Storage of Finished Goods will be charged as set forth in
Addendum B. Modus Media will provide a costed inventory report each month that
will show the previous month end inventory.
Inventory Reports and Shrinkage:
Modus Media will provide inventory and inventory adjustment reports to E-Stamp
for both Component and Finished Goods Inventory.
Section C: Pricing of Materials
- --------------------------------
Pricing of materials and services are set forth on the Addendum B to this
Agreement.
Component and raw material pricing set forth on the Addendum B are subject to
changes in market prices. Modus Media will notify E-Stamp of any change in
component or raw materials pricing that exceeds plus or minus 5%, and change
pricing to reflect such changes at the next periodic pricing review. If a
change in forecast quantity for a component results in a change in price of more
than 10% (+/-) for that component, the price will be changed on that component
at that time of change.
Storage fees for less than 90 days raw materials and components will be included
in the kit pricing.
If overtime is required, Modus Media will so advise E-Stamp of such charges and
obtain prior consent from E-Stamp. Working standard Modus Media holidays, at E-
Stamp's request, will be billed on an overtime basis, as incurred. Overtime
rates will be quoted and agreed upon by both parties before overtime work
begins.
Pricing Methodology: Assembly
All assembly work will be charged a flat per touch rate according to how many
touches per component.
Media Replication:
CD prices are included in Addendum B.
Make ready/Staging Fee:
This charge is reflected in Addendum B.
-3-
<PAGE>
Palletization/Materials Fee:
Materials for pallets, corrugated protection, corner-boards and stretch wrapping
are included in Addendum B.
Project Management:
A project management fee will be charged on a per kit basis which includes the
following services:
The management fee is detailed in the pricing section found in Addendum B.
Job Engineering Order Processing
Local Interplant Freight Dedicated Resources
Inventory Management Account Management
Transaction Reporting First Article Inspection
Procured Parts (supplier Specified):
All procured components will be marked-up at the rates provided in Addendum B.
Invoicing
Modus Media International shall submit an invoice to E-Stamp Corporation for
each shipment, or partial shipment of products, components or provision of
services. Invoices will be generated when product is moved into Finished Goods
and when an order is built to ship for bulk distribution. Fulfillment invoices
from Modus Media International will summarize monthly fulfillment charges and
provide detailed accountability broken down by each Sales Order shipped.
Film, Digital Files, and Plates:
All platemaking film made by Modus Media used solely for E-Stamp's work will
become E-Stamp's property upon payment of invoices. All film or electronic
files furnished by E-Stamp used solely for E-Stamp's work will remain E-Stamp's
property. All plates made by Modus Media used solely for E-Stamp's work will
remain Modus Media's property. All electronic imposition files Modus Media
makes from E-Stamp's furnished digital files, all type fonts used for the
production of E-Stamp's work, any storage devices, disks, etc. used to archive
E-Stamp's files and any proprietary software, systems or technology used to
process E-Stamp's files will remain Modus Media property. Modus Media agrees
not to use any film, digital files or plates made on behalf of E-Stamp for any
other purpose other than what has been previously agreed to by E-Stamp.
RMA Service
Please see Addendum A for specific RMA procedure requirements.
Other Pricing:
All relevant pricing for other services is included in Addendum B. Any other
pricing for any other services will be provided upon request.
Terms of Payment, Interest, Collection Costs, and Billing Disputes
Term of Payment is defined as Net 30 from date of invoice. Should any invoice
issued hereunder become past due in excess of 60 days, E-Stamp agrees to pay
interest at the rate of one and one-half percent (1.5%) per month, or the lawful
limit if less, on all such amounts excluding any amounts that E-Stamp is
currently disputing with Modus Media, commencing fifteen (15) days after written
notice
-4-
<PAGE>
to E-Stamp as well as all the costs of collection of overdue accounts, if any,
including, but not limited to, reasonable attorney's fees. Interest payable will
be calculated from the invoice due date to the date payment is received. Should
any portion of an invoice be disputed, E-Stamp agrees to pay the undisputed
portion according to its terms and E-Stamp will notify Modus Media promptly of
the dispute. Both parties agree to use their best efforts to resolve the
disputed portion of the invoice within thirty (30) days of learning of the
dispute.
Bankruptcy
If either party shall be adjudicated a bankrupt, institute voluntary proceedings
for bankruptcy or reorganization, make an assignment for the benefit of its
creditors, apply for or consent to the appointment of a receiver for it or its
property, or admit in writing its inability to pay its debts as they become due,
the other party may terminate this Agreement by written notice. Any such
termination will not relieve either party from any accrued obligations
thereunder.
Limitation of Liability
Modus Media will perform the work in a good and workmanlike manner and in
accordance with the specifications and production schedule. In no event will
either party be liable to the other for special, incidental or consequential
damages, including, but not limited to, lost profits or business. Modus Media's
liability shall be limited to the total payments actually received under this
agreement.
Responsibility for Subject Matter
In furnishing Modus Media with matter to reproduce, or distribute, or to have
incorporated in the completed product, E-Stamp represents and warrants that none
of such matter infringes any copyright or other rights of a third party (either
as furnished to Modus Media by E-Stamp or as altered by Modus Media at E-Stamp's
direction), or patent, is libelous, or otherwise violates the rights of or will
cause damage or injury to other persons E-Stamp agrees to indemnify and save
Modus Media harmless from all losses, damages and expenses, including attorneys'
fees, which Modus Media may suffer as the result of any claim of such violation,
damage, or injury.
Work Stoppages
Modus Media will not be liable for delays or non-performance of this Agreement
occasioned by strikes, fires, accidents, or by causes beyond Modus Media's
control including, but not limited to, the inability to obtain necessary
materials or utilities. In the event of a stoppage or delay resulting from any
such cause, Modus Media will perform such parts of the work as Modus Media is
capable of performing. In the event E-Stamp places any other part of the work
elsewhere, E-Stamp agrees to allow Modus to resume the work as promptly as
practical.
Insurance:
Modus Media will carry, at its own expense, fire, sprinkler leakage and extended
coverage insurance, subject to the usual exclusions, limitations, and conditions
of such policies on the actual cash value of all Modus Media materials, work in
process, and all Finished Goods completed and not shipped, and on the actual
cash value of all positives, copy, artwork, paper and other materials finished
by E-Stamp while in Modus Media's care, custody and control. If E-Stamp's
property is damaged as a result of an insured peril under the applicable
insurance policy, then, at Modus Media's option with the concurrence of E-Stamp,
will replace E-Stamp's damaged property or reimburse E-Stamp for the actual cash
value of the damaged property. If Modus Media elects to reimburse
-5-
<PAGE>
E-Stamp for the damaged property's actual cash value, the amount payable to E-
Stamp shall be limited to the proceeds of such policy plus any related
deductible, if any, applied to the claim for damage to E-Stamp's property. For
positives and other media Modus Media's insurance coverage and liability shall
be limited to the cost of blank film or other media and the cost of duplication
from an original or other copy.
Passing of Title:
Title and possession will pass to E-Stamp upon delivery into finished goods or
upon date of final invoicing, whichever is earlier.
Governing Law:
The laws of each state where the goods and services are performed will govern
this Agreement.
Section D: General Terms
- -------------------------
Term:
The term of this agreement is from December 1, 1998 through December 31, 1999.
The parties agree to negotiate toward a new agreement prior to the end date.
Standard pricing will be reviewed semi-annually.
Termination:
This agreement may be terminated by either party with 90 calendar days written
notice to the other. Upon termination or expiration of this Agreement, the
parties will agree upon disposition of all raw material, work in progress, and
Finished Goods inventories in accordance with the terms of this agreement. Any
such termination or expiration will not relieve either party from any accrued
obligations defined hereunder.
Disputes:
Both parties agree to negotiate disputes in good faith and should they fail to
reach agreement, agree that any dispute, controversy or difference between the
parties, arising out of or related to this Agreement may be resolved, upon the
request of the parties, through final and binding arbitration. The parties
agree that this Section does not apply to breaches of confidentiality or
intellectual property provisions whereby E-Stamp may petition a court of law for
injunctive relief.
This Agreement and the Addendums attached hereto contain all the Agreements,
understanding, representations, conditions, warranties and covenants, and
constitutes the sole and entire agreement between the parties hereto pertaining
to the subject matter hereof and supersedes all prior communications or
agreements, written or oral. This Agreement may not be revised or modified
except by the mutual written consent of both Modus Media and E-Stamp as attested
to by an instrument signed by an officer of each of them.
-6-
<PAGE>
Agreed and accepted by:
E-Stamp Corporation Modus Media International
By Helen Eliadis By Colleen Mitchell
------------------------------ ------------------------------
Title Director, M&D Title Sales Representative
--------------------------- ---------------------------
Date June 1, 1999 Date June 1, 1999
---------------------------- ----------------------------
Signature /s/ Helen Eliadis Signature /s/ Colleen Mitchell
----------------------- -----------------------
-7-
<PAGE>
Appendix
--------
Modus Media International will provide E-Stamp Corporation Call Center Services
in Modus Media's Preston Solution Center during their Beta phase. While E-Stamp
is in official Beta phases, their Call Center pricing will be based on an hourly
charge. The charge will be $28.00 per hour of Call Center time. Call Center
Pricing in Addendum B will be applicable once E-Stamp exits Beta Phase.
-8-
<PAGE>
December 4, 1998
<TABLE>
<CAPTION>
FULFILLMENT PRICE QUOTE
E-Stamp
Modus Media International
Preston Solution Center
- ---------------------------------------------------------------------------------------------------
Description Charge Volume Total
- ---------------------------------------------------------------------------------------------------
Per Month Monthly
<S> <C> <C> <C>
ADMINISTRATIVE CHARGES
Monthly Management Fee $ [***] [***] $ [***]
Set-up Fees $ [***] [***] $ [***]
RESPONSE MANAGEMENT
Inbound 800 Call Service
0 - 20,000 minutes $ [***] [***] $ [***]
20,001 - 40,000 minutes $ [***] [***] $ [***]
40,001 + minutes $ [***] [***] $ [***]
Mail / Fax / e-mail Processing $ [***] [***] $ [***]
Imported Orders $ [***] [***] $ [***]
FINANCIAL PROCESSING
Visa, MasterCard, Discover [***]% $ [***] $ [***]
American Express [***]% $ [***] $ [***]
Check Processing $ [***] [***] $ [***]
Purchase Order Service $ [***] [***] $ [***]
Additional Invoice/Statement $ [***] [***] $ [***]
Returned Check Processing $ [***] [***] $ [***]
Refund Processing $ [***] [***] $ [***]
SPECIAL OPERATIONS
Programming, per hour $ [***] [***] $ [***]
Clerical, per hour $ [***] [***] $ [***]
Data Transfer $ [***] [***] $ [***]
FTC Cards $ [***] [***] $ [***]
Followup Outbound Calls $ [***] [***] $ [***]
Outbound Fax Fee $ [***] [***] $ [***]
FULFILLMENT CHARGES
Enduser Pick & Pack first line item $ [***] [***] $ [***]
Additional line items in same carton, per $ [***] [***] $ [***]
item
Serial Number Capture $ [***]
Intl Export Documents, per order $ [***] [***] $ [***]
Freight & Postage $ [***] [***] $ [***]
End User Returns Processing [***] [***] $ [***]
Bulk Returns Processing [***] [***] $ [***]
MATERIALS HANDLING
Receive furnished product, per part # $ [***] [***] $ [***]
Storage, per pallet, per month $ [***] [***] $ [***]
REPORTING
Standard per occurrence (up to 5 pgs) $ [***] [***] $ [***]
Customized Report $ [***] [***] $ [***]
TOTAL P.O. $ [***]
- ---------------------------------------------------------------------------------------------------
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and exchange Commission.
- -----------------------------------------------------------------------------------------------------------------------------
Description Comments
- -----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATIVE CHARGES
<S> <C>
Monthly Management Fee Covers 1 set of basic reports, on-going training, project coordination and
documentation
Set-up Fees One time fee. Set up includes programming fees and one 800 number.
RESPONSE MANAGEMENT
Inbound 800 Call Service
0 - 20,000 minutes per minute
20,001 - 40,000 minutes per minute
40,001 + minutes per minute
Mail / Fax / e-mail Processing Per mail/fax/e-mail order
Imported Orders Per imported order
FINANCIAL PROCESSING
Visa, MasterCard, Discover [***]% of total order charge
American Express [***]% of total order charge
Check Processing Per Check
Purchase Order Service Per initial order (includes 1st invoice)
Additional Invoice/Statement Per invoice or statement
Returned Check Processing Per returned check
Refund Processing
SPECIAL OPERATIONS
Programming, per hour Per programming hour
Clerical, per hour Per clerical hour
Data Transfer Per file created (ASCII, fixed length, comma delimited)
FTC Cards Per notification (Customer notification of delayed shipment)
Followup Outbound Calls Per Call (Credit Card Problem, etc.)
Outbound Fax Fee Per Fax Page
FULFILLMENT CHARGES
Enduser Pick & Pack first line item Includes pick/pack, packing slip, small ship carton (price may change
depending on carton size)
Additional line items in same carton, per Per additional line items
item
Serial Number Capture Per number captured
Intl Export Documents, per order Per order
Freight & Postage Actual costs billed as incurred
End User Returns Processing Per RMA
Bulk Returns Processing Per RMA Unit (incl receive, log, disposition, scrap or re-stock)
MATERIALS HANDLING
Receive furnished product, per part # Per Part # - Furnished product received from 3rd party
Storage, per pallet, per month Per pallet
REPORTING
Standard per occurrence (up to 5 pgs) Per Occurrence (standard reports beyond the basic set included in the
monthly management fee)
Customized Report Per hour
TOTAL P.O. Sum of all estimated charges
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and exchange Commission.
-9-
<PAGE>
<TABLE>
<CAPTION>
Modus Media International Estamp December 4, 1988
Preston Solution Center
Service Charge Comments
- ---------------------------------------- -------------- -------------------------------------------------
<S> <C> <C>
Turnkey
Administration
--------------
New SKU setup $ [***] Per Product Family per Platform
--------------
Management Fee $ [***] Per Kit
--------------
BOM Change $ [***] Per ECO
--------------
EDI Import $ [***] Per Order
--------------
Order Entry Fax Orders $ [***] Per Order
--------------
Manufacturing Invoicing Order Timeframe (Each order, day, weekly, monthly)
--------------
Distribution Invoicing Monthly Timeframe (Each order, day, weekly, monthly)
--------------
Payment Terms n-30 (Cash, net 30, net 60, etc.
--------------
Manufacturing
Manufacturing Service Level
--------------
Components Stock [***] Days
--------------
Components Not Stock [***] Days
--------------
Assembly $ [***] Touch (Boxes -2; Shrinkwrap -1; Scanning -1; Sleeves -2)
--------------
Disk Subs NA Touch (Disk, label, bag = 1 touch)
--------------
Disk Replication NA HD or LD
--------------
Make ready/staging fee
--------------
Run lengths less than 500 units NA Per Kit
--------------
Run lengths greater than or equal to 500 units NA Per Kit
--------------
Run lengths greater than or equal to 5000 units NA Per Kit
--------------
Palletization $ [***] Per Kit
--------------
Rework $ [***] Proposed $135 Add'l Charge
--------------
Rush Order NA Per Order
--------------
CD Replication
--------------
24 hr turn Mastering $ [***] One time charge
--------------
Production $ [***] Per CD
--------------
72 hr turn Mastering $ [***] One time charge
--------------
Production $ [***] Per CD
--------------
5 day turn Mastering $ [***] One time charge
--------------
Production $ [***] Per CD
--------------
CD insertion into tyvek sleeve $ [***] Per CD
--------------
CD insertion into plastic sleeve NA Per CD
--------------
Distribution
Distribution Service Level
--------------
Orders in by ___ ship same day 2:00 PM Time: Mountain Standard
--------------
Expedite orders in by ___ ship same day 2:00 PM Time: Mountain Standard
--------------
Orders in by ___ ship next day 2:00 PM Time: Mountain Standard
--------------
Serial Number Capture (Distribution) $ [***] Each
--------------
Generate Customer Letters NA Per Page
--------------
Pick & Pack
End User (Orders from 1 to 20)
--------------
1st Pick $ [***] Per Kit
--------------
Additional Picks $ [***] Per Kit
--------------
Bulk (Orders from 21 and larger)
--------------
1st Line $ [***] Per Line
--------------
Additional Lines $ [***] Per Line
--------------
Export Documents Preparation $ [***] Per Order
--------------
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
<TABLE>
<CAPTION>
Modus Media International Estamp December 4, 1988
Preston Solution Center
Service Charge Comments
- ---------------------------------------- -------------- -------------------------------------------------
<S> <C> <C>
--------------
Freight $ [***] Per Freight sent via Prepaid & Add, Collect or
3rd Party Billing
--------------
Rush Orders $ [***]
--------------
RMAs
--------------
1-9 Units Flat fee only
--------------
Over 9 Units Each Kit over 9 + flat fee
--------------
Receiving
--------------
Furnished Parts (Customer Supplied) $ [***] Per pallet
--------------
Purchasing
--------------
Outside Purchase markup [***]% Components Unit Price less than $20
--------------
Outside Purchase markup [***]% Components Unit Price greater than $20
--------------
Print 3 or 4 Color Off List
--------------
Print 2 Color Off List
--------------
Print 1 Color Off List
--------------
One Time Charges (Prelim)(die costs, etc.) $ [***] Billed on a separate PO
--------------
Inventory
--------------
Storage of Components $ [***] $Pallet/Month
--------------
Average Number / Month Pallets
--------------
Storage of Finished goods $ [***] $Pallet/Month
--------------
Average Number / Month Pallets
--------------
Cost of Money [***]% Per Month (Stream owned components older than 90 Days)
--------------
Obsolete [***] How many days/months before defined as obsolete
--------------
Monthly When is it dispositioned
--------------
$ [***] Per pallet price to return to customer
--------------
Miscellaneous
--------------
Reports $ [***] Each
--------------
Faxes $ [***] Per page
--------------
File Transfers $ [***] Each
--------------
Programming $ [***] Per hour
--------------
Forecast
--------------
Manufacturing [***] Type and timeframe of forecast
--------------
After 21st of Month When provided
--------------
Distribution Type and timeframe of forecast
--------------
Min. daily orders
--------------
Max. daily orders
--------------
Phone Center Type and timeframe of forecast
--------------
Min. daily calls
--------------
Max. daily calls
--------------
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
EXHIBIT 10.17
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT ("Sublease") is dated as of the 2nd day of
February, 1999, by and between ELECTRONICS FOR IMAGING, INC., a Delaware
corporation ("Sublessor"), and E-STAMP CORPORATION, a Delaware corporation
("Sublessee").
A. Sublessor, as Tenant, and The Joseph and Eda Pell Revocable Trust, as
Landlord ("Master Landlord"), previously entered into that certain Agreement of
Lease, dated July 30, 1992 ("Original Lease"), which has been amended by that
certain First Addendum to Lease dated July 30, 1992 ("First Addendum"), that
certain Second Addendum to Lease dated April 1, 1993 ("Second Addendum"), that
certain Third Addendum to Lease dated May 20, 1993 ("Third Addendum"), that
certain Fourth Addendum to Lease dated May 25, 1993 ("Fourth Addendum"), that
certain Fifth Addendum to Lease dated July 12, 1994 ("Fifth Addendum"), that
certain Sixth Addendum to Lease dated January 19, 1995 ("Sixth Addendum"), and
that certain Seventh Addendum to Lease dated December 4, 1996 ("Seventh
Addendum"), (collectively, the "Master Lease"). Under the Master Lease,
Sublessor leases from Master Landlord approximately forty-nine thousand seven
hundred seventy-nine (49, 779) rentable square feet ("Master Premises") on the
first and second floors of the building located at 2855 Campus Drive, San Mateo,
California ("Building"). A copy of the Master Lease is attached hereto as
Exhibit A. Capitalized terms used but not defined herein shall have the meanings
- ---------
given them under the Master Lease.
B. Sublessor desires to sublease a portion of the Master Premises to
Sublessee, and Sublessee desires to sublease a portion of the Master Premises
from Sublessor, on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sublessor and Sublessee agree as
follows:
1. Sublease Premises. Upon and subject to the terms and conditions of
-----------------
this Sublease, Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor that portion of the Master Premises identified on the
floor plan attached hereto as Exhibit B ("Sublease Premises") and incorporated
---------
herein by this reference. The Sublease Premises are located on the first floor
of the Building. Sublessor and Sublessee hereby stipulate that the Sublease
Premises contain
-1-
<PAGE>
twenty-four thousand eight hundred ninety (24,890) rentable square feet ("RSF"),
which is approximately fifty percent (50%) of the Master Premises.
1.1 AS-IS. The Sublease Premises shall be delivered to Sublessee in
-----
"AS-IS AND WITH ALL FAULTS" condition and without any representations or
warranties, express or implied, with respect thereto by Sublessor or any of
Sublessor's directors, officers, shareholders, employees, agents or
representatives ("Sublessor's Representatives"). Specifically, neither Sublessor
nor any of Sublessor's Representatives has made, or hereby makes, any
representation or warranty concerning the compliance of the Sublease Premises or
the Building with the American with Disabilities Act, 42 U.S.C. Section 12101
et. seq. ("ADA"), Title 24 of the California Administrative Code ("Title 24") or
any other similar federal, state or local laws, statutes, ordinances, codes,
regulations, rules, orders, actions, policies or decrees pertaining to the
accessibility of business establishments to persons with disabilities.
2. Term. The term of the Sublease shall commence upon April 1, 1999
----
("Commencement Date"). The Sublease term shall end on June 30, 2000 ("Expiration
Date") unless sooner terminated pursuant to this Sublease.
2.1 Possession. Sublessee represents to Sublessor that: (i) Sublessee
----------
is currently leasing approximately thirteen thousand four hundred sixty-three
square feet (13,463 sf) located at 4009 Miranda Avenue, Palo Alto, California
("Miranda Premises") at a monthly base rental rate (triple net) of Forty-Eight
Thousand Four Hundred Sixty-Six and 80/100 ($48,466.80) ("Miranda Property Base
Rent"), (ii) the term of the lease for the Miranda Premises expires on April 30,
1999, (iii) if Sublessee does not vacate the Miranda Premises prior to May 1,
1999, Sublessee shall be legally obligated under the lease for the Miranda
Premises to pay to the landlord thereunder base rent in an amount equal to one
hundred fifty percent (150%) of the Miranda Property Base Rent regardless of
whether Sublessee vacates the Miranda Premises prior to June 1, 1999, and
Sublessee shall not be entitled to receive any credit, refund, rebate or other
return of any portion of such amount if Sublessee vacates the Miranda Premises
prior to June 1, 1999. Based on the foregoing representations and
notwithstanding any provision of this Sublease, if for any reason Sublessor
cannot deliver possession of the Sublease Premises to Sublessee on the
Commencement Date, such failure shall not affect the validity of this Sublease
or the obligations of Sublessee hereunder or extend the term hereof, but in such
case Sublessee shall not be obligated to pay rent until possession of the
Sublease Premises is delivered to Sublessee and Sublessee shall be entitled to
the
-2-
<PAGE>
following remedies: (a) if Sublessor delivers possession of the Sublease
Premises after April 15, 1999 but on or prior to April 30, 1999, then for the
period from May 1, 1999 through May 31, 1999, inclusive, Sublessee shall be
entitled to a credit against any Rent (defined under Section 4.2 below) due to
Sublessor under this Sublease in an amount equal to the lesser of One Thousand
One Hundred Seventy-Three Dollars ($1173) per day or fifty percent (50%) of the
amount actually paid by Sublessee to the landlord under the Miranda Premises
lease as base rent for such period; (b) if Sublessor delivers possession of the
Sublease Premises after April 30, 1999, then for the period from the date on
which Sublessee delivers possession of the Sublease Premises to Sublesee through
May 31, 1999, inclusive, Sublessee shall be entitled to a credit against any
Rent due to Sublessor under this Sublease in an amount equal to the lesser of
One Thousand One Hundred Seventy-Three Dollars ($1173) per day or fifty percent
(50%) of the amount actually paid by Sublessee to the landlord under the Miranda
Premises lease as base rent for such period; and (c) if Sublessor has not
delivered possession of the Sublease Premises to Sublessee within thirty (30)
days after the Commencement Date, Sublessee may, at its election, by notice in
writing to Sublessor within ten (10) days after such thirty (30) day period,
cancel this Sublease, in which event Sublessor shall return all sums actually
deposited by Sublessee with Sublessor, and neither party shall have any further
liability to the other and both parties shall be discharged from all obligations
hereunder. Sublessee shall have no other rights or remedies against Sublessor,
at law, in equity, or otherwise, for any failure of Sublessor to deliver
possession of the Sublease Premises to Sublessee on or before the Commencement
Date. Sublessee and Sublessor agree that the damages to Sublessee resulting from
Sublessor's failure to timely deliver possession are impractical and extremely
difficult to fix or ascertain and that the foregoing credits and termination
right are a fair and reasonable estimate and represent the agreed upon amount of
and remedies for said damages. It is the parties' intention to create by this
Section 2.1 a valid and enforceable liquidated damages provision consistent with
the pertinent provisions of the California Civil Code, or any amendments thereof
or successors thereto.
SUBLESSEE AND SUBLESSOR HEREBY ACKNOWLEDGE AND AGREE THAT THE CREDITS AND
TERMINATION RIGHT SET FORTH UNDER THIS SECTION 2.1 HAVE BEEN AGREED UPON AS
THE PARTIES' REASONABLE ESTIMATE OF SUBLESSEE'S DAMAGES AND AS SUBLESSEE'S
SOLE REMEDIES AGAINST SUBLESSOR, AT LAW, IN EQUITY OR OTHERWISE, IN THE
EVENT SUBLESSOR DOES NOT
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<PAGE>
TIMELY DELIVER POSSESSION OF PREMISES TO SUBLESSEE PURSUANT TO THIS
SUBLEASE.
SUBLESSOR: /s/ signature illegible SUBLESSEE: /s/ signature illegible
If Sublessee occupies the Sublease Premises prior to the Commencement Date, such
occupancy shall be subject to this Sublease, and Sublessee shall commence paying
Rent upon such occupancy pursuant to Section 4 below. Any such early occupancy
shall not advance the Expiration Date.
2.2 No Renewal, Extension or Expansion Rights. To the extent that
-----------------------------------------
Sublessor has not previously exercised such rights, Sublessor and Sublessee
shall not exercise any renewal, extension or expansion rights pertaining to the
Sublease Premises under the Master Lease.
3. Use. The Sublease Premises shall be used and occupied by Sublessee
---
solely in a manner and for the uses permitted under the Master Lease and for no
other purpose. Sublessee, at its sole cost and expense, shall promptly comply
with all federal, state and local laws, statutes, ordinances, codes,
regulations, rules, orders, actions, policies or decrees now or hereinafter in
effect ("Laws"), including, without limitation, the ADA, Title 24 and similar
Laws pertaining to the accessibility of business establishments to persons with
disabilities. Sublessee shall not do or permit to be done in or about the
Sublease Premises or Building, nor bring or keep anything therein, which will in
any way increase the existing rate of or affect any fire or other insurance upon
the Building or the Sublease Premises or any of its contents, or cause
cancellation of any insurance policy covering the Building or the Sublease
Premises or any part thereof. Sublessee shall not use, store, or dispose of any
Hazardous Materials (defined below) on any portion of the Sublease Premises in
violation of the Environmental Laws (defined below). As used in this Section,
Hazardous Materials shall mean any substance or material which is regulated as a
hazardous, toxic or dangerous waste, substance or material or is defined as a
"hazardous waste" or "hazardous substance" in (or for purposes of) the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Clean Water Act, the Clean Air Act, the Toxic Substance
Control Act or any so-called "Superfund" or "Superlien" law or any other
Environmental Law, as now or hereinafter in effect. "Environmental Law" shall
mean any federal, state or local Laws pertaining to or imposing liability or
standards of conduct concerning any environmental matters, including, but not
limited to, matters relating to air pollution, water pollution, noise
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<PAGE>
control or Hazardous Materials. Sublessee shall not use or permit the use of the
Sublease Premises in any manner that will tend to create waste or a nuisance or
which will tend to disturb other tenants of the Building.
4. Rent.
----
4.1 Base Rent. Beginning on the Commencement Date and continuing
---------
thereafter during the term of this Sublease, Sublessee shall pay to Sublessor a
base rent of Sixty-Five Thousand Two Hundred Eleven and 80/100 Dollars per month
($65,211.80/month) ("Base Rent").
4.2 Additional Rent. In addition to Base Rent, beginning on the
---------------
Commencement Date and continuing thereafter during the term of this Sublease,
Sublessee shall pay to Sublessor an amount equal to Six Thousand Four Hundred
Seventy-One and 40/100 Dollars per month ($6,471.40/month) ("Additional Rent")
as Sublessee's contribution towards any Project Taxes and Operating Expenses in
excess of Base Year Project Taxes and Operating Expenses (as those terms are
defined under the Master Lease) payable by Sublessor under the Master Lease and
any over-standard electrical charges payable by Sublessor under Section 4 of the
Seventh Addendum. In addition, Sublessee shall reimburse Sublessor for any late
fees, charges or penalties, after-hour services fees or charges, or other fees,
charges or penalties imposed under the Master Lease with respect to the Sublease
Premises (other than excess Project Taxes and Operating Expenses and over-
standard electrical charges imposed under Section 4 of the Seventh Addendum),
except to the extent such are due solely to the fault of Sublessor, and any
electrical service charges due to after-hours services. Except as provided in
Section 4.4 below, Additional Rent shall be payable monthly. Base Rent and any
Additional Rent payable under this Sublease are collectively referred to herein
as "Rent".
4.3 Prorations. The Rent for any period during the term of this
----------
Sublease which is less than one month shall be a prorata portion of the Rent for
such month.
4.4 Payment of Rent. Except as otherwise specifically provided in
---------------
this Sublease, Rent shall be payable in lawful money without demand, offset,
deduction, counterclaim or setoff, in monthly installments, in advance, on the
first day of each month during the term of this Sublease. All Rent is to be paid
to Sublessor at its office at the address set forth in Section 19.1 herein, or
at such other place as Sublessor may designate by notice to Sublessee; provided,
however, that upon any default by Sublessor under this Sublease, Sublessee shall
be entitled to pay the Rent directly to Master Landlord upon written notice to
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<PAGE>
Sublessor. To the extent any Additional Rent or any other amounts due under this
Sublease are payable on account of items which are not payable monthly by
Sublessor to Master Landlord under the Master Lease, such amounts shall be paid
to Sublessor as and when such items are payable by Sublessor to Master Landlord
under the Master Lease unless otherwise provided herein. Upon written request by
Sublessee, Sublessor agrees to provide Sublessee with copies of any statements
or invoices received by Sublessor from Master Landlord pursuant to the terms of
the Master Lease.
4.5 Advance Rent. Concurrently with the execution of this Sublease,
------------
Sublessee shall pay to Sublessor the sum of Seventy-One Thousand Six Hundred
Eighty-Three and 20/100 Dollars ($71,683.20) ("Advance Rent"), which Advance
Rent shall be applied by Sublessor toward the Rent for the first month of the
Sublease.
5. Security Deposit. In addition to the Advance Rent and within seven (7)
----------------
days of the execution of this Sublease, Sublessee shall deliver to Sublessor an
unconditional and irrevocable letter of credit in favor of Sublessor, in a form
and drawn upon a financial institution reasonably acceptable to Sublessor, for
the principal sum of One Hundred Forty-Three Thousand Three Hundred Sixty-Six
Dollars ($143,366) ("Deposit") as security for Sublessee's faithful performance
of Sublessee's obligations hereunder. If the term of any letter of credit held
by Sublessor will expire prior to the Expiration Date, and it is not extended or
a new letter of credit for the foregoing principal sum and for an extended
period of time is not substituted within thirty (30) days prior to the
expiration date of the letter of credit then held by Sublessor, then Sublessor
shall be entitled to draw the entire amount of the letter of credit then held by
Sublessor and hold such funds in accordance with this Section 5 until the
Expiration Date. At any time that Sublessee fails to pay Rent or any other
amounts due hereunder, or otherwise defaults with respect to any provision of
this Sublease or the Master Lease, Sublessor shall be entitled to draw the
entire amount of any letter of credit then held by Sublessor and use, apply or
retain all or any portion of the Deposit for the payment of such amounts or for
the payment of any other amount to which Sublessor may become obligated by
reason of Sublessee's default, or to compensate Sublessor for any loss or damage
which Sublessor may suffer thereby. If Sublessor so uses or applies all or any
portion of the Deposit, Sublessee shall within ten (10) days after written
demand therefor deposit cash with Sublessor in an amount sufficient to restore
the Deposit to the full amount hereinabove stated and Sublessee's failure to do
so shall be a material breach of this Sublease. Sublessor shall not be required
to keep the Deposit separate from its general
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<PAGE>
accounts. If Sublessee performs all of Sublessee's obligations hereunder, any
letter of credit then held by Sublessor pursuant to this Section 5 or, if
Sublessor has drawn upon such letter of credit pursuant to this Section 5, the
Deposit, or so much thereof as has not been previously applied by Sublessor,
shall be returned, without payment of interest or other increment for its use to
Sublessee at the expiration of the term hereof and after Sublessee has vacated
the Sublease Premises. No trust relationship is created herein between Sublessor
and Sublessee with respect to said letter of credit or Deposit.
6. Parking. Sublessee shall have the non-exclusive right to use fifty
-------
percent (50%) of the reserved and non-reserved parking spaces available for use
by Sublessor under the Master Lease.
7. Signs. To the extent Sublessee desires to erect, install or utilize
-----
any signs, it shall do so only in accordance with the Master Lease and at its
sole cost and expense. Further, to the extent that any exterior or public area
signage available under the Master Lease is of a limited nature, such signage
shall be shared equally between the Sublease Premises and the remainder of the
Master Premises; provided, however, that under no circumstances shall Sublessor
be obligated to remove or modify Sublessor's existing monument signage located
at the intersection of the driveway to the Building and Campus Drive prior to
Sublessor vacating all of the Master Premises.
8. Master Lease.
------------
8.1 Incorporation of Master Lease. To the extent applicable to the
-----------------------------
Sublease Premises, the Master Lease is incorporated into this Sublease in its
entirety as if fully set forth herein, except that the following provisions
thereto are expressly excluded in their entirety from the Sublease: (i) Section
31 of, and Exhibit B to, the Original Lease; (ii) Sections 20, 21, 22, 23 and 24
of the First Addendum; (iii) Section 22 of, and Exhibit B to, the Third
Addendum; (iv) Section 22 of, and Exhibit B to, the Fourth Addendum; (v) Section
22 of the Fifth Addendum; and (vi) Section 22 of the Sixth Addendum. If any
provision of this Sublease expressly conflicts with any provision of the Master
Lease as incorporated herein, the terms of this Sublease shall govern. Sublessee
shall assume and perform for the benefit of Sublessor and Master Landlord the
Tenant's obligations under the Master Lease provisions incorporated herein to
the extent that the provisions are applicable to the Sublease Premises. Whenever
the Master Lease requires the approval or consent of Master Landlord, Sublessee
shall be required to obtain the approval or consent of both Sublessor and Master
Landlord. Whenever the Master Lease
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<PAGE>
requires Tenant to submit, exhibit to, supply or provide Master Landlord with
evidence, certificates, or any other matter or thing, Sublessee shall submit,
exhibit to, supply or provide, as the case may be, the same to both Master
Landlord and Sublessor. In any such instance, Sublessor shall reasonably
determine if such evidence, certificate or other matter or thing shall be
satisfactory; provided, that Sublessor agrees that it shall not unreasonably
withhold consent to any item which is consented to by Master Landlord. Sublessee
acknowledges that it has reviewed the Master Lease and is familiar with the
terms and conditions thereof. Sublessee shall not do or permit to be done
anything which would constitute a violation or breach of any of the terms or
conditions of the Master Lease, or which would cause the Master Lease to be
terminated or forfeited.
8.2 Direct Performance. At any time and on reasonable prior notice to
------------------
Sublessee, Sublessor may elect to require Sublessee to perform its obligations
under this Sublease directly to Master Landlord, in which event Sublessee shall
promptly send to Sublessor copies of all notices and other communications
between Sublessee and Master Landlord.
9. Performance by Sublessor/Status of Master Landlord. Notwithstanding
--------------------------------------------------
any other provision of the Master Lease or this Sublease, Sublessee acknowledges
and agrees that performance by Sublessor is conditioned in all cases upon Master
Landlord's performance of its corresponding obligations under the Master Lease,
and performance by Master Landlord shall be deemed performance by Sublessor.
Sublessor does not assume the obligations of the Master Landlord under the
Master Lease. Sublessor shall not be liable to Sublessee for any default or
other failure of the Master Landlord under the Master Lease. Despite any default
or other failure by Master Landlord under the Master Lease, this Sublease shall
remain in full force and effect, and Sublessee shall pay all Rent and other
amounts due under this Sublease without any abatement, deduction, counterclaim
or offset; provided, however, that in the event Sublessor obtains a final
judgment in its favor releasing Sublessor from paying rent under the Master
Lease, then Sublessor shall rebate to Sublessee an amount equal to the portion
of such released rent due to the Sublease Premises less a proportionate share of
all costs and expenses related to obtaining such final judgment. With respect to
work, services, repairs, repainting, restoration, the provision of utilities,
elevator or HVAC services, or the performance of other obligations required of
Master Landlord under the Master Lease, Sublessor's sole obligation with respect
thereto shall be to request the same from Master Landlord, upon written request
by Sublessee. Sublessee shall contact Master Landlord first to obtain the
desired service
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<PAGE>
or item and shall only contact Sublessor if Master Landlord fails to perform
pursuant to the Master Lease.
10. Furniture. As further consideration for and as a condition precedent
---------
to this Sublease, Sublessee agrees to purchase from Sublessor, and Sublessor
agrees to sell to Sublessee, Eighty-Five (85) cubicles currently located in the
Sublease Premises and the in-place wiring therefor (collectively, the
"Cubicles") for the amount of Forty-Two Thousand Five Hundred Dollars ($42,500)
(85 cubicles * $500 per cubicle), which amount shall be due and payable one (1)
day prior to the Commencement Date. The Cubicles are part of a Harpers cubicle
system, a typical cubicle of which is comprised of two (2) corner sections and
one (1) straight section, a chair, a pencil drawer and two overhead files, and
is wired for four CAT 5 (data) and one split CAT 3 (voice) connections.
Sublessee shall accept the Cubicles "As-Is And With All Faults" so long as they
are in substantially the condition as existed on February 2, 1999. Sublessee
acknowledges that neither Sublessor nor Sublessor's Representatives has made, or
hereby makes, any representation, warranty or covenant, written or oral,
statutory, express or implied, as to any matter whatsoever, with respect to the
Cubicles, including, without limitation, the design, quality, capacity,
material, workmanship, operation, condition, merchantability or fitness for a
particular purpose.
11. Alterations. Sublessee shall be solely responsible for all costs and
-----------
expenses associated with any improvements and alterations to the Sublease
Premises (collectively, "Alterations"). All Alterations shall be subject to
Sublessor's prior written approval, which approval shall not be unreasonably
withheld. Sublessee shall give Master Landlord at least ten (10) days prior
written notice before undertaking any Alterations to enable Master Landlord, in
its sole discretion, to post and record notices of nonresponsibility. Sublessee
shall, at all times, keep the Sublease Premises and the Building free and clear
of all mechanic's or materialman's liens relating to or arising from any
Sublessee Alterations. If any mechanic's or materialman's lien arising from
Sublessee's Alterations is filed and/or recorded against the Sublease Premises
or the Building, Sublessee shall cause such claim or lien to be released and
removed within ten (10) days of such filing and/or recording, either by
satisfaction or by the posting of a release bond in the amount required by
statute, and if Sublessee fails to do so, then Master Landlord or Sublessor may
do so at Sublessee's sole cost and expense. Sublessee acknowledges that it is
not authorized to undertake any Alterations in or to the Sublease Premises
except as permitted under this Sublease and the Master Lease and that it must
deliver the Sublease Premises to Sublessor on the Expiration Date in the
condition required under the Master Lease.
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<PAGE>
12. Assignment and Subletting. Sublessee shall not assign the Sublease or
-------------------------
sublease all or any portion of the Sublease Premises without the prior written
consent of Sublessor, which consent shall not be unreasonably withheld.
Sublessor may grant its consent on reasonable conditions, including, without
limitation, those set forth in Section 5 of the Master Lease. Any such
assignment or subletting without Sublessor's reasonable consent shall be void
and, at the option of Sublessor, Sublessor may terminate the Sublease. No
assignment or sublease shall release Sublessee from any of its obligations
hereunder. If the consent of the Sublessor to an assignment or subletting is
obtained, Sublessor shall promptly contact the Master Landlord to request the
Master Landlord's consent pursuant to the Master Lease.
13. Indemnification.
---------------
13.1 Indemnification of Sublessor. Sublessee agrees to defend,
----------------------------
indemnify and hold Master Landlord, Sublessor and their respective trustees,
directors, officers, shareholders, employees, agents and representatives
(collectively, the "Sublessor Indemnified Parties") harmless from and against
all claims, damages, liabilities, losses, actions, causes of action, judgments,
costs and expenses, including, without limitation, reasonable attorneys' fees
(collectively, "Claims"), arising out of or relating to (i) any breach by
Sublessee under this Sublease, (ii) Sublessee's use of the Sublease Premises,
the Building, the Cubicles or any common areas, (iii) the conduct of Sublessee's
business therein, or (iv) any act or omission of Sublessee or Sublessee's
directors, officers, employees, agents, representatives, licensees, contractors
or invitees in or about the Sublease Premises or the Building; provided,
however, that Sublessee shall not be required to so indemnify, defend or hold
harmless (a) any of the Sublessor Indemnified Parties to the extent such Claims
are directly caused by the negligence or willful misconduct of such Sublessor
Indemnified Parties, (b) the Sublessor Indemnified Parties to the extent that
such Claims are directly caused by a breach of the Master Lease by Sublessor, or
(c) Master Landlord to the extent such Claims are directly caused by the
negligence or willful misconduct of Master Landlord or Sublessor. The foregoing
indemnification and defense obligations shall survive the expiration or earlier
termination of this Sublease.
13.2 Indemnification of Sublessee. Sublessor agrees to defend,
----------------------------
indemnify and hold Sublessee and its directors, officers, shareholders,
employees, agents and representatives (collectively, the "Sublessee Indemnified
Parties") harmless from and against all Claims arising out of or relating to any
default by Sublessor under the Master Lease (except to the extent such default
of the Master
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<PAGE>
Lease is caused by Sublessee's breach of this Sublease); provided, however, that
Sublessor shall not be required to so indemnify, defend or hold harmless any of
the Sublessee Indemnified Parties to the extent such Claims are directly caused
by the negligence or willful misconduct of such Sublessee Indemnified Parties.
The foregoing indemnification and defense obligations shall survive the
expiration or earlier termination of this Sublease.
14. Insurance. During the entire term of this Sublease, Sublessee shall,
---------
at its sole cost and expense, procure and maintain all insurance required under
Section 9 of the Original Lease; provided, however, that comprehensive general
liability insurance described in Section 9 of the Original Lease shall have a
combined single limit for bodily injury and/or property damage liability of not
less than Two Million Dollars ($2,000,000) per occurrence. Sublessee shall name
Sublessor and Master Landlord as additional insureds under all such insurance
policies.
14.1 Waiver of Subrogation. Sublessee shall obtain from its insurer a
---------------------
waiver of all rights of subrogation that the insurer of Sublessee might have
against Sublessor under all policies of insurance maintained by Sublessee at any
time during the Sublease term insuring or covering the Sublease Premises or the
Building or any improvements, fixtures, equipment, furnishings or other
property, including, without limitation, salable goods, merchandise, and
inventory, if any, in, on or about the Sublease Premises or Building.
15. Consent of Landlord. The Master Lease requires Sublessor to obtain the
-------------------
written consent of Master Landlord to this Sublease. Sublessor shall solicit
Master Landlord's consent to this Sublease promptly following the execution and
delivery of this Sublease by Sublessor and Sublessee. In the event Master
Landlord's written consent to this Sublease has not been obtained within thirty
(30) days after the execution thereof on terms reasonably acceptable to
Sublessee, then this Sublease may be terminated by either party hereto upon
notice to the other, and upon such termination all documents and deposits
delivered hereunder shall be promptly returned and neither party hereto shall
have any further rights against or obligations or liabilities to the other party
hereto.
16. Default by Sublessee. Upon any default by Sublessee under this
--------------------
Sublease, Sublessor shall have all rights and remedies available to Master
Landlord under the Master Lease in the event of a similar default on the part of
Sublessor thereunder, and all rights and remedies at law or in equity.
Notwithstanding any other provision of this Sublease, Sublessee shall, with
respect to the Sublease Premises, cure any default by Sublessee under this
Sublease within the period allowed to Tenant under the Master Lease
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even if such time period is shorter than the period otherwise allowed under this
Sublease due to the fact that notice of default from Sublessor to Sublessee is
given after the corresponding notice of default from Master Landlord to
Sublessor.
17. Termination of the Lease. Except as provided in Section 17.1 below, if
------------------------
for any reason the term of the Master Lease shall terminate prior to the
Expiration Date, this Sublease shall automatically be terminated and Sublessor
shall not be liable to Sublessee by reason thereof unless said termination shall
have been caused by the default of Sublessor under the Master Lease.
17.1 Attornment. Master Landlord, by executing this document, agrees
----------
that until a default shall occur in the performance of Sublessor's obligations
under the Master Lease, that Sublessor may receive, collect and enjoy the Rent
accruing under this Sublease. However, if Sublessor shall default in the
performance of its obligations to Master Landlord then Master Landlord may at
its option, receive and collect, directly from Sublessee, all Rent owing and to
be owed under this Sublease. Master Landlord shall not, by reason of the
collection of the Rent from Sublessee, be deemed liable to Sublessee for any
failure of the Sublessor to perform and comply with Sublessor's remaining
obligations.
Sublessor hereby irrevocably authorizes and directs Sublessee upon
receipt of any written notice from the Master Landlord stating that a default
exists in the performance of Sublessor's obligations under the Master Lease to
pay to Master Landlord the Rent due and to become due under this Sublease.
Sublessor agrees that Sublessee shall have the right to rely upon any such
statement and request from Master Landlord, and that Sublessee shall pay such
Rent to Master Landlord without any obligations or right to inquire as to
whether such default exists and notwithstanding any notice from or claim from
Sublessor to the contrary and Sublessor shall have no right or claim against
Sublessee for any such Rent so paid by Sublessee.
In the event that Sublessor shall default in its obligations under the
Master Lease, then Master Landlord, at its option and without being obligated to
do so, may require Sublessee to attorn to Master Landlord in which event Master
Landlord shall undertake the obligations of Sublessor under this Sublease from
the time of the exercise of said option to termination of this Sublease but
Master Landlord shall not be liable for any prepaid Rent nor any Deposit paid by
Sublessee, nor shall Master Landlord be liable for any other defaults of the
Sublessor under the Sublease.
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In the event that Sublessor defaults under its obligations to be
performed under the Master Lease by Sublessor, Master Landlord agrees to deliver
to Sublessee a copy of any such notice of default. Sublessee shall have the
right to cure any default of Sublessor described in any notice of default within
ten (10) days after service of such notice of default on Sublessee. If such
default is cured by Sublessee, then Sublessee shall have the right of
reimbursement and offset from and against Sublessor.
18. Brokers. Sublessor and Sublessee represent and warrant to each other
-------
that no brokers were involved in connection with the negotiation or consummation
of this Sublease other than Catalyst Real Estate ("Catalyst"), as Sublessee's
representative, and Colliers Parrish International ("Colliers"), as Sublessor's
representative. Except as to Colliers and Catalyst, each party agrees to defend,
indemnify, and hold the other harmless from and against any and all claims,
damages, liabilities, losses, actions, causes of action, judgments, costs and
expenses, including, without limitation, reasonable attorneys' fees arising out
of or relating to the claims of any broker, agent, finder or other such person
or entity claiming by, through or under the acts or agreements of such
indemnifying party. Sublessor shall pay to Colliers a commission due pursuant to
Sublessor's separate written agreement with Colliers. Colliers shall pay fifty
percent (50%) of such commission to Catalyst.
19. Miscellaneous Provisions.
------------------------
19.1 Notices. Any notice, demand or request which may be permitted,
-------
required or desired to be given in connection with this Sublease shall be given
in writing and directed to Sublessor and Sublessee as follows:
If to Sublessor: Electronics for Imaging, Inc.
303 Velocity Way
Foster City, California 94404
Attention: Michael L. Wright
Facsimile No.: (650) 357-3219
With a copy to: Russell & Walker LLP
Spear Street Tower
One Market Plaza
Eighteenth Floor
San Francisco, California 94105
Attention: Richard Walker, Esq.
Facsimile No.: (415) 808-4840
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<PAGE>
If to Sublessee: E-Stamp Corporation
4009 Miranda Avenue, Suite 225
Palo Alto, California 94304-1218
Attention: Rick Prime
Vice-President Finance
Facsimile No.: (650) 843-8078
With a copy to: Perkins Coie, LLP
2420 Sand Hill Road, Suite 203
Menlo Park, California 94025
Attention: Edward J. Wes, Jr.
Facsimile No.: (650) 854-9465
Notices shall be either (i) personally delivered (including delivery by Federal
Express or other courier service) to the offices set forth above, in which case
they shall be deemed delivered on the date of delivery to said offices; (ii)
sent by facsimile, in which case they shall be deemed delivered on the date
sent, provided, however, that any notices sent by facsimile shall also be sent
by overnight courier on the same day; or (iii) sent by certified mail, return
receipt requested, in which case they shall be deemed delivered on the date
shown on the receipt unless delivery is refused or delayed by the addressee, in
which event they shall be deemed delivered on the date of refusal or delay of
delivery by the addressee. The addresses and addressees may be changed by giving
notice of such change in the manner provided for above.
19.2 Entire Agreement. This Sublease (including all exhibits attached
----------------
hereto, except those sections of the Master Lease excluded under Section 8.1
above) constitutes the entire understanding between the parties with respect to
the transaction contemplated herein, and all prior or contemporaneous
agreements, understandings, representations and statements, whether oral or
written, are superceded by this Sublease.
19.3 Time of Essence. Time is of the essence in this Sublease.
---------------
19.4 Applicable Law. This Sublease shall be governed by and construed
--------------
pursuant to the laws of the State of California.
19.5 Attorneys' Fees. In the event of any litigation (including,
---------------
without limitation, any litigation in a bankruptcy proceeding) between the
parties with respect to the Sublease Premises, this Sublease, the performance of
the parties' obligations hereunder or the effect of a termination of this
Sublease, or any other matter related thereto, the prevailing
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party shall be entitled to its reasonable costs and expenses incurred in
connection with such litigation, including reasonable attorneys' fees.
19.6 Recording. Neither Sublessor or Sublessee shall record this
---------
Sublease or a memorandum hereof without the consent of the other.
19.7 Examination of Sublease. SUBMISSION OF THIS INSTRUMENT FOR
-----------------------
EXAMINATION OR SIGNATURE BY SUBLESSEE DOES NOT CONSTITUTE A RESERVATION OF OR
OPTION FOR SUBLEASE, AND IT IS NOT EFFECTIVE AS A SUBLEASE OR OTHERWISE UNTIL
EXECUTION BY AND DELIVERY TO BOTH SUBLESSOR AND SUBLESSEE AND CONSENTED TO BY
MASTER LANDLORD IN ACCORDANCE WITH THE TERMS OF THE MASTER LEASE.
19.8 Counterparts. This Sublease may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this Sublease as
of the date first written above.
SUBLESSOR: ELECTRONICS FOR IMAGING, INC.,
a Delaware corporation
By: /s/ Eric T. Saltzman
Eric T. Saltzman
Vice-President
SUBLESSEE: E-STAMP CORPORATION,
a Delaware corporation
By: /s/ Sunir Kapoor
Sunir Kapoor
President and C.E.O.
[Consent of Master Landlord On Next Page]
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Master Landlord hereby consents to the foregoing Sublease, upon the
following express terms and conditions:
1. The Sublease is subject and subordinate to the Master Lease and
to all of the terms, covenants, conditions, provisions and agreements contained
in the Master Lease.
2. Pursuant to Section 5 of the Master Lease, (a) Sublessor shall
pay to Master Landlord, throughout the term of the Sublease, fifty percent (50%)
of all amounts collected by Sublessor under the Sublease which are in excess of
the amounts required to be paid by Sublessor under the Master Lease with respect
to the Sublease Premises; and (b) Sublessor shall promptly reimburse Master
Landlord for the actual costs incurred by Master Landlord in connection with the
review and processing of the Sublease, including, without limitation, Master
Landlord's reasonable attorneys' fees.
3. Any improvements or alternations to the Sublease Premises shall
require the prior written approval of Master Landlord pursuant to the terms of
the Master Lease.
MASTER LANDLORD: THE JOSEPH AND EDA PELL
REVOCABLE TRUST
By: /s/ Signature Illegible
Its: _______________________
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LIST OF EXHIBITS
Exhibit A Master Lease
Exhibit B Floor Plan
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<PAGE>
EXHIBIT A
TO
SUBLEASE AGREEMENT
MASTER LEASE
A copy of the Master Lease is attached hereto.
<PAGE>
AGREEMENT OF LEASE
THIS LEASE is made on the 30th day of July, 1992, between The Joseph and Eda
Pell Revocable Trust ("LANDLORD") and Electronics For Imaging, a California
corporation ("TENANT").
1. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, upon the terms and conditions hereinafter set forth, those
premises (hereinafter "premises") constituting approximately 32,863 rentable
square feet and 31,254 useable square feet as shown on Exhibit "A" attached
hereto, of which 25,000 rentable square feet and 24,264 useable square feet are
located on the first floor and 7,863 rentable square feet and 6,990 useable
square feet on the second floor of that building commonly known as 2855 Campus
Drive (hereinafter "the building"). The building is located on that real
property commonly known as 2855 Campus Drive, San Mateo, California (hereinafter
"the Project"), which includes the building, parking area, arcade, landscaping
and related improvements.
2. TERM. The term of this lease shall be fifty (50) months and shall
commence on the 1st day of November, 1992, and end on the 31st day of December,
1996, inclusive; provided, however that in the event Landlord is unable to
deliver possession of the premises to Tenant upon the date above specified for
the commencement of the term of this lease, neither Landlord nor its agents
shall be liable for any damage caused thereby, nor shall this lease thereby
become void or voidable, and the term herein specified shall in such case
commence upon the date of delivery of possession of the premises to Tenant and
shall terminate fifty (50) months thereafter.
In such event Tenant shall not be liable for any rent until such time as
Landlord shall deliver possession of said premises to Tenant.
3. RENT. Tenant agrees to pay to Landlord as rent for the premises the
sum of Forty-Seven Thousand Three Hundred Twenty-Two Dollars ($47,322.00) per
month in advance on the 1st day of the term of this lease (subject to Paragraph
36 hereof) and on the 1st day of each calendar month thereafter during the term,
except that if the 1st day of the term shall not be the 1st day of the month,
the rental for the portion of the term occurring in the first and last calendar
months of the term shall be appropriately prorated. All installments of rent
shall be paid at the office of Landlord, or at such other place as may be
designated in writing from time to time by Landlord, in lawful money of the
United States and without deduction or offset for any cause whatsoever except as
otherwise specifically provided herein. The rental for which provision is
hereinabove made shall be subject to adjustment as provided in Paragraph 20
hereof; or other covenants and conditions hereinafter set forth. Notwithstanding
the foregoing, no such rent shall be due for the first five (5) months of the
lease term.
All other sums which are to be paid to Landlord by Tenant pursuant to the
terms of this lease shall be deemed additional rent, and shall be paid by Tenant
to Landlord within ten (10) days after receipt by Tenant of a billing therefor
or at such other time as is specifically provided in this lease.
4. USE. The premises are to be used for general office purposes and for
no other business or purpose. No use shall be made or permitted to be made of
the premises, nor acts done in or about the premises, which will in any way
conflict with any law, ordinance, rule or regulation, permit, occupancy
certificate, or other entitlement affecting the use or occupancy of the
premises,
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now or hereafter in effect, or which will increase the existing rate of
insurance upon the Project or cause a cancellation of any insurance policy
covering the building or any part thereof, nor shall Tenant sell, or permit to
be kept, used or sold in or about the premises any article which may be
prohibited by the standard form of fire insurance policy. Tenant shall at its
own expense comply with all present and future laws, ordinances, orders, rules,
regulations, and/or requirements of all governmental authorities pertaining to
Tenant's particular use or occupancy of the premises, or Tenant's activities
therein. Tenant shall not commit, or suffer to be committed, any waste upon the
premises, or any public or private nuisance, or other act or thing which may
obstruct or disturb the quiet enjoyment of any other tenant in the Project, nor
shall Tenant, without the written consent of Landlord, use any apparatus,
machinery or device in or about the premises which shall cause any substantial
noise or vibration, or which shall substantially increase the amount of
electricity or water, if any, agreed to be furnished or supplied under this
lease. Tenant shall not install or use heat-generating machines, excess
lighting, or other equipment which may affect the temperature otherwise
maintained by the air conditioning equipment, without the prior written consent
of Landlord. Tenant may install the usual office machines and equipment, such as
electrical typewriters, adding machines, teletypewriters and similar equipment.
Notwithstanding the foregoing, Tenant may install and operate at the premises
computers and related equipment, subject to the provisions of this lease
respecting use of the premises and installation of alterations and trade
fixtures.
5. ASSIGNMENT. Tenant shall not directly or indirectly sell, assign,
mortgage, encumber or transfer this lease, sublet the premises or any part
thereof or allow any other person (excepting Tenant's agents and employees) to
occupy the premises or any portion thereof, without the prior written consent of
Landlord; provided that Tenant shall not be required to obtain Landlord's
consent to use of the Premises by Tenant's invitees and customers so long as
such invitees and customers are not subtenants or assignees of Tenant. Any such
proposed, attempted or consummated sale, assignment, mortgage, encumbrance,
transfer, subletting, occupancy or other prohibited act described in the
preceding sentences is herein collectively called a "transfer" and the person or
entity who or which is the proposed or actual recipient of a "transfer" is
herein collectively called a "transferee." This prohibition against transfers
does not include the transfer of the Tenant's stock through any public exchange.
As used herein, a "transfer" shall not include a transfer of this lease in
connection with a merger, consolidation or nonbankruptcy reorganization of
Tenant's business, or a transfer to a subsidiary, affiliate, division or
corporation controlled by or under common control with Tenant or a purchaser of
substantially all of the assets of Tenant located at the premises, so long as
the transferee agrees in writing to be bound by all of the terms of this lease
and has a net worth equal to or greater than that of Tenant at the time of the
proposed transfer (with Tenant's net worth measured as of the commencement date
of this lease), the use proposed by the transferee is permitted pursuant to
Paragraph 4 above and is otherwise consistent with the first class office nature
of the building; and no such transfer shall result in Tenant being released or
discharged from any liability under this lease. Tenant shall give Landlord
written notice of any proposed transfer. Said notice shall state the proposed
commencement date of the desired transfer, all material terms of the proposed
transfer, the name and address of the proposed transferee, and Tenant shall
deliver to Landlord with said notice a true and complete copy of all agreements
relating to the proposed transfer together with current complete financial
statements of the proposed transferee. Thereafter, Tenant shall immediately
furnish Landlord with any
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other information concerning the proposed transferee as Landlord shall
reasonably request.
Landlord shall not unreasonably refuse or delay its consent to Tenant's
transfer of the premises. Landlord may grant its consent on reasonable
conditions, including but not limited to (i) Landlord's approval of the proposed
transferee's financial status; (ii) Landlord's approval of the proposed tenant
improvement plan, including any modifications affecting the HVAC system; (iii) a
condition that the proposed tenant improvements are to be made in a manner
reasonably satisfactory to Landlord, and (iv) a condition that Landlord shall be
entitled to receive fifty percent (50%) of the amount by which the rent received
by Tenant from a transferee exceeds the rental required hereunder.
Any transfer hereunder by Tenant shall not result in Tenant being released
or discharged from any liability under this lease other than as specifically set
forth above. As a condition to Landlord's prior written consent as provided for
in this paragraph, the transferee(s) shall agree in writing to comply with and
be bound by all of the terms, covenants, conditions, provisions and agreements
of this lease, and Tenant shall deliver to Landlord, promptly after execution,
an executed copy of each sublease and an agreement of said compliance by each
transferee. Tenant shall not agree to any modification of such sublease,
including any further transfer, without Landlord's prior written consent.
If Landlord consents to any such subletting or assignment, Tenant shall pay
to Landlord the amount of all Landlord's actual costs of processing such
proposed transfer (including, without limitation, reasonable attorney's fees).
Consent to any transfer shall not constitute consent to any subsequent
transfer. If Tenant makes any transfer without the prior written consent of
Landlord, Landlord may collect rent from the transferee and apply such rent
against amounts owing hereunder without waiving its rights hereunder, and
consent of Landlord shall not be deemed or presumed from such conduct. Landlord
may, at its option, terminate this lease in the event of any transfer of this
lease which does not comply with the provisions of this paragraph.
6. REPAIRS AND ALTERATIONS. Subject to any punchlist items prepared in
accordance with Exhibit B and to any latent defects discovered within one year
after delivery (provided that nothing herein shall be construed to require
Landlord to correct any item in the premises damaged by Tenant's misuse
thereof), Tenant agrees by taking possession of the premises as herein set forth
that such premises are then in a tenantable and good condition and conform with
the requirements of this lease, that Tenant will take good care of the premises,
and that the same will not be altered or changed without the written consent of
the Landlord. Tenant shall promptly notify Landlord of any, damage to or defect
in any part of the premises, or in any equipment or utility system serving the
premises, of which Tenant becomes aware and which may cause or result in death
or injury to any person or damage to property notwithstanding that Landlord may
have no obligation with respect thereto. As part of the consideration for rental
hereunder, Tenant agrees that all alterations, improvements, repairs or
maintenance of the premises shall, except as otherwise herein agreed, be made by
contractors reasonably acceptable to Landlord, at Tenant's expense, and Tenant
hereby waives the provisions of Subdivision (1) of Section 1932 and of Sections
1941 and 1941.1 of the Civil Code of California, and all rights to make repairs
at Landlord's expense under the provisions of Section 1942 and 1942.1 of said
Civil Code or any other provision of law. Unless otherwise provided by written
agreement, all alterations, improvements and changes that may be permitted by
Landlord shall at the termination of the lease become the property of Landlord,
and
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<PAGE>
shall remain upon and be surrendered with the premises, provided however, that
at Landlord's option Tenant shall, at Tenant's expense, when surrendering the
premises, remove the same and restore the premises to their original condition
at the commencement of this lease, provided that Landlord shall have so notified
Tenant at the time Landlord consented to such alterations, improvements or
changes. All damage or injury done to the premises by Tenant, or by any persons
who may be in or around the premises with the consent of Tenant, shall be paid
for by Tenant. Tenant shall, at the termination of this lease by the expiration
of time or otherwise, surrender and deliver up the premises to Landlord in as
good condition as when received by Tenant from Landlord, reasonable wear and
tear excepted. Tenant shall pay for all damage to the building, the Project, or
appurtenant areas or equipment, as well as all damage to tenants or occupants
thereof or their property caused by Tenant or by Tenant's agents, contractors,
invitees or representatives. Subject to Tenant's express repair obligations set
forth herein, Landlord shall maintain and keep the Project in good condition,
provided that Landlord shall be entitled to treat the costs thereof as
"Operating Expenses" to the extent permitted under Paragraph 20(e)(2) of this
lease. Landlord agrees to reasonably cooperate with Tenant in enforcing any
warranties applicable to systems and equipment Tenant is obligated to repair and
maintain hereunder.
7. TRADE FIXTURES. Subject to the provisions of Paragraphs 4 and 6
hereof, Tenant may install and maintain its trade fixtures on the premises,
provided that such fixtures, by reason of the manner in which they are affixed,
do not become an integral part of the building or premises. Tenant, if not in
default hereunder, may at any time or from time to time during the term hereof,
or upon the expiration or termination of this lease, alter or remove any such
trade fixtures so installed by Tenant. If not so removed by Tenant on or before
the expiration or termination of this lease, Tenant, upon the request of
Landlord, shall remove the same. Any damage to the premises caused by any such
installation, alteration or removal of such trade fixtures shall be promptly
repaired at the expense of the Tenant.
8. SERVICES. Landlord shall furnish the premises with a reasonable amount
of water and electricity suitable for general office uses including a normal
complement of electrical office equipment, daily janitor service except on
Saturdays, Sundays and public holidays, window washing with reasonable
frequency, replacement of fluorescent tubes and light bulbs, toilet room
supplies, and elevator service consisting of non-attended automatic elevators.
Such heat and air-conditioning as may be required for the comfortable occupation
of the premises will be provided during the hours of 7:30 AM to 6:00 PM daily
except Saturdays, Sundays and public holidays. During other hours, Landlord
shall provide reasonable heat and air-conditioning upon twenty-four (24) hours'
notice by Tenant to Landlord, and Tenant, upon presentation of a bill therefor,
shall pay Landlord for such service on an hourly basis at the then prevailing
rate as established by Landlord. The current hourly rate is Thirty Dollars
($30.00) per hour. This rate shall be reviewed and may be subject to adjustment
annually.
If in the reasonable judgment of Landlord any equipment or device used on
the premises (other than the usual office machines permitted pursuant to
Paragraph 4 hereof) will result in unusual electrical (e.g., 24-hour, on-line
computer functions) or water use, Landlord may either (i) estimate the amount of
Tenant's excess usage and charge Tenant a surcharge based on the current actual
utility rates for the building, or (ii) cause a special meter to be installed on
the premises to measure the amount of electric current or water consumed for
such equipment or device. Tenant shall pay all expenses directly related to any
such meters, including without limitation, the expense of such meters and of
installation,
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<PAGE>
maintenance and repair thereof, for all such electric current or water so
consumed (at the rates then in effect by the utility furnishing same utilizing
the average rate for the building), and for the expense of keeping account of
the electric current or water so consumed. If Landlord does not install such
separate meter until after the use of such equipment or device has commenced,
Tenant shall pay the actual expense of electric current or water consumed prior
to installation of the meter as reasonably estimated by Landlord on the basis of
actual use determined after installation of the meter. Landlord may install
supplemental air conditioning units in the premises or otherwise provide
supplemental air conditioning if any heat-generating equipment or devices are
installed or used on the premises, and all expenses of such supplemental air
conditioning (including without limitation installation, operation, repair and
maintenance, separate metering, if any, and accounting for such expenses),
determined in the reasonable judgment of Landlord, shall be paid by Tenant.
Landlord shall not be liable for direct or indirect or consequential damage or
damages for (i) personal discomfort, inconvenience, illness, injury or death of
Tenant, its employees, agents, invitees, clients, licensees, guests, customers
or any other persons whatsoever, nor (ii) injury or damage to property, by
reason of the operation or non-operation of any of the above-referenced
equipment or systems, or for any interruption, reduction, or cessation of the
supply, quality or character of any utility or other service, unless caused by
the gross negligence or willful misconduct of Landlord. Tenant shall be solely
responsible for providing appropriate protections (including data storage back-
up devices) against loss of its computer data or other electronic data.
Landlord's obligations hereunder are subject to adoption by Landlord of
energy conservation measures required by any governmental entity, and Tenant
shall cooperate in effectuating such energy conservation measures upon request
of Landlord including without limitation those measures specified in the Project
Rules and Regulations.
9. INSURANCE. Notwithstanding any other provision of this lease, Tenant
at its expense shall maintain the following insurance coverages: (a) worker's
compensation insurance as may be required by law; (b) comprehensive general
liability insurance issued by an insurer reasonably satisfactory to Landlord,
with a combined single liability limit for bodily injury and property damage of
not less than One Million Dollars ($1,000,000) per occurrence, or such greater
amount as an institutional mortgagee of Landlord may reasonably require from
time to time, insuring against all liability of Tenant and its authorized
representatives arising out of and in connection with Tenant's use or occupancy
of the premises; and (c) "all risk" property insurance on Tenant's personal
property and fixtures and all Tenant's improvements to the premises. Tenant's
property policies shall not provide for deductible amounts in excess of $1,000
without the prior written consent of Landlord. At the request of Landlord, the
liability insurance shall include products liability coverage. All such
insurance shall insure performance by Tenant of the indemnity and hold harmless
provisions of Paragraph 10 hereof. Landlord shall be named as an additional
insured with Tenant on such liability policy, and such policy shall include
cross-liability endorsements. Tenant's liability policy of insurance shall be
primary and noncontributory to any insurance carried by Landlord. At the
commencement of the lease term, and annually on renewal of such insurance,
Tenant shall deliver to Landlord an original certificate of such insurance from
the insurer, which certificate shall show the coverages required by this lease
(including, without limitation, that Tenant's insurance is primary and
noncontributory with respect to any insurance of Landlord), that Landlord shall
be an additional insured, and shall provide that such policy shall not be
cancelled or modified without thirty (30) days prior written
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<PAGE>
notice by the insurer to Landlord. If Tenant fails to obtain such insurance or
to furnish such certificate as required in this lease, Landlord may, but shall
not be obligated to, obtain such insurance at the expense of Tenant, and Tenant
shall promptly pay such expense to Landlord.
Landlord may, without diminishing or affecting in any way Tenant's
obligations to maintain insurance as herein provided, maintain any insurance
coverage on the building, the Project, or the premises deemed appropriate by
Landlord in its sole discretion, including without limitation lessor's risk or
comprehensive general liability insurance, worker's compensation insurance,
extended coverage, fire or casualty insurance, with replacement cost riders,
flood or earthquake insurance, rental or business interruption insurance, and
such insurance may provide for such deductible amounts in amounts deemed
appropriate by Landlord. Except as otherwise expressly provided herein or
required by law, Landlord shall have no obligation to maintain such insurance.
Notwithstanding any contribution by Tenant to Landlord for insurance premiums as
part of the operating expenses as may be required in this lease, no insurable
interest is conferred upon Tenant under any policies carried by Landlord, and
Tenant shall have no right to receive any proceeds of insurance from policies
carried by Landlord. If Tenant desires to receive indemnity by way of insurance
for any property, work or thing whatever, Tenant shall insure same for its own
account and shall not look to Landlord for reimbursement or recovery in the
event of loss or damage from any cause, whether or not Landlord has insured same
and recovered therefor.
Each party hereby waives its right of recovery against the other for any
losses which are or are required to be insured against under this Paragraph,
regardless of cause or origin, including negligence of the other party hereto,
and covenants that no insurer shall hold any right of subrogation against such
other party. Each party shall advise insurers of the foregoing, and such waiver
shall be a part of each policy maintained by each party which applies to the
premises or Tenant's use and occupancy of any part thereof.
10. HOLD HARMLESS AND NONLIABILITY OF LANDLORD. Inasmuch as Tenant has
agreed to carry the insurance-specified in Paragraph 9, the parties agree that
Landlord shall not be liable for, and Tenant hereby waives all claims against
Landlord with respect to or arising out of, any death or injury or damage that
may result to any person or property in or about the premises, or the Project,
from any cause whatsoever, including but not limited to injury or damage
resulting from any defects in the Project or any equipment located therein, or
from the acts or omissions of any persons, including cotenants, or any acts or
omissions of Landlord, except insofar as such injury or damage may result from
the negligence or willful misconduct of Landlord or its employees, agents,
contractors, licensees or invitees. In addition, Landlord shall not be liable
for any loss or damage for which Tenant is required to insure pursuant to
Paragraph 9, nor for any loss or damage resulting from any construction,
alterations or repairs performed by Tenant or its contractors, agents or
employees.
Tenant agrees to indemnify and hold Landlord harmless against all claims,
and the expense of defending against such claims, for death or for injury or
damage to persons or property occurring in or about the premises or occurring
outside the premises to the extent such death, injury or damage results from the
act, failure to act, negligence or other fault of Tenant or its agents,
employees, contractors, licensees or invitees. Tenant further agrees to
indemnify and hold harmless Landlord against any and all claims by or on behalf
of any person, firm or corporation, arising from the conduct of any work done by
or for Tenant in or
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about or from transactions of Tenant concerning the premises, and will further
indemnify and hold Landlord harmless against and from any and all claims arising
from any breach or default on the part of the Tenant to be performed pursuant to
the terms of this lease. Tenant shall also indemnify and hold harmless Landlord
against all costs, reasonable counsel fees, expenses and liabilities incurred in
connection with any such claims or actions or proceedings brought thereon. If
any action or proceeding is brought against Landlord by reason of any such
claims or liability, Tenant agrees to defend such action or proceeding at
Tenant's sole expense by counsel reasonably satisfactory to Landlord. The
provisions of this Paragraph 10 shall survive the expiration or termination of
this lease.
Should Landlord, without fault on Landlord's part, be made a party to any
litigation instituted by or against Tenant, or by or against any person holding
under or using the premises by license of Tenant, or for the foreclosure of any
lien for labor or material furnished to or for Tenant or any such other person
or otherwise arising out of or resulting from any act or transaction of Tenant
or of any such other person, Tenant shall pay to Landlord the amount of any
judgment rendered against Landlord or the premises or any part thereof, and all
costs and expenses, including reasonable attorneys' fees, incurred by Landlord
in or in connection with such litigation.
11. DESTRUCTION. If the premises or the building wherein the same are
situated shall be destroyed by fire or other casualty, or be so damaged thereby
that they are untenantable and cannot be rendered tenantable within one hundred
eighty (180) days from the date of such destruction or damage in the reasonable
opinion of the Landlord, Landlord shall so notify Tenant in writing within
thirty (30) days after the date of such destruction or damage, and either
Landlord or Tenant may terminate this lease by giving written notice to the
other within thirty (30) days after the date of the first notice. If neither
party elects to terminate this lease, or if the damage or destruction shall not
be such as to permit termination of the lease as above provided, Landlord shall
with due diligence, to the extent of any insurance proceeds received by
Landlord, or to the extent of insurance proceeds which would have been received
by Landlord but for Landlord's failure to maintain the insurance required of
Landlord pursuant to this Lease, repair said premises, and a proportionate
reduction shall be made in the rent herein corresponding to the time during
which and to the portion of the premises of which Tenant shall be deprived of
possession, as reasonably determined by Landlord. The provisions of Subdivision
2 of Section 1932 of the California Civil Code, and of Subdivision 4 of Section
1933 of that Code, shall not apply to this lease, and Tenant waives the benefits
of such provisions. In repairing the premises, Landlord may use designs, plans
and specifications other than those used in the original construction, and may
alter or relocate any or all of the building, including the premises, provided
that the premises as altered or relocated shall be in all material respects
reasonably comparable to the premises as defined herein. Leasehold improvements
installed in the premises by Landlord at its expense shall be repaired and
rebuilt by Landlord, subject to the same requirements applicable to the premises
under this paragraph.
12. NOTICES. All notices, demands, requests, consents, or approvals
("notices" hereafter) which are required or authorized to be given by Landlord
or Tenant pursuant to this lease or by law, or which Landlord or Tenant may
desire to give to the other, shall be in writing. All notices to Landlord shall
be addressed to Pell Development Company, 100 Smith Ranch Road, Suite 325, San
Rafael, California 94903 or such other address as Landlord may from time to time
request, and shall be personally delivered to an employee of Landlord or served
by mail. All notices to Tenant shall be
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addressed to Tenant at the premises, and shall be delivered to the premises,
personally or by messenger or air courier, or served by mail addressed to the
premises, whether or not Tenant has departed from, abandoned, or vacated the
premises, or to such other address as Tenant may from time to time designate in
writing. Tenant waives the provisions of Section 1162 of the California Code of
Civil Procedure, provided that any notice to Tenant under Section 1161 of the
California Code of Civil Procedure is given in compliance with this Paragraph.
All notices served by mail shall be deposited in the United States mail, first
class postage prepaid (or, at the option of the party giving the notice, may be
by certified or registered mail, postage prepaid), addressed as herein provided,
and shall be effective (a) on the third day after being deposited in the mail,
as determined by the postmark, or if there is no postmark then by other
competent evidence, or (b) when received if earlier or if otherwise served.
13. INSOLVENCY OR RECEIVERSHIP. Either (a) the appointment of a receiver
to take possession of all, or substantially all, of the assets of Tenant, which
appointment is not dissolved for a period of thirty (30) days thereafter, (b) a
general assignment by Tenant for the benefit of creditors, (c) any action taken
or suffered by Tenant under any insolvency or bankruptcy or reorganization act,
which action remains undischarged for a period of thirty (30) days, (d) the
attachment, execution or other judicial seizure of Tenant's interest in this
lease or in any substantial amount of Tenant's assets located on the premises,
which such seizure is not discharged for a period of thirty (30) days
thereafter; or (e) an admission by Tenant in writing of its inability to pay its
debts as they become due, shall constitute a breach of this lease by Tenant.
14. DEFAULT.
(a) Events of Default. The occurrence of any of the following shall
-----------------
constitute an event of default on the part of Tenant: (1) failure of Tenant to
pay rent or other payments when due hereunder, such failure continuing for a
period of five (5) days after Landlord gives Tenant written notice of such
failure; provided, however, that Landlord shall not be required to provide such
notice more than twice in any 12-month period during the term of this lease, the
third such nonpayment constituting default without requirement of notice; (2)
vacation or abandonment by Tenant of the premises; (3) transfer of Tenant's
interest in this lease, or any part thereof without the consent of Landlord as
provided in Paragraph 5 hereof; (4) occurrence of a breach of this lease under
Paragraph 13 hereof, relating to the financial condition of Tenant; (5) failure
of Tenant to cure a breach of an obligation under this lease which results in a
nuisance to other tenants in the Project or to Landlord, or presents a hazard to
persons or property, within 48 hours after notice of such breach; (6) failure of
Tenant to perform any other obligation, covenant, or agreement under this lease,
other than those matters specified above, such failure continuing for thirty
(30) days after notice of such failure (or such longer period as is reasonably
necessary to remedy such default, provided that Tenant shall, within such thirty
(30) day period commence and thereafter continuously and diligently pursue such
remedy at all times until such default is cured). Any notice by Landlord under
this Paragraph shall be sufficient if it informs Tenant of the general nature of
Tenant's failure to perform Tenant's obligations hereunder. If Tenant fails to
perform any obligation hereunder at a time when Tenant is entitled to no cure
periods, Landlord shall be entitled to exercise the remedies herein provided for
default without written notice to Tenant or an opportunity to Tenant to cure
such default.
(B) REMEDIES. Upon the occurrence of an event of default under
--------
Paragraph 14(a) of this lease, Landlord shall have
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the following rights and remedies, which shall be cumulative, and any other
remedies provided by law:
Without prejudice to any of the remedies that Landlord may have under
this lease, or at law or equity by reason of Tenant's default, Landlord may (i)
terminate this lease and avail itself of all the rights and remedies of the
Landlord provided by section 1951.2 of the Civil Code of the State of
California, or successor Code section; (ii) elect to have the lease continue in
effect for so long as Landlord does not terminate Tenant's right to possession,
in which case Landlord may enforce all of its rights and remedies under this
lease, including (but without limitation) the right to recover all unpaid
rental, including adjustments pursuant to paragraph 20 hereof, as it becomes
due, and Landlord, without terminating this lease, may exercise all of the
rights and remedies of a Landlord under section 1951.4 of the Civil Code of the
State of California or any successor Code section; (iii) enter the premises and
remove therefrom all persons and property, store such property in a public
warehouse or elsewhere at the cost of and for the account of Tenant, and sell
such property and apply the proceeds therefrom pursuant to applicable California
law, and (iv) have a receiver appointed for Tenant, upon application by
Landlord, to take possession of the premises and to apply any rental collected
from the premises and to exercise all other rights and remedies granted to
Landlord pursuant to subparagraph (iii) above. Acts of maintenance and
preservation or efforts to lease the premises or the appointment of a receiver
upon application of Landlord to protect its interest under the lease shall not
be construed as a termination of Tenant's right to possession of the premises
under Section 1951.4 of the California Civil Code, or any successor law thereto,
nor shall any such act be construed as an election on Landlord's part to
terminate this lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction.
If Landlord elects to terminate this lease after Tenant's default, Landlord
may recover all amounts provided in 1951.2 of the California Civil Code
(including, without limitation, the costs and expenses of recovering the
premises, the reasonable costs and expenses of subletting or re-letting the
premises including reasonable attorneys' fees and any real estate commissions
actually paid or incurred, provided that any commission paid to a company owned
by Landlord shall not exceed the prevailing market rate for such commission, and
any costs and expenses of repairs or alterations for such sub-letting or re-
letting) with interest thereon at the rate herein provided, and any additional
amounts which may now or hereafter be authorized by law.
If Landlord subleases the premises, then upon each such subletting, Tenant
shall immediately pay to Landlord (in addition to any other amounts due
hereunder) all reasonable costs and expenses of such subletting, including
without Limitation reasonable attorneys' fees and any real estate commissions
actually paid or incurred (provided that any commission paid to a company owned
by Landlord shall not exceed the prevailing market rate for such commissions)
and any costs and expenses of such alterations and repairs, and the present
worth of the amount, if any, by which the unpaid rentals and other amounts due
hereunder for any portion of the balance of the term of this lease included in
the period of such subletting exceed the rentals reserved in such sublease
(computing present worth by assuming the legal rate of interest), less the
amount, if any, of said rental loss which Tenant proves could have been
reasonably avoided, with interest on all such sums at the rate herein provided.
Rents received by Landlord from such re-letting shall be applied; first, to the
payment of any unpaid sums due to Landlord from Tenant under the preceding
sentence hereof; second, to the payment of any indebtedness, other than
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monthly rent, due hereunder from Tenant to Landlord (including interest on
defaulted payments hereunder); third, to the payment of rent due and unpaid
hereunder and the residue, if any, shall be held by Landlord and applied in
payment of future rent or other obligations as the same may become due and
payable hereunder. If rentals received from such a subletting during any month
are less than rentals and other payments to be paid during or prior to that
month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Any
such deficiency shall be calculated and paid monthly.
Landlord shall have the right to cure any default of Tenant at Tenant's
expense. Tenant shall pay to Landlord immediately upon demand all costs incurred
by Landlord in curing any such default. No such cure by Landlord shall
constitute a waiver by Landlord of the default of Tenant or prevent Landlord
from exercising the other remedies herein provided for default by Tenant.
(c) Late charges. Tenant acknowledges that late payment by Tenant to
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Landlord of rent or other sums due hereunder will cause Landlord to incur costs
not contemplated by this lease, including without limitation processing and
accounting charges, administrative expense, and additional interest expense or
late charges to Landlord resulting from late payment by Landlord of payments due
on obligations of Landlord, whether or not secured by an encumbrance on the
premises. Tenant acknowledges that the exact amount of such damages would be
extremely difficult and impractical to ascertain, and that the expense of
attempting to ascertain the exact amount of such damages would be an additional
cost not contemplated by this lease. Accordingly, in the event that Tenant shall
fail to pay any installment of rent or any sum due hereunder within ten (10)
days after the later of the date such amount is due or the effective date of any
notice required to be given by Landlord in connection therewith, and without
regard to whether Landlord exercises any remedy herein provided for default by
Tenant, Tenant shall pay to Landlord as additional rent a late charge equal to
four percent (4%) of each such installment or other sum. Landlord and Tenant
agree that the late charge herein provided is a reasonable estimate of the
damages which Landlord shall incur by reason of late payment by Tenant.
Landlord's acceptance of any late charge shall not constitute a waiver of
Tenant's default with respect to the overdue amount if Tenant fails to pay such
amount within any applicable grace period provided in this lease, nor shall such
acceptance prevent Landlord from exercising any rights or remedies herein
provided for default by Tenant.
(d) Other. In addition to the foregoing, and regardless of whether
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Landlord has exercised any remedies for default hereunder, if an event of
default has occurred under Paragraph 14(a) hereof and is continuing at the time
Tenant purports to exercise a right or option granted hereunder, Tenant shall
have no right to exercise any right of first refusal, option to extend the term
of this lease or option to expand the premises granted to Tenant hereunder or in
any other agreement relating to the premises, the building or the Project, and
any attempt to exercise such a right or option shall be void and of no effect
whatsoever, provided, however, that Tenant's right to possession of the
premises, and Tenant's rights to sublet the premises or assign its lease
pursuant to the provisions of Paragraph 5 hereof, shall not be deemed terminated
unless Landlord terminates the lease by written notice as herein provided. Any
period provided herein for the exercise by Tenant of any such right or option
hereunder shall not be tolled, extended, or otherwise affected to the benefit of
Tenant by reason of any such disability of Tenant hereunder regardless of any
attempt by Tenant to exercise such right or option hereunder while such an event
of default exists hereunder. Any defaulted payments hereunder shall bear
interest at 3% per
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annum plus the greater of (i) the Federal Reserve Bank rate, specified in
Article 15, Section 1 of the California Constitution, prevailing on the 25th day
of the month preceding execution of this lease (it being understood that this
lease is not a contract to make a loan or forbearance), or (ii) such Federal
Reserve Bank rate prevailing on the 25th day of the month preceding the date
such defaulted payment was due hereunder, regardless of whether Landlord
exercises any remedies hereunder.
Tenant hereby waives all claims for damages that may be caused by
Landlord's re-entering and taking possession of the premises or removing and
storing the property of Tenant as authorized in this paragraph, and will hold
Landlord harmless against all loss, costs or damages occasioned thereby, and no
such re-entry shall be considered or construed to be a forcible entry.
15. REMOVAL OF PROPERTY. [Intentionally deleted].
16. WAIVER. No provision of this lease shall be deemed waived by Landlord
or Tenant except by a writing signed by Landlord or Tenant. The waiver by
Landlord or Tenant of any breach of any term, covenant, or condition herein
contained shall not be deemed to be a waiver of such term, covenant, or
condition or of any subsequent breach of the same or any other term, covenant,
or condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant, or condition of this lease, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent. No endorsement on
any check or other form of payment or statement in any communication
accompanying any payment shall be deemed an accord or satisfaction, and Landlord
or Tenant may accept any payment without prejudice to any rights Landlord or
Tenant may have at law or under this lease. Any consent by Landlord or Tenant to
any act or omission by Tenant or Landlord for which Landlord's or Tenant's
consent is required hereunder shall not be deemed to be a consent to any
subsequent act or omission of the same or different nature, nor shall any such
consent be deemed to be a waiver of the requirement of Landlord's or Tenant's
consent for any subsequent act or omission of the same or different nature.
17. ATTORNEYS' FEES. If Tenant or Landlord shall bring any action for any
relief against the other, declaratory or otherwise, arising out of this lease or
Tenant's occupancy of the premises, including any suit by Landlord for the
recovery of rent or possession of the premises, the losing party shall pay to
the prevailing party a reasonable sum for attorneys' fees incurred in bringing
such suit, and/or enforcing any judgment granted therein, all of which shall be
deemed to have accrued upon the commencement of such action and shall be paid
whether or not such action is prosecuted to judgment. Any judgment or order
entered in such action shall contain a specific provision providing for the
recovery of attorneys' fees and costs incurred in enforcing such judgment. For
the purposes of this section, attorneys' fees shall include, without limitation,
fees incurred in the following: (1) postjudgment motions; (2) contempt
proceedings; (3) garnishment, levy, and debtor and third party examinations; (4)
discovery; and (5) bankruptcy litigation.
18. TAXES PAYABLE BY TENANT. Tenant shall pay, before delinquency, all
taxes levied against, imposed upon, measured by, or resulting from or with
respect to (a) any personal property or trade fixtures placed by Tenant in or
about the premises; (b) any improvements ("Special Improvements") to the
premises in excess of building standard improvements, whether owned by Landlord
or Tenant; (c) the possession, lease, operation, management, maintenance,
alteration, improvement, repair, use or occupancy of
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the premises or any portion thereof by Tenant (provided that this clause shall
not be construed to require Tenant to make payments in duplication of amounts
payable pursuant to Paragraph 20 hereof); (d) this transaction or any document
to which Tenant is a party creating or transferring any interest or estate in
the premises; (e) the cost and expenses of contesting the amount or validity of
any of the foregoing taxes. If any such taxes are levied against Landlord or
Landlord's property, and if Landlord pays the same, which Landlord shall have
the right to do regardless of the validity of such levy, or if the assessed
value of Landlord's property is increased by the inclusion therein of a value
placed upon such personal property, trade fixtures or Special Improvements of
Tenant, and if Landlord pays the taxes based upon such increased assessment,
which Landlord shall have the right to do regardless of the validity thereof,
Tenant shall, upon demand, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment, as the case may be. In the event that it shall not be lawful for
Tenant so to reimburse Landlord, the rent payable to Landlord under this lease
shall be revised to yield to Landlord the same net rent from the premises after
imposition of any such tax upon Landlord as would have been received by Landlord
from the premises prior to the imposition of such tax. The amount of any tax
upon Tenant's personal property attached to the premises, trade fixtures or
Special Improvements which is included in the property tax assessment for the
building shall be determined on the basis of the records of the County Assessor
if such records are sufficiently detailed to allow such determination, and if
not, then the amount shall be determined on the basis of the actual cost of
construction or installation thereof. Notwithstanding the foregoing, Tenant
shall have the right to contest the imposition or assessment of any such taxes
by appropriate legal procedures, provided that unless the taxing authority
agrees to suspend Tenant's obligation to pay such amounts during the pendency of
such contest, Tenant shall not be relieved of the obligation to pay, or
reimburse Landlord for, any such taxes during the pendency of such contest, and
Tenant shall indemnify and hold Landlord harmless from any liability, cost,
damage or expense arising out of such contest.
19. LIENS. Tenant shall keep the premises, building, and the Project, free
from any liens arising out of any work performed, materials furnished or
obligations incurred by Tenant.
20. RENTAL ADJUSTMENT. The monthly rental provided in Paragraph 3 shall be
subject to adjustment as follows:
(a) Landlord shall bear all Project Taxes and Operating Expenses through
and including the Base Year, which is calendar year 1993. If Project Taxes and
Operating Expenses in any subsequent year of the lease term exceed the Base Year
Project Taxes and Operating Expenses, Tenant shall pay to Landlord with respect
to each such year, Tenant's Share of such excess.
(b) Tenant shall pay its share of any such excess in the following manner:
After the first calendar year following the Base Year (hereinafter referred to,
together with each successive calendar year of the lease term, as the
"Comparison Year"), Landlord shall calculate the actual Project Taxes and
Operating Expenses and Tenant's share of the excess amount over the Base Year
Project Taxes and Operating Expenses. Landlord shall notify Tenant of the total
amount of its share of the excess. Tenant shall pay to Landlord the full amount
of its share of the excess for the first Comparison Year within thirty (30) days
after its receipt of the invoice. One-twelfth (1/12th) of Tenant's share of the
excess for the first Comparison Year shall be added to the monthly rental
payments required to be made by Tenant in the Second Comparison Year as an
estimated amount of Tenant's share of the excess for such Comparison Year, and
any installments which would have been
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payable in the months preceding Landlord's notice to Tenant shall be payable
within thirty (30) days after Landlord's notice. The procedure outlined above
shall be repeated in each successive Comparison Year, provided that the total
amount of monthly payments made by Tenant in any Comparison Year shall be
deducted from its share of the excess amount for such Comparison Year, with the
balance to be paid by Tenant within thirty (30) days after its receipt of the
reconciliation statement for such Comparison Year, or with any overpayment by
Tenant to be credited against the next installment of rent due under the lease,
and further provided that Tenant shall pay the same installment amount in each
Comparison Year as in the prior year until such amount is adjusted by Landlord
in the reconciliation statement for the prior Comparison Year.
(c) Landlord shall, as soon as practicable after the close of any calendar
year for which rental was increased under Subparagraph 20(a) hereof, deliver to
Tenant a written statement summarizing actual Project Taxes and Operating
Expenses for such calendar year and showing Tenant's Share of any excess over
the Base Year Project Taxes and Operating Expenses. If Tenant disputes the
amount set forth in such statement, Tenant shall have the right, by written
request made not later than thirty (30) days following receipt of such
statement, to cause Landlord's books and records with respect to such calendar
year to be audited by independent certified public accountants mutually
acceptable to Landlord and Tenant. Prior to any such audit, Tenant shall pay to
Landlord a deposit equal to the full amount of any unpaid amount in dispute.
Notwithstanding the foregoing, Tenant may elect to deposit such disputed amount
with a neutral escrowholder by so notifying Landlord provided that in such
event, the audit must be concluded, and Landlord and Tenant shall each cause the
escrowholder to release any amounts determined to be owed to Tenant or Landlord,
respectively, no later than sixty (60) days following the original due date for
the disputed amount. All amounts held in such escrow account shall bear interest
at the highest available rate for short-term deposits for the benefit of Tenant,
unless such audit reveals that the amount in dispute is in fact owing to
Landlord, in which case such interest shall be for the benefit of Landlord. The
amounts payable under Subparagraph 20(b) by Landlord to Tenant or Tenant to
Landlord, as the case may be, shall be appropriately adjusted on the basis of
such audit. If such audit discloses a liability for further refund by Landlord
to Tenant in excess of five percent (5%) of the amount determined by Landlord
pursuant to this subparagraph 20(c) hereof as Tenant's Share of actual excess
Project Taxes and Operating Expenses for such calendar year, the cost of such
audit and the escrowholder's fee shall be borne by Landlord; otherwise the cost
of such audit and the escrowholder's fee shall be borne by Tenant. Tenant shall
pay all reasonable expenses of Landlord in connection with any inspection or
audit of Landlord's books and records hereunder (including without limitation
accounting or legal fees incurred by Landlord in connection therewith), unless
under the terms of this subparagraph 20(c) Landlord is required to pay the cost
of an audit for the calendar year covered by Tenant's inspection or audit. If
Tenant shall not request an audit in accordance with the provisions of this
subparagraph 20(c) within ninety (90) days of receipt of Landlord's statement,
such statement shall be conclusively binding upon Tenant.
(d) Tenant's obligation under this Paragraph 20 for any fraction of a
calendar year at the end of the lease term shall be determined by prorating
Tenant's obligation hereunder on the basis which the number of days in such
fractional calendar year in the lease term bears to 365. If the lease term
terminates during a calendar year, additional rent payable hereunder, as pro-
rated, shall be due and payable when determined notwithstanding the termination
of this lease. If this lease shall be terminated by Landlord pursuant to the
default provisions of Paragraph 14,
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Tenant's liability under this Paragraph 20 shall immediately be due and payable,
based upon Landlord's reasonable current projection as to likely excess actual
Project Taxes and Operating Expenses if the same are not yet then ascertainable
with certainty, with any such projection and payment by Tenant subject to
subsequent adjustment when the actual applicable Project Taxes and Operating
Expenses can be determined. For purposes of this Paragraph 20, Project Taxes and
Operating Expenses for any year (including the Base Year) during which the
Project is not fully occupied shall be calculated by projection as if the
Project were 95% occupied during the entire calendar year.
(e) For the purposes of this paragraph the following definitions shall
apply:
(1) "Project Taxes" shall include (a) all real estate taxes,
possessory interest taxes, personal property taxes levied upon, measured by, or
assessed to Landlord in connection with the Project other than taxes covered by
Paragraph 18, and any other taxes, charges and assessments (including, without
limitation, any taxes, charges or assessments for public improvements, services
or benefits, transit development fees, housing funds, education funds, street
highway or traffic fees, environmental charges, fees or penalties imposed as a
means of controlling or abating environmental degradation or energy use
(provided, however, that Project Taxes shall not include charges based on the
presence of Hazardous Substances), and taxes, charges or assessments upon or
measured by or for parking facilities) which are levied with respect to or in
connection with the Project, and any improvements, fixtures and equipment and
all other property of Landlord, real or personal, located in or around the
Project and used in connection with the operation of the Project; and (b) any
other tax, charge, assessment, fee or governmental imposition or charge of every
kind or nature whatsoever assessed to Landlord in connection with the Project,
any part thereof, or the premises (other than estate taxes, inheritance taxes,
or net income taxes payable against nonrental as well as rental income) whether
or not in addition to or in lieu of such real estate and possessory interest or
personal property taxes, whether or not now customary or within the
contemplation of the parties hereto, ordinary or extraordinary, foreseen or
unforeseen, or similar or dissimilar to any of the foregoing, including by way
of illustration but not limitation any and all taxes, impositions, charges, fees
or assessments upon, allocable to, or measured by the area of the premises or
the Project or on the rent payable hereunder or the rent payable on the premises
or the Project or any portion thereof, including without limitation any gross
income tax, excise tax or value added tax, levied by any governmental or quasi-
governmental entity with respect to the Project, any part thereof, or such rent;
and (c) the reasonable cost and expenses of contesting the amount or validity of
any of the foregoing taxes. In the event that it shall not be lawful for Tenant
to reimburse Landlord for Tenant's Share of any tax, as defined herein, the rent
payable to Landlord under this lease shall be revised to yield to Landlord the
same net rent from the premises after imposition of any such tax upon Landlord
as would have been received by Landlord hereunder prior to the imposition of
such tax. Notwithstanding anything to the contrary in this paragraph, Tenant
shall not be responsible for any increase in real property taxes arising from
any sale or transfer of the Project, or any interest therein, or in Landlord,
during the first five (5) years commencing with the commencement of this lease.
Tenant shall be responsible for Tenant's share of any increases in real property
taxes occasioned by changes in the existing real property tax laws or
regulations, or the enactment of any new real property tax laws or regulations,
after the date hereof.
(2) "Operating Expenses" shall mean all costs and expenses of
ownership, operation and maintenance of the Project
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(excluding depreciation on the buildings and improvements, all amounts paid on
loans of Landlord, real estate brokers' commissions, and expenses capitalized
for federal income tax purposes except as specified herein) including by way of
illustration but not limited to: utilities; supplies; insurance; business
license, permit, inspection and other authorization fees, charges, exactions and
taxes; special charges or assessments for services provided to the Project,
including without limitation sewer, water, fire or police protection; cost of
services of independent contractors (including without limitation accounting and
legal services and property management fees); cost of compensation (including
employment taxes and fringe benefits) of all persons who perform regular and
recurring duties connected with day-to-day operation, maintenance and repair of
the buildings, their equipment and the adjacent walks, malls, arcades, atriums,
balconies, roof gardens, parking area and landscaped areas, including without
limitation janitorial, scavenger, gardening and landscaping, security, operating
engineer, elevator, painting, plumbing, electrical, carpentry, heating,
ventilation, air-conditioning, window washing, signing and advertising (but
excluding persons performing services not uniformly available to or performed
for substantially all Project tenants); maintenance and repair expenses,
including but not limited to capital expenditures required to meet changed
government regulations and governmental regulations for environmental protection
or energy conservation, and rental expenses for personal property to the extent
used in the maintenance, operation and repair of the Project; Landlord's
reasonable administration expense; and the reasonable cost of contesting the
validity, amount, or applicability of any governmental enactments or other
expenses which may affect Operating Expenses.
(3) "Tenant's Share" is agreed to be forty-three and 30/100 percent
(43.3%).
21. SUBORDINATION. Tenant agrees that this lease shall be subject and
subordinate to any mortgage, deed of trust or like encumbrance heretofore or
hereafter placed upon the Project or the premises by Landlord or its successors
in interest, to secure the payment of monies loaned, interest thereon and/or
other obligations, and this lease also shall be subject and subordinate to any
ground lease or underlying lease heretofore or hereafter affecting the Project.
Notwithstanding the foregoing, in the event that, subsequent to the execution of
this lease, a new mortgage, deed of trust or like encumbrance on the premises is
created, or a ground lease or underlying lease to which this lease shall be
subordinate is entered into, then this lease shall be subject and subordinate to
such encumbrance or lease only if Landlord obtains from such mortgagor or lessor
a written agreement in form acceptable to such mortgagor or lessor, providing
substantially that Tenant's rights under this lease shall not be affected by any
foreclosure or deed in lieu of foreclosure of, or sale under such encumbrances
for so long as Tenant performs its obligations under this lease (or, in the case
of a ground lease or underlying lease, Tenant's rights shall not be affected by
any termination of such lease for so long as Tenant performs its obligations
under this lease). Tenant agrees to execute and deliver, upon demand of
Landlord, any and all instruments reasonably desired by Landlord, subordinating
in the manner requested by Landlord, this lease to such mortgage, deed of trust,
like encumbrance, ground lease, or underlying lease. On or before the
commencement date of this Lease, Landlord shall deliver to Tenant a recordable
non-disturbance agreement in favor of Tenant, in commercially reasonable form,
executed by Bank of America with respect to its mortgage lien encumbering the
Project.
22. OFFSET STATEMENT. Within ten (10) business days after request therefor
by Landlord, or in the event of any sale,
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assignment or hypothecation of the premises and/or the Project or any portion
thereof, by Landlord, Tenant agrees to deliver in recordable form a certificate
to any proposed mortgagee, trust deed beneficiary or purchaser, or to Landlord,
in form reasonably satisfactory to the addressee, certifying as to (a) the date
of this lease and any amendments thereto, (b) the date upon which this lease
term commenced and will end, (c) the fact that this lease, as so amended, is in
full force and effect and has not been modified except as stated, (d) whether
any rentals are then prepaid or unpaid hereunder, (e) whether any defaults then
exist hereunder, (f) whether Tenant claims any offsets or defenses to any
obligation imposed hereunder and (g) any other information reasonably requested
of Tenant. If Tenant is provided with a proposed form of such certificate, and
fails to execute same within ten (10) business days after receipt thereof,
Tenant agrees that such failure shall, at Landlord's option, constitute an event
of default under this lease. Tenant acknowledges that any proposed mortgagee,
trust deed beneficiary, or purchaser, or Landlord, may rely on the truth of
statements set forth in such certificate as executed by Tenant.
23. ATTORNMENT. In the event of a termination of all or any part of
Landlord's interest in the building or the Project due to sale or other
disposition, or from any cause whatsoever or in the event of the foreclosure of
or exercise of a power of sale under any mortgage or deed of trust made by
Landlord covering the premises, Tenant shall attorn to and recognize as Landlord
hereunder, Landlord's assignee or successor in interest or the purchaser at such
foreclosure or sale in lieu thereof, as the case may be, on condition that such
assignee, successor or purchaser does not disturb Tenant's possession under this
lease (so long as no event of default exists under Paragraph 14(a) hereof). Any
such sale, disposition, or other termination of Landlord's interest in the
building or Project shall operate to release Landlord from any liability
thereafter arising under any of the covenants or conditions of this lease,
express or implied, in favor of Tenant, and in such event Tenant agrees to look
solely to the responsibility of Landlord's successor in interest under this
lease, as limited by Paragraph 29 hereof.
24. CONDEMNATION. Should the whole or any part of the premises be
condemned and taken by any competent authority for any public or quasi-public
use or purpose, or should Landlord receive written notice of any threatened
condemnation or taking, Landlord shall promptly notify Tenant in writing. All
awards payable on account of such condemnation and taking shall be payable to
Landlord, and Tenant hereby waives all interest in or claim to said awards, or
any part thereof; provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or require Tenant to assign to the
Landlord any award made payable to Tenant and specifically designated as
compensation for the taking of personal property and fixtures belonging to
Tenant and removable by Tenant at the expiration of the term of the lease or for
the interruption of or damage to Tenant's business or for any costs or expenses
of relocating Tenant's business. If the whole of the premises shall be so
condemned and taken, then this lease shall terminate effective on the earlier of
thirty (30) days after Landlord's delivery of a notice to Tenant to such effect
or the date upon which the condemning authority takes possession. If a part only
of the premises is condemned and taken and the remaining portion thereof is not
suitable for the purposes of which Tenant had leased said premises, either
Landlord or Tenant may terminate this lease upon thirty days' notice to the
other, which notice must be served on the other within ten (10) business days of
Landlord's delivery of the notice of condemnation to Tenant. If by such
condemnation and taking a part only of the premises is taken, and the remaining
part thereof is suitable for the purposes for which Tenant has leased said
premises, this lease shall continue, but the
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rental shall be reduced in an amount proportionate to the value of the portion
taken as it related to the total value of the premises.
25. WAIVER OF REDEMPTION; HOLDING OVER. Tenant hereby waives for Tenant
and all those claiming under Tenant, all right now or hereafter existing to
redeem the leased premises after termination of Tenant's right of occupancy by
notice of termination by Landlord pursuant to Paragraph 14 hereof or by order or
judgment of any court or by any legal process or writ. If Tenant holds over
after the term hereof, with or without the express or implied consent of
Landlord, such tenancy shall be from month to month only, and not a renewal
hereof or an extension for any further term, and in such case the rent shall be
increased to any amount which Landlord may specify in a written notice to Tenant
(but not exceeding 125% of the rent payable hereunder immediately before
expiration of the term), and all other payments provided herein shall be payable
in the amount and at the times specified in this lease. Such month to month
tenancy shall be subject to every other term, covenant, and agreement contained
herein except as to the term of this lease.
26. ENTRY AND INSPECTION; CONFIDENTIALITY.
(a) Landlord and its agents shall have the right to enter into and
upon the premises at all reasonable times upon at least 24 hours oral notice
(which shall not be required in the case of emergency), for the purpose of
inspecting the same, or for the purpose of showing same to prospective
purchasers, mortgagees, or tenants, or for the purpose of protecting the
interest therein of Landlord or to post notices of non-responsibility, or to
make alterations or additions to the premises or to any other portion of the
building in which the premises are situated, including the erection of
scaffolding or other mechanical devices, or to provide any service provided by
Landlord to Tenant hereunder, including window cleaning and janitor service,
without any rebate of rent to Tenant for any loss of occupancy or quiet
enjoyment of the premises, or damage, injury or inconvenience thereby
occasioned, provided that in all situations other than an emergency Landlord
shall exercise its rights hereunder in a manner that will not unreasonably
interfere with Tenant's use of the premises. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in, upon, and about the premises, excluding Tenant's vaults and safes,
or special security areas (designated in a writing signed by Tenant and Landlord
in advance), and Landlord shall have the right to use any and all means which
Landlord may deem necessary or proper to open said doors in an emergency,
without liability of Landlord to Tenant, in order to obtain entry to any portion
of the premises, and any entry to the premises, or portions thereof obtained by
Landlord by any of said means, shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the premises,
or an eviction, actual or constructive, of Tenant from the premises or any
portions thereof. Landlord shall make reasonable efforts to minimize any
interference with Tenant's use and enjoyment of the premises in making any such
entry. In connection with any such entry to the premises, Tenant may require
that Landlord or its agent or contractor be accompanied by Tenant, provided that
Tenant shall be available for such accompaniment in accordance with Landlord's
or its agent's or contractor's schedule.
(b) Landlord acknowledges that Tenant's operations at the premises
will include the development, application and marketing of confidential and
proprietary trade secrets. If Tenant provides Landlord written notice describing
in reasonably sufficient detail certain areas within the premises as secure
areas, Landlord agrees to enter such areas only after advance notice to Tenant
and subject to accompaniment by Tenant, except that such notice and
accompaniment shall not be required in cases
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<PAGE>
of emergency, or upon expiration or earlier termination of this lease. Landlord
agrees to not disclose such confidential and/or proprietary information about
Tenant and its business; provided, however, that Landlord shall not be precluded
from making any disclosure compelled by a court or other governmental entity.
(c) Subject to events of force majeure, acts of God, riot, war, public
disturbance, casualties, events beyond Landlord's control, and to the necessity
to limit or restrict access as may be required from time to time for safety,
repair or maintenance, Tenant shall have access to the premises 24 hours per
day, seven days a week.
27. BUILDING PLANNING. Landlord shall have the right at any time, without
the same constituting an actual or constructive eviction and without incurring
any liability to Tenant therefor, to change the arrangement and/or location of
entrances or passageways, doors and doorways, and corridors, elevators, stairs,
toilets, or other public parts of the building and the Project, and to change
the name, number or designation by which the building or the Project is commonly
known.
28. HAZARDOUS SUBSTANCES. Landlord represents and warrants to Tenant that
to the best of its knowledge as of the date of this lease, there are no
Hazardous Substances located in, on or under the building or the Project other
than as disclosed to Tenant in writing; provided that, for purposes of the
foregoing representation and warranty, "Hazardous Substances" shall mean those
substances which are as of the date of this lease regulated by local, state or
federal law or regulation requiring removal or other remediation, warning or
restrictions on use, generation, storage, disposal or transportation to the
extent those substances are present in quantities which are deemed hazardous by
such laws or regulations. For purposes of the remainder of this Paragraph 28,
"Hazardous Substances" shall mean those substances which are now or hereafter
regulated by local, state or federal law or regulation requiring removal or
other remediation, warning or restrictions on use, generation, storage, disposal
or transportation to the extent those substances are present in quantities which
are deemed hazardous by such laws or regulations. Landlord shall indemnify and
hold Tenant harmless from and against all claims, costs, damages and
liabilities, including attorneys' fees and costs, arising out of or in
connection with the presence of any Hazardous Substances in, on or under the
building or the Project to the extent such presence is caused by Landlord or
such presence existed prior to the date of this lease. Landlord's obligations
hereunder shall survive the termination of this lease.
Tenant, at its sole cost, shall comply with all laws relating to its
storage, use, generation, transportation, disposal and release of Hazardous
Substances. If Tenant does store, use, generate, transport or dispose of any
Hazardous Substances, Tenant shall notify Landlord in writing at least ten (10)
days prior to their first appearance on the premises; provided, however, that
Tenant shall not have to give such notice with regard to incidental quantities
of any such Hazardous Substances present in products stored, used or otherwise
brought onto the premises for general office and/or janitorial purposes. Tenant
shall be solely responsible for and shall defend, indemnify and hold Landlord
and its agents, employees and representatives harmless from and against all
claims, costs, damages and liabilities, including attorneys' fees and costs,
arising out of or in connection, with Tenant's, or Tenant's agents, contractors
or employees, storage, use, generation, transport, disposal or release of
Hazardous Substances, including, without limitation, any such claims, costs,
damages and liabilities, including attorneys' fees and costs, arising out of or
in connection with any investigation, testing, removal, clean-up,
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remediation and/or restoration services, work, equipment and materials necessary
to remove or otherwise satisfactorily remediate the contamination and any
related problems actually caused by Tenant's, or Tenant's agents, contractors or
employees, use, storage, generation, transportation, disposal or release of
Hazardous Substances in, on or around the premises or the Project; but it is
understood and agreed that Tenant shall not be responsible, and Landlord
releases Tenant from liability for, Hazardous Substances contamination in, on or
around the premises, including without limitation investigation, testing,
remediation and/or restoration costs related thereto, that is not actually
caused by the storage, use, generation, transport, disposal or release of
Hazardous Substances by Tenant or Tenant's agents, contractors or employees.
Tenant's obligations hereunder shall survive the termination of this lease. If
at any time during or after the term of this lease, as it may be extended,
Tenant becomes aware of any inquiry, investigation, and administrative
proceeding, or judicial proceeding by any governmental agency regarding the
storage, use or disposition of any Hazardous Substances by Tenant or its agents,
contractors or employees on or about the premises or the Project, Tenant shall
within five (5) days after first learning of such inquiry, investigation or
proceeding give Landlord written notice advising Landlord of same. Landlord and
Tenant agree that this Paragraph 28 is intended to delineate the parties'
respective rights and obligations regarding the presence of Hazardous Substances
in, on or around the premises or the Project and that other provisions of this
lease shall not be construed to expand, or limit, such rights or obligations.
29. LIMITATION ON LANDLORD'S LIABILITY. In the event of any actual or
alleged failure, breach or default by Landlord hereunder pertaining to the
premises, the building, or the Project, Tenant shall give Landlord written
notice of such default and Landlord shall not be deemed in default hereunder
unless Landlord fails to cure such default within thirty (30) days after receipt
of such written notice (or such longer period as is reasonably necessary to
remedy such default, provided that Landlord shall, within such thirty (30) day
period, commence and thereafter diligently pursue such remedy until such default
is cured). If Landlord fails to cure such default in the applicable time period,
Tenant may elect to cure such default, and Landlord shall reimburse Tenant the
reasonable costs of such cure within thirty (30) days after its receipt of
documentation of such costs. If Landlord fails to make such payment when due,
Tenant may deduct the amount of such costs from its monthly base rental payment,
provided that the amount of the deduction in any one month shall not exceed
fifty percent (50%) of the base rental amount due for such month, and provided
further that Tenant shall not be entitled to exercise such deduction right with
respect to base monthly rental payments for more than four months in any twelve
month period during the term of this Lease. In consideration of the benefits
accruing to Tenant hereunder, Tenant agrees for itself and its successors and
assigns that in the event of any such failure, breach or default,' or of any
damage to Tenant from any act or omission of Landlord pertaining to the premises
or the Project, the sole and exclusive remedy of Tenant shall be against
Landlord's interest in the Project, that any judgment obtained against Landlord,
or any person who owns an interest in the building or land shall be satisfied
solely by execution of the judgment and levy against the right, title and
interest of Landlord or such person in the Project, and rentals therefrom.
Neither Landlord, nor any such person who owns any interest whatsoever in the
Project, shall be personally liable for any deficiency after such execution and
levy. Notwithstanding the foregoing, Tenant shall have recourse against Landlord
for any loss incurred by Tenant as a result of Landlord's failure to carry the
insurance required under this lease, or the failure of an assignee of Landlord
to whom Landlord has sold or transferred its interest in the Project to assume
liability for the
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defaults or obligations of Landlord which accrued prior to the date of such sale
or transfer.
30. SUCCESSORS AND ASSIGNS. Subject to the provisions hereof relating to
assignment, mortgaging, pledging and subletting, this lease is intended to and
does bind the heirs, executors, administrators, successors and assigns of any
and all of the parties hereto.
31. SECURITY. Tenant has deposited with Landlord the sum of Forty-Seven
Thousand Three Hundred Twenty-Two Dollars ($47,322.00) as the Security Deposit
for the full and faithful performance of every provision of this lease to be
performed by Tenant. Title to the Security Deposit has been transferred to
Landlord subject only to Tenant's right to the return of the Security Deposit as
set forth below. If Tenant defaults with respect to any provision of this lease,
Tenant's right to the return of the Security Deposit shall terminate to the
extent of any payments then past due hereunder, and Landlord may apply all or
any part of the Security Deposit for the payment of any rent or other sum in
default, the repair of such damage to the premises or the payment of any other
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other, loss or damage which
Landlord may suffer by reason of Tenant's default to the full extent permitted
by law. If any portion of the Security Deposit is so applied, Tenant shall,
within five (5) days after written demand therefor, deposit cash with Landlord
in an amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep the Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on the Security
Deposit. If Tenant is not otherwise in default, the Security Deposit or any
balance thereof shall be returned to Tenant at its last address known to
Landlord within thirty (30) days of termination of the lease.
32. PARKING. Landlord agrees that Tenant shall be provided on a non-
exclusive basis and at no additional cost with 112 non-reserved automobile
parking spaces. Such number of parking spaces shall be subject to pro rata
adjustment if a lesser or greater area shall hereafter be contained in the
definition of the premises subject to this lease. Said parking spaces shall be
located in the parking area which is part of the Project. Landlord shall keep
the parking area clean, lighted and in good repair. Landlord shall not
oversubscribe parking at the Project. Landlord may designate certain parking
areas as Visitors' Parking, to be reserved for guests and/or visitors of the
Project, and Tenant and Tenant's employees shall not park in areas designated
for Visitors' Parking. Additionally, Landlord agrees that Tenant shall be
provided on an exclusive basis and at no additional cost with fifteen (15)
reserved automobile parking spaces. Said reserved parking spaces shall be
properly marked by Landlord as "Reserved." The location of the reserved parking
stalls is identified in Exhibit C. Landlord shall have no policing or enforcing
responsibilities with respect to the reserved spaces.
33. SUITE AND BUILDING IDENTIFICATION. Landlord will provide, at
Landlord's expense, Tenant's name plate and suite number on Tenant's suite door
using building standard design and materials and shall provide lobby directory
signage for Tenant and a reasonably limited number of key employees in building
standard design. Tenant shall be permitted monument signage at the front of the
building at Tenant's sole expense, subject to Landlord's reasonable approval and
provided that Tenant shall be responsible for compliance with applicable codes
and regulations.
34. RULES AND REGULATIONS. The rules and regulations attached to this
lease, as well as such reasonable rules and
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regulations as may be hereafter adopted by Landlord for the safety, care and
cleanliness of the premises and the operation of the Project, and the
preservation of good order thereon, are hereby expressly made a part hereof, and
Tenant agrees to comply with them. Landlord shall not be liable to any person,
including Tenant, for the failure of any other tenant or person to observe such
rules and regulations.
35. TIME. Time is of the essence of this lease.
36. LEASE EXAMINATION AND EXECUTION. Tenant acknowledges that submission
of this lease for examination by Tenant does not constitute a reservation or
option for lease, and that this lease is not and shall not be effective until
(a) Tenant has delivered to Landlord at least three originals of this lease,
fully executed by Tenant, accompanied by payment to Landlord of a sum equal to
the sum of (i) one month's rent hereunder, which shall be applied toward
Tenant's rental obligations under Paragraph 3 hereof upon commencement of this
lease, and (ii) the amount of the security deposit provided in Paragraph 31
hereof; and (b) Landlord has delivered to Tenant at least one fully executed
original of this lease. Tenant, and each person executing this lease on behalf
of Tenant, represent and warrant that this lease is duly executed by Tenant, and
that the persons executing this lease on behalf of Tenant are duly authorized so
to do and to bind Tenant to the obligations set forth in this lease. Landlord,
and each person executing this lease on behalf of Landlord, represent and
warrant that this lease is duly executed by Landlord, and that the persons
executing this lease on behalf of Landlord are duly authorized so to do and to
bind Landlord to the obligations set forth in this lease.
37. MISCELLANEOUS. This lease shall constitute the entire agreement of the
parties pertaining to the premises and all prior agreements and representations
of the parties (except representations of Tenant concerning its financial
condition), whether written or oral, shall be superseded by this lease. This
lease may not be amended or modified except by written agreement duly executed
by the parties hereto. This lease shall be interpreted as follows: (a) according
to the fair meaning of the language without strict construction against either
party; (b) under the laws of the state of California; (c) by disregarding
captions, which shall have no significance except convenience; (d) by
substituting appropriate gender where required; and (e) by substituting the
plural for the singular, and vice versa, where the context requires. If any
provision of this lease is found to be unenforceable or otherwise invalid, such
unenforceable provision shall be deemed separable and the remaining provisions
of this lease shall remain in full force and effect. Landlord's and Tenant's
covenants shall survive termination of this lease where reasonably appropriate
to accomplish the purpose thereof. Tenant, at its sole cost and expense, may
cause to be prepared a memorandum of lease to be executed by the parties, in
form reasonably acceptable to Landlord, which may be recorded by Tenant in the
Official Records of San Mateo County, California. Upon the expiration or earlier
termination of this lease, Tenant shall cause to be prepared and recorded in the
Official Records of San Mateo County, California, at its sole cost and expense,
a quitclaim deed to be executed by Tenant, in form reasonably acceptable to
Landlord.
38. EXHIBITS. Exhibit A hereto, Exhibit B hereto, Exhibit C hereto, the
Rules and Regulations attached hereto as Exhibit D, and any other Exhibit or
Addendum which is initialed or signed by Landlord and Tenant and attached hereto
shall be considered a part of this lease for all purposes.
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<PAGE>
39. BROKERS. Landlord and Tenant each warrants that it has had no dealings
with any real estate brokers or agents in connection with the negotiation of
this lease excepting only Cornish and Carey Commercial and The CAC Group and it
knows of no other real estate broker or agent who is entitled to a commission in
connection with this lease.
40. NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or shutting off of
light, air or view by any structure which is now or may hereafter be erected on
lands adjacent to the Project shall in no way affect this lease or impose any
liability on Landlord. Noise, dust or vibration or other incidents to new
construction of improvements on lands adjacent to the Project, whether or not by
Landlord, shall in no way affect this lease or impose any liability on Landlord.
IN WITNESS WHEREOF, Landlord and Tenant have executed these presents the
day and year first above written.
LANDLORD: TENANT:
THE JOSEPH AND EDA PELL REVOCABLE ELECTRONICS FOR IMAGING,
TRUST a California corporation
By:/s/ Signature Illegible By:/s/ Signature Illegible
Its:__________________________ Its:__________________________________
By:______________________________ By:______________________________________
Its:__________________________ Its:__________________________________
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<PAGE>
EXHIBIT A
PAGE 1
[EXHIBIT OMITTED]
<PAGE>
EXHIBIT A
PAGE 2
[EXHIBIT OMITTED]
<PAGE>
EXHIBIT B
SUITE IMPROVEMENTS
1. Landlord shall, at Landlord's cost, construct the improvements to the
premises described in, and in accordance with, those certain plans and
specifications for the premises (the "Final Plans") dated June 15, 1992, by
Ambience. Subject to any Tenant Delays, as hereinafter defined, Landlord
estimates the construction period to substantially complete the tenant
improvements to be 60 days from the date of issuance of the permit for the
tenant improvements (said completion date is hereinafter referred to as the
"estimated completion date"), and Landlord will use its best efforts and due
diligence to obtain such permit at the earliest date reasonably possible and
complete the tenant improvements by the estimated completion date. Landlord
shall provide Tenant with access to the premises for the purpose of installing
modular office cubicles, computer and telephone wires and other cabling no later
than three weeks prior to the estimated completion date. Landlord shall have no
responsibility for coordinating or installing such cubicles, wires or cables.
Tenant shall be solely responsible for the cost of acquisition and installation
of its telephone and computer equipment, and all of Tenant's furnishings and
personal property.
2. Landlord shall turn-key the tenant improvements in the premises in
accordance with the Final Plans and any Change Orders pursuant to Paragraph 3
hereof. The cost shall include the cost of Tenant's space planner's services,
including the cost of preparing the Final Plans and permit fees. Tenant
improvements shall include all architectural fees (up to $1.00 per square foot),
demolition, permits, all code compliance work, all fire/life safety compliance,
fire sprinklers (if required), bathroom upgrading including handicap retrofit
(if required), Title 24, ADA costs, construction and Landlord fees, if any.
3. Tenant may by written instructions or drawings issued to Landlord (a
"Change Order Request") make changes in the Final Plans, including with
limitation, requiring additional work, directing the omission of work previously
ordered, or changing the quantity or type of any materials, equipment or
services. Promptly upon receipt of a Change Order Request, Landlord will provide
Tenant with a statement in detail setting forth the cost of said change
(including a breakdown of costs attributable to labor and materials,
construction equipment exclusively necessary for the change, and preparation or
amendment to shop drawings resulting from said change) and any time delays
anticipated to result from said change, prior to Tenant's final authorization
thereof. Tenant will have two (2) business days after receipt of such statement
in which to confirm the Change Order Request and authorize in writing the work
to be performed pursuant thereto, or to withdraw such request. Change Orders
will be signed by Landlord and Tenant in advance of any Change Order work.
Landlord will not unreasonably withhold its consent to any such Change Order
provided the changes do not, in Landlord's reasonable opinion, adversely affect
the Building's structure, systems, equipment or appearance. No changes to the
Final Plans will be made except pursuant to a written Change Order signed by
Tenant. The cost of all Change Orders which adds cost over the tenant
improvements shown on the Final Plans shall be paid by Tenant after substantial
completion of such Change Order work and within ten days of its receipt of an
invoice therefor.
4. Landlord warrants that all tenant improvements to be constructed by
Landlord as initial tenant improvements shall be constructed in a good and
workmanlike manner using materials of good quality in accordance with the Final
Plans and with all applicable laws. Within thirty (30) days after the
commencement date of the Lease term, Tenant shall make an inspection of the
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<PAGE>
premises and prepare a punchlist of items needing additional work by Landlord.
Landlord's contractor shall complete all punchlist items reasonably identified
by Tenant within thirty (30) days after the inspection or as soon as practicable
thereafter.
5. Notwithstanding anything to the contrary in this Lease, the
commencement of the term of this Lease shall not be delayed to the extent that
delivery of the premises to Tenant is caused by the following ("Tenant Delays"):
construction to be furnished by Landlord is delayed (1) by or at the instruction
of Tenant or its architect, including without limitation, pursuant to or
resulting from a written Change Order (or Orders) pursuant to Section 3 above,
or (2) to accommodate the installation of Tenant's modular office cubicles,
computer and telephone wires and other cabling pursuant to Section 1 above (it
being agreed that Tenant shall not, without Landlord's consent, seek to make any
other installations or conduct any other work which might delay delivery of the
premises); provided that Landlord gives Tenant written notice of any such delay.
6. Upon termination of the Lease, all of the initial tenant improvements
shall remain in the premises unless Landlord shall consent in writing to the
removal thereof by Tenant.
7. Tenant acknowledges that Landlord will make no independent review of
the Final Plans and that Landlord does not warrant either expressly or
impliedly, the adequacy of the Final Plans, the tenant improvements or Tenant's
equipment for Tenant's intended purpose, other than a warranty that the tenant
improvements have been constructed according to the Final Plans in a good and
workmanlike manner, and in accordance with applicable laws.
2
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
1. No sign, placard, pictures, advertisement, name or placard shall be
inscribed, displayed or printed or affixed on or to any part of the outside or
inside of the Building without the written consent of the Landlord first had and
obtained (not to be unreasonably withheld) and Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice without
notice to and at the expense of Tenant.
All approved signs or lettering or doors shall be printed, painted, affixed
or inscribed at the expense of Tenant by a person approved by Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly from
outside the Premises; provided, however, that Landlord may furnish and install a
Building standard window covering at all exterior windows. Tenant shall not
without prior written consent of Landlord (not to be unreasonably withheld)
sunscreen any window.
2. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by any of the tenants or used by them for any
purpose other than for ingress and egress from their respective Premises.
3. Tenant shall not alter any lock or install any new or additional locks
or any bolts on any doors or windows of the Premises.
4. The toilet rooms, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein and the expense
of any breakage, stoppage, damage resulting from the violation of this rule
shall be borne by the Tenant who, or whose employees or invitees shall have
caused it.
5. Tenant shall not overload the floor of the Premises or in any way
deface the Premises or any part thereof.
6. No furniture, freight or equipment of any kind shall be brought into
the Building without the prior notice of Landlord and all moving of the same
into or out of the Building shall be done at such time and in such manner as
Landlord shall reasonably designate. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy equipment brought
into the Building and also the times and manner of moving the same in and out of
the Building. Safes or other heavy objects shall, if considered necessary by
Landlord, stand on supports of such thickness as is necessary to properly
distribute the weight. Landlord will not be responsible for loss of damage to
any such safe or property from any cause and all damage done to the Building by
moving or maintaining any such safe or other property shall be repaired at the
expense of the Tenant.
7. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interferes in any way with other tenants or those having business therein, nor
shall any animals (seeing eye dogs excepted) or birds be brought in or kept in
or about the Premises or the Building.
8. No cooking shall be done or permitted by Tenant on the Premises
(except that employees may use a UL-rated microwave
<PAGE>
oven for personal food preparation), nor shall the Premises be used for the
storage of merchandise, for washing clothes, for lodging, or for any improper,
objectionable or immoral purposes.
9. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material or use any
method of heating or air conditioning other than supplied by the Landlord.
10. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires will be
allowed without the consent of the Landlord. The location of fixtures affixed to
the Premises shall be subject to the approval of Landlord.
11. On Saturdays, Sundays and legal holidays and on other days between the
hours of 6:00 p.m. and 8:00 a.m. the following day, access to the Building, or
to the halls, corridors, elevators or stairways in the Building, or to the
Premises may be refused unless the person seeking access is known to the person
or employee of the Building in charge and has a pass or is properly identified.
In case of invasion, mob, riot, public excitement, or other commotion, the
Landlord reserves the right to prevent access to the Building during the
continuance of the same by closing of the doors or otherwise, for safety of the
tenants and protection of property in the Building and the Building.
12. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
the rules and regulations of the Building.
13. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent of the
Landlord, which shall not unreasonably be withheld.
14. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building of
which the Premises are a part.
15. Tenant shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent same.
16. Without the written consent of Landlord, Tenant shall not use the name
of the Building in connection with or in promoting or advertising the business
of Tenant except as Tenant's address.
17. Landlord shall have the right to control and operate the public
portions of the Building, and the public facilities, and heating and air
conditioning, as well as facilities furnished for the common use of the tenants,
in such manner as it deems best for the benefit of the tenants generally,
provided that Landlord exercises its rights hereunder in a manner consistent
with the operation of a first-class office building.
18. All entrance doors in the Premises shall be left locked when the
Premises are not in use, and all doors opening to public corridors shall be kept
closed except for normal ingress and egress from the Premises.
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FIRST ADDENDUM TO LEASE
THIS FIRST ADDENDUM TO LEASE ("First Addendum") is dated for reference
purposes as of July 30, 1992, and is made between The Joseph and Eda Pell
Revocable Trust ("Landlord") and Electronics for Imaging ("Tenant") to be a part
of that certain Agreement of Lease, of even date herewith, between Landlord and
Tenant (herein the "Lease Form") concerning 32,863 rentable square feet of space
(the "Premises") located at 2855 Campus Drive (the "Project"), San Mateo,
California. Landlord and Tenant agree that the Lease Form is modified and
supplemented by this First Addendum.
1. Commencement Date. Notwithstanding anything to the contrary in the
-----------------
Lease Form:
A. The Lease shall commence (the "Commencement Date") on the later
of November 1, 1992, and the first to occur of (i) the date by which all of the
following have occurred: (a) Landlord has substantially completed the tenant
improvements described in Exhibit B to the Lease Form (the "Tenant
---------
Improvements") in accordance with such Exhibit B, (b) Landlord has delivered
---------
possession of the Premises to Tenant; and (c) Landlord has obtained all
approvals and permits from the appropriate governmental authorities required for
the legal occupancy of the Premises for general office use, or (ii) the date by
which the conditions specified in part (i) hereof would satisfied but for Tenant
Delay, as defined in Exhibit B.
---------
B. If the Commencement Date has not occurred for any reason other
than Tenant Delay on or before November 1, 1992, then in that event Tenant shall
not be liable for any rent until such time as Landlord shall deliver possession
of said premises to Tenant. If the Commencement Date has not occurred for any
reason other than Tenant Delay, as defined in Exhibit B by February 1, 1993,
---------
then Tenant may terminate this Lease by written notice to Landlord, whereupon
any monies previously paid by Tenant to Landlord shall be reimbursed to Tenant.
2. Rent. Notwithstanding anything to the contrary in the Lease Form, all
----
base rent and additional rent shall be equitably prorated to reflect the
commencement and termination dates of the Lease.
3. Acceptance of Premises. Notwithstanding anything to the contrary in
----------------------
the Lease Form:
A. Tenant's acceptance of the Premises shall not be deemed a waiver
of Tenant's right to have defects caused by Landlord or Landlord's contractor in
the Tenant Improvements or the Premises repaired at Landlord's expense.
B. Landlord warrants and represents that as of the Commencement Date
the Premises will be in good condition and repair and the electrical,
mechanical, HVAC, plumbing, elevator and other systems serving the Premises and
the Building will be in good condition and repair.
4. Compliance with Laws. Notwithstanding anything to the contrary in the
--------------------
Lease, Form, at the Commencement Date, the Premises and the Project shall
conform to all requirements of applicable covenants, conditions, restrictions
and encumbrances ("CC&R's"), all underwriter's requirements, and all rules,
regulations, statutes, ordinances, laws and building codes (collectively,
"Laws") applicable thereto.
5. Use of Premises. Notwithstanding anything to the contrary in the Lease
---------------
Form, to Landlord's knowledge, as of the Commencement Date, Landlord represents
and warrants that Tenant's use of the Premises, as described in Paragraph 4 of
the Lease
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Form, is permitted by all Laws, CC&R's, and fire underwriter's requirements and
that electricity, water, janitorial, heating, ventilating, air conditioning and
other services, at the levels generally provided for office uses in comparable
buildings in the vicinity of the Premises, will be available to the Premises at
all times during the Lease term; subject to Paragraph 8 of the Lease Form, and
subject to events beyond Landlord's control.
6. Alternations, Additions and Improvements. Notwithstanding anything to
----------------------------------------
the contrary in the Lease Form:
A. Nonstructural. Provided that Tenant shall deliver to Landlord a
-------------
copy of all final plans, specifications and working drawings for any such work
at least ten (10) days before commencing such work, Tenant may construct
nonstructural alterations, additions and improvements ("Alterations") in the
Premises without Landlord's prior approval which (i) do not affect any area
outside the Premises, (ii) do not affect the Building's structure, equipment,
services or systems, or the outside appearance or use of the Premises or
Building, and (iii) does not cost more than Twenty-Five Thousand Dollars
($25,000). If Landlord's consent is required for an Alteration and Landlord does
not notify Tenant in writing of its approval or disapproval within fifteen (15)
days following Tenant's written request for approval (provided Tenant's request
must specify that failure to respond shall be deemed approval), then Landlord
shall be deemed to have approved the proposed Alteration. Tenant shall insure
that all work done by Tenant or its contractors, agents or employees complies
with all Laws, and Tenant shall obtain all necessary permits and approvals, at
Tenant's cost, copies and/or other acceptable documentation of which shall be
provided to Landlord prior to commencement of any work.
B. Removal. Upon Tenant's written request, Landlord shall advise
-------
Tenant in writing whether it reserves the right to require Tenant to remove any
Alterations from the Premises upon termination of the Lease.
C. Tenant's Property. All Alterations, trade fixtures and personal
-----------------
property installed in the Premises at Tenant's expense ("Tenant's Property")
shall at all times remain Tenant's property and Tenant shall be entitled to all
depreciation, amortization and other tax benefits with respect thereto. Except
for Alterations which cannot be removed without structural injury to the
Premises, at any time Tenant may remove Tenant's Property from the Premises,
provided Tenant repairs all damage caused by such removal.
D. Lien Waiver. Landlord shall have no lien or other interest
-----------
whatsoever in any item of Tenant's Property, or any portion thereof or interest
therein located in the Premises or elsewhere, and Landlord hereby waives all
such liens and interests. Within ten (10) business days after receipt of
Tenant's written request (and acceptable documents), Landlord shall execute
documents reasonably necessary to evidence Landlord's waiver of any right,
title, lien or interest in Tenant's Property located in the Premises.
E. Insurance. Tenant shall have no obligation to insure any property
---------
in the Premises, other than as required in the Lease Form, from fire or any
other casualty and Tenant shall be entitled to all insurance proceeds and
condemnation awards and settlements payable with respect to Tenant's Property.
F. Sale of Tenant's Property. Landlord shall provide Tenant with at
-------------------------
least five (5) days prior written notice of any sale of Tenant's Property by
Landlord.
7. Repairs and Maintenance. Notwithstanding anything to the contrary in
-----------------------
the Lease Form:
2
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A. Landlord shall perform and construct, and (except to the extent
any such performance, repair, maintenance or improvement is an obligation of
Tenant under the Lease Form or this Addendum, or is required due to the act or
omission of Tenant, its agents, contractors, employees, invitees or licensees,
or due to a breach of this Lease by Tenant) Tenant shall have no responsibility
to perform or construct, any repair, maintenance or improvement (i) necessitated
by the acts or omissions of Landlord or its agents, employees or contractors,
(ii) required as a consequence of any violation of Law or construction defect in
the Premises or the Project as of the Commencement Date caused by Landlord or
its contractors, and (iii) to the heating, ventilating, air conditioning,
electrical, water, sewer, and plumbing systems serving the Premises or the
Project. Tenant's obligation, if any, to reimburse Landlord for the costs of
such repairs, maintenance and improvements shall be governed by the other
provisions of this Lease. Tenant shall not be required to perform or construct
any repair, maintenance or improvement necessitated by the acts or omissions of
any other occupant of the Project or its agents, employees or contractors.
B. Capital Improvements. If any of Tenant's obligations under the
--------------------
Lease (as modified by this First Addendum) require Tenant to pay all or any
portion of any charge which could be treated as a capital improvement under
generally accepted accounting principles, then Tenant shall pay its share of
such expense as follows:
1. The cost of such improvement shall be amortized over the
useful life of the improvement (as reasonably determined by Landlord) with
interest on the unamortized balance at the then prevailing market rate Landlord
would pay if it borrowed funds to construct such improvements from an
institutional lender, and Landlord shall inform Tenant of the monthly
amortization payment required to so amortize such costs, and shall also provide
Tenant with the information upon which such determination is made.
2. Tenant shall pay Tenant's Share of such amortization payment
for each month after such improvement is completed until the first to occur of
(i) the expiration of the Lease term or (ii) the end of the term over which such
costs were amortized, which amount shall be due at the same time the base
monthly rent is due.
8. Expenses. Notwithstanding anything to the contrary in the Lease Form:
--------
"Operating Expenses" shall be defined to exclude the following
repairs, maintenance, improvements, replacements, premiums, claims, losses,
fees, charges, costs and expenses (collectively, "Costs"), nor shall any portion
of any Tenant Improvement allowance be applied to such costs:
A. Losses Caused by Others. Costs incurred with respect to repairs
-----------------------
required due to the negligent act or omission or violation of Law by Landlord,
any other occupant of the Project, or their respective agents, employees or
contractors.
B. Casualties. Costs occasioned by fire, acts of God, or other
----------
casualties to the extent such costs are covered by, or are required to be
covered by, Landlord's insurance specified in this lease.
C. Capital Improvements. Costs relating to repairs, alterations,
--------------------
improvements, equipment and tools which would properly be capitalized under
generally accepted accounting principles, except to the extent that (i) the
foregoing reduces Operating Expenses and (ii) such Cost is amortized in an
annual
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amount equal to the amortization of such costs over the useful life of the
capital item in question.
D. Reimbursed Expenses. Costs for which Landlord actually receives
-------------------
reimbursement from others, provided that Landlord shall use commercially
reasonable efforts to obtain such reimbursements to which it is entitled.
E. Real Estate Taxes. Taxes, assessments, all other governmental
-----------------
levies, and any increases in the foregoing occasioned by or relating to (i)
construction of improvements for other occupants of the Project, and (ii) a
change of ownership of any interest of Landlord in the Project during the term
of the Lease, as extended pursuant to the terms hereof, if (a) to any person or
entity affiliated with or related to Landlord, or the beneficiaries, partners,
officers, shareholders or directors which comprise Landlord, or (b) in
connection with Landlord's estate planning.
F. Construction Defects. Costs to correct any construction defect in
--------------------
the Premises or the Project (except for defects in work or items installed by
Tenant or its contractors) or to correct a violation by Landlord of any CC&R's,
underwriter's requirement or Law applicable to the Premises or the Project on
the Commencement Date.
G. Utilities or Services. Costs (i) arising from the
---------------------
disproportionate use of any utility or service supplied by Landlord to any other
occupant of the Project, or (ii) associated with utilities and services of a
type not provided to Tenant.
H. Interior Improvements. The cost of any renovation, improvement,
---------------------
painting or redecorating of space for other tenants of the Project.
I. Leasing Expenses. Fees, commissions, attorneys' fees, Costs or
----------------
other disbursements incurred in connection with negotiations or disputes with
any other occupant of the Project. Costs arising from the violation by Landlord
or any occupant of the Project (other than Tenant) of the terms and conditions
of any lease or other agreement.
J. Reserves. Depreciation, amortization, or other expense reserves,
--------
except to the extent amortization is otherwise expressly permitted by this
lease.
K. Mortgages. Interest, charges and fees incurred on debt, payments
---------
on mortgages and rent under ground leases.
L. Insurance. Increases in insurance costs after the Commencement
---------
Date caused by the activities of another occupant of the Project, and co-
insurance payments. Deductibles in excess of $5,000 for the insurances carried
by Landlord hereunder. Premiums for earthquake and flood damage insurance,
unless such insurance is required by an institutional lender providing financing
for the building or Project, but in no event shall Tenant be required to pay in
excess of Tenant's Share of $20,000 annually as its share of such insurance.
M. Hazardous Substances. Costs incurred to investigate the presence
--------------------
of any Hazardous Substance (defined in the Lease Form), Costs to respond to any
claim of Hazardous Substance contamination or damage, Costs to remove any
Hazardous Substance from the Project and any judgments or other Costs incurred
in connection with any Hazardous Substance exposure or releases, except to the
extent caused by the storage, use, release, transport or disposal of the
Hazardous Substance in question by Tenant.
4
<PAGE>
N. Management. Any fee in excess of the management fee which would
----------
be charged by an independent professional management service for operation of
comparable projects in the vicinity.
O. Duplication. Costs and expenses for which Tenant reimburses
-----------
Landlord directly or which Tenant pays directly to a third party.
9. Indemnity. Notwithstanding anything to the contrary in the Lease Form
---------
(but subject to the last paragraph of Paragraph 9 and to Paragraph 29 thereof):
A. Negligence or Misconduct. Tenant shall neither release Landlord
------------------------
from, nor indemnify Landlord with respect to: (i) the negligence or willful
misconduct of Landlord or its agents, employees, or contractors, or (ii) a
breach of Landlord's obligations or representations under this Lease.
B. Landlord's Indemnification. Except to the extent of Tenant's
--------------------------
negligence or willful misconduct, Landlord shall indemnify, defend, protect and
hold harmless Tenant from all losses, costs, claims and damages, including
reasonable attorneys' fees and expenses to the extent the foregoing results from
the negligence or willful misconduct of Landlord or its agents, employees,
contractors, licensees or invitees, or the breach by Landlord of Landlord's
obligations or representations under this Lease.
10. Common Areas. Notwithstanding anything to the contrary in the Lease
------------
Form, if Landlord is permitted to alter any common area of the Project, such
alteration shall not unreasonably interfere with Tenant's use of or access to
the Premises or Tenant's parking rights.
11. Rules and Regulations. Notwithstanding anything to the contrary in the
---------------------
Lease Form, Tenant shall comply with all new non-discriminatory rules or
regulations which do not unreasonably interfere with Tenant's use of or access
to the Premises or Tenant's parking rights.
12. Reasonable Expenditures. Notwithstanding anything to the contrary in
-----------------------
the Lease Form, any expenditure by a party permitted or required under the
Lease, for which such party is entitled to demand and does demand reimbursement
from the other party, shall be limited to the fair market value of the goods and
services involved, shall be reasonably incurred, and shall be substantiated by
documentary evidence available for inspection and review by the other party or
its representative during normal business hours.
13. Surrender. Notwithstanding anything to the contrary in the Lease Form,
---------
Tenant's obligation to surrender the Premises shall be fulfilled if Tenant
surrenders possession of the Premises in the condition existing at the
commencement of the Lease, ordinary wear and tear, acts of God, casualties,
condemnation, Hazardous Substances (other than those stored, used or disposed of
by Tenant in or about the Premises or Project or for which Tenant is otherwise
responsible), and interior improvements which Landlord has not stated in writing
must be removed at the termination of the Lease excepted.
14. Damage or Destruction. Notwithstanding anything to the contrary in the
---------------------
Lease Form:
A. Landlord's Insurance. Landlord shall carry the following
--------------------
insurance: All risk, extended coverage property and casualty insurance for the
full replacement value of the Project and comprehensive general liability
insurance in the amount of $1,000,000 per occurrence. Landlord's casualty
insurance shall
5
<PAGE>
contain a "building ordinance" endorsement with respect to reconstruction costs
arising out of changes in applicable building codes.
B. Uninsured Casualty. Subject to the parties' rights to terminate
------------------
this Lease pursuant to the first sentence of Paragraph 11 of the Lease Form, in
the case of damage which is relatively minor (e.g., repair or restoration would
take fewer than ninety (90) days and would cost less than five percent (5%) of
the replacement cost of the Building), or if Tenant agrees to pay the cost of
repair in excess of a pre-agreed base amount, Landlord shall, at Landlord's cost
(provided that Tenant shall be responsible for any repairs required due to the
act or omission, or negligence or other fault of Tenant, its agents,
contractors, employees, invitees or licensees) repair such damage regardless of
whether insurance proceeds are available to make such repairs.
C. Tenant's Right to Terminate. Landlord shall notify Tenant within
---------------------------
fifteen (15) business days following any damage to or destruction of the
Premises (or the Building if such damage or destruction interferes with Tenant's
use of the Premises) the length of time Landlord reasonably estimates to be
necessary for repair or restoration. Tenant shall have the right to terminate
the Lease provided in Paragraph 11 of the Lease Form.
D. Construction Standard. In repairing the Premises, Landlord may
---------------------
use designs, plans and specifications other than those used in the original
construction, and may alter or relocate the premises, provided that the premises
as altered or relocated shall be in all material respects reasonably comparable
to the premises as defined herein.
15. Eminent Domain. Notwithstanding anything to the contrary in the Lease
--------------
Form, Tenant shall be entitled to pursue with and receive from the condemning
authority a separate award for a portion of the condemnation proceeds (whether
by award or payment under threat of condemnation) based on: (i) the Lease bonus
value (the difference between the Lease rent and fair market value rent); (ii)
the value of the condemned improvements Tenant has the right to remove from the
Premises; (iii) the unamortized value, allocable to the remainder of the Lease
term, of any improvements installed at Tenant's expenses, which are not
removable; (iv) Tenant's moving cost; (v) loss to Tenant's goodwill as a
consequence of the condemnation; and (vi) Tenant's trade fixtures.
16. Quiet Possession. Notwithstanding anything to the contrary in the
----------------
Lease Form, Tenant shall peacefully have, hold and enjoy the Premises, subject
to the other terms of this Lease, provided that Tenant pays the rent and
performs all of Tenant's covenants and agreements contained in this Lease. This
covenant and the other covenants of Landlord contained in this Lease shall be
binding upon Landlord and its successors only with respect to breaches occurring
during its and their respective ownerships of Landlord's interest hereunder.
17. Offset Statements, Reciprocal Obligation. Notwithstanding anything to
----------------------------------------
the contrary in the Lease Form, Section 22 of the Lease Form shall be deemed to
impose a reciprocal obligation on Landlord for the benefit of Tenant.
18. Landlord's Default. If Landlord's failure to perform any of its
------------------
obligations under the Lease results in a condition which is causing or threatens
to cause immediate damage to Tenant's personnel or property, then Landlord shall
repair such condition as soon as possible after receiving notice from Tenant.
19. Effect of Addendum. Each term used herein with initial capital letters
------------------
shall have the meaning ascribed to such term in
6
<PAGE>
the Lease Form unless specifically otherwise defined herein. In the event of any
inconsistency between this First Addendum and the Lease Form, the terms of this
First Addendum shall prevail. As used herein, the term "Lease" shall mean the
Lease Form, this First Addendum and all riders, exhibits, rules, regulations,
covenants, conditions and restrictions referred to in the Lease Form or this
First Addendum.
20. Option to Extend. Notwithstanding anything to the contrary in the
----------------
Lease Form:
A. Grant of Option. Landlord hereby grants to Tenant two consecutive
---------------
option(s) (the "Extension Option(s)") to extend the term of this Lease, each for
an additional term of three (3) years, commencing when the then-existing term
expires, upon the terms and conditions set forth in this Paragraph.
B. Exercise of Extension Options. Tenant must exercise such
-----------------------------
Extension Option(s) by giving Landlord written notice of its intention not less
than nine (9) months prior to the expiration of the then-existing term of this
Lease. If Tenant fails to exercise its first extension option, it shall be
deemed to have waived the second such option.
C. Extended Term Rent. If the Extension Option(s) are timely
------------------
exercised, in accordance herewith, the base rent for the Premises shall be based
upon the then current fair market monthly rent ("Fair Market Rent") for the
Premises as of the commencement date of the applicable extended term, as
determined by the agreement of the parties or, if the parties cannot agree by
the date which is seven (7) months prior to the commencement of such extended
term, then by an appraisal. The base rent for the Premises during each extended
term shall equal one hundred percent (100%) of Fair Market Rent, if such Fair
Market Rent is less than the base rent payable by Tenant for the month
immediately prior to commencement of such extended term. Otherwise, base rent
during such extended term shall equal the greater of ninety-five percent (95%)
of Fair Market Rent or One and 44/100 Dollars ($1.44) per rentable square foot
of the Premises. All other terms and conditions contained in the Lease and this
First Addendum, as the same may be amended from time to time by the parties in
accordance with the provisions of the Lease, shall remain in full force and
effect and shall apply during the extension term(s). Landlord shall be at no
expense (other than applicable leasing commissions, if any) in connection with
Tenant's election to extend the Lease term (including without limitation not
being obligated to pay for additional tenant improvements in connection with
such extended term) and Tenant shall accept the Premises during the extended
term in their then-existing condition. Notwithstanding the foregoing, if Tenant
exercises its first renewal option, Landlord, at Landlord's sole expense, shall
touch up the walls of the leased Premises, as needed, and shampoo the carpet. If
Tenant properly exercises its second renewal option, Landlord, at Landlord's
sole expense, shall repaint and recarpet the leased Premises at its sole
expense.
D. Appraisal. If it becomes necessary to determine the fair market
---------
rental value for the Premises by appraisal, real estate brokers (referred to
hereafter as "appraisers"), all of whom shall be licensed real estate brokers
who have at least five (5) years experience appraising and/or leasing office
space located in the vicinity of the Premises shall be appointed and shall act
in accordance with the following procedures:
(i) If the parties are unable to agree on the Fair Market Rent within
the allowed time, either party may demand an appraisal by giving written notice
to the other party, which demand to be effective must state the name, address
and qualifications of an appraiser selected by the party demanding an
7
<PAGE>
appraisal (the "Notifying Party"). Within ten (10) days following the Notifying
Party's appraisal demand, the other party (the "Non-Notifying Party") shall
either approve the appraiser selected by the notifying party or select a second
properly qualified appraiser by giving written notice of the name, address and
qualification of said appraiser to the Notifying Party. If the Non-Notifying
Party fails to select an appraiser within the ten (10) day period, the appraiser
selected by the Notifying Party shall be deemed selected by both parties and no
other appraiser shall be selected. If two appraisers are selected, they shall
select a third appropriately qualified appraiser. If the two appraisers fail to
select a third qualified appraiser, the third appraiser shall be appointed by
the then presiding judge of the county where the Premises are located upon
application by either party.
(ii) If only one appraiser is selected, that appraiser shall notify
the parties in simple letter form of its determination of the Fair Market Rent
for the Premises within fifteen (15) days following his selection, which
appraisal shall be conclusively determinative and binding on the parties as the
appraised Fair Market Rent.
(iii)If multiple appraisers are selected, the appraisers shall
meet not later than ten (10) days following the selection of the last appraiser.
At such meeting the appraisers shall attempt to determine the Fair Market Rent
for the Premises as of the commencement date of the extended term by the
agreement of at least two (2) of the appraisers.
(iv) If two (2) or more of the appraisers agree on the Fair Market
Rent for the Premises at the initial meeting, such agreement shall be
determinative and binding upon the parties hereto and the agreeing appraisers
shall, in simple letter form executed by the agreeing appraisers, forthwith
notify both Landlord and Tenant of the amount set by such agreement. If multiple
appraisers are selected and two (2) appraisers are unable to agree on the Fair
Market Rent for the Premises, all appraisers shall submit to Landlord and Tenant
an independent appraisal of the Fair Market Rent for the Premises in simple
letter form within twenty (20) days following appointment of the final
appraiser. The parties shall then determine the Fair Market Rent for the
Premises by averaging the appraisals; provided that any high or low appraisal,
differing from the middle appraisal by more than ten percent (10%) of the middle
appraisal, shall be disregarded in calculating the average.
(v) The appraisers' determination of Fair Market Rent shall be based
on rental of space of the same age, construction, size and location as the
Premises, taking into account the improvements installed therein at Landlord's
expense and Tenant's obligations to pay additional rent under this Lease. In
determining Fair Market Rent, the appraisers shall not consider any alterations
installed in the Premises at Tenant's expense.
(vi) If only one appraiser is selected, then each party shall pay one-
half of the fees and expenses of that appraiser. If three appraisers are
selected, each party shall bear the fees and expenses of the appraiser it
selects and one-half of the fees and expenses of the third appraiser.
(vii) If the process described above for selection of Fair Market
Rent has not resulted in a determination of such rent by the commencement of the
applicable lease term, then Tenant shall continue to pay rent in the amounts
then payable under this Lease prior to the commencement of the applicable
extended term, until the appraiser(s) reach a decision, with an appropriate
rental adjustment and other adjustments for any overpayment or underpayment of
rent or other amounts if the above
8
<PAGE>
described process subsequently results in a different rate for the Fair Market
Rent than is then payable hereunder.
21. Phase Two Expansion. Tenant shall further lease from Landlord the
-------------------
additional space (the "Phase Two Space") located on the second floor of the
Building consisting of 2,536 rentable square feet and 2,255 useable square feet
as shown on Exhibit "A" to the Lease
-----------
Form as the "Phase Two Space". Landlord shall, at Landlord's sole expense,
construct the improvements to the Phase Two Space described in the Final Plans.
Landlord shall construct such improvements in accordance with Exhibit "B" to the
Lease Form, except that -----------
Landlord estimates that such improvements shall be substantially complete by
February 1, 1993. As of the later of February 1, 1993 or the first to occur of
(i) the date by which all of the events described in clause (i) of Subparagraph
1(A) of this First Addendum have occurred with respect to such improvements and
the Phase Two Space, or (ii) the date by which the events specified in such part
(i) would have occurred but for Tenant Delay(s) as defined in Exhibit B, the
---------
Phase Two Space shall be deemed a portion of the Premises, base
monthly rent for the Premises shall be increased to Fifty Thousand Nine Hundred
Seventy-Four Dollars ($50,974.00), and the Tenant's Share shall equal 46.64%.
Promptly thereafter, Landlord and Tenant shall execute an amendment to this
Lease confirming the effective date of such expansion of the Premises to include
the Phase Two Space. The expansion of the Premises to include the Phase Two
Space shall further be subject to Subparagraph 1(B) of this First Addendum,
except that "May 1, 1993," shall be substituted for "February 1, 1993."
22. Options to Expand. Notwithstanding anything to the contrary in the
-----------------
Lease Form:
A. Grant of Expansion Options. Landlord hereby grants to Tenant
--------------------------
options (the "Expansion Options") to lease all of the remaining space (the
"Expansion Space") on the second floor of the Building on the terms and
conditions described in this Paragraph.
B. Landlord Representations. Landlord represents that the Expansion
------------------------
Space is subject only to the following interests, and the Expansion Options
shall be subject only to such interests:
1. Cochran & Horvath currently leases 2,912 rentable square
feet (the "Cochran Space") with a lease expiration date of July 31, 1993.
2. Concrete Form Contractors currently leases 8,203 rentable
square feet with a lease expiration date of July 31, 1993, but such tenant has
an option to extend its lease term for an additional two years thereafter.
3. Lincoln National Life currently leases 3,418 rentable square
feet with a lease expiration date of March 31, 1995, but such tenant has an
option to cancel such lease effective March 31, 1993.
4. Kensington Microware currently has a right of first refusal
to lease all the space on the second floor of the Building.
C. Exercise of Expansion Options. Landlord shall comply with all
-----------------------------
terms and conditions of Kensington Microware's right of first refusal. In the
event that Kensington Microwave does not exercise such right of first refusal
with respect to any portion of the Expansion Space, Landlord shall promptly
thereafter give Tenant written notice of the availability of such Expansion
Space, which notice shall specify the date that such Expansion Space will become
available for Tenant's occupancy.
9
<PAGE>
Such notice shall be given to Tenant at least six (6) months prior to the
availability date of the Concrete Form Construction space, at least five (5)
months prior to the availability date of the Lincoln National Life Space, and at
least three (3) months prior to the availability of the Cochran & Horvath space.
Tenant must exercise its Expansion Option with respect to such available
Expansion Space by giving Landlord notice thereof within eight (8) business days
after Tenant's receipt of Landlord's notice of availability thereof.
D. Effect of Exercise. If Tenant exercises an Expansion Option with
------------------
respect to any Expansion Space, this Lease shall be amended as follows:
1. Such Expansion Space shall be measured in accordance with
applicable BOMA measurement standards and included within the Premises, except
that the Base Year for determining Operating Expenses and Project Taxes with
respect to such Expansion Space shall be the calendar year next following
inclusion of such Expansion Space within the Premises.
2. The Tenant's Share shall be increased to equal a fraction
(expressed as a percentage), the numerator of which equals the total rentable
square feet of the Premises (including such Expansion Space) and the denominator
of which equals the total rentable square feet of the Building.
3. Base monthly rent for any Expansion Space other than the
Cochran Space shall equal the Fair Market Rent of such Expansion Space as
determined by agreement of the parties or, if the parties cannot agree within
twenty (20) days of Tenant's exercise of the Expansion Option, by the appraisal
procedure described in Subparagraph 20(D) of this First Addendum (taking into
account the tenant improvement allowance provided in Paragraph 22.D.4). If such
appraisal process has not resulted in a final determination of Fair Market Rent
by the commencement date of the term respecting applicable Expansion Space, then
the rate then payable with respect to the remainder of the Premises, shall be
used until such final determination, with an appropriate adjustment for any
overpayments or underpayments of rent or other amounts if the appraisal results
in a determination of Fair Market Rent different from such amounts then payable
with respect to the remainder of the Premises. Base monthly rent for the Cochran
Space shall be at the same base monthly rental rate per square foot of rentable
space payable by Tenant under this Lease for the initial Premises at the time
the Cochran Space is included within the Premises.
4. Landlord shall provide to Tenant an allowance for tenant
improvements to such Expansion Space in an amount equal to Fifteen Dollars
($15.00) per rentable square foot of the applicable Expansion Space.
5. Such amendment of the Lease shall be effective, as to the
applicable Expansion Space, as of the earlier of (a) the date Tenant takes
possession of such Expansion Space, or (b) the occurrence of all of the events
described in clause (i) of subparagraph 1(A) of this First Addendum with respect
to such Expansion Space and any tenant improvements to be made by Landlord to
such Expansion Space, or (c) the date by which such events described in clause
(i) would have occurred but for Tenant Delay, as
defined in Exhibit B. Promptly thereafter, Landlord and Tenant shall execute an
---------
amendment to this Lease confirming the effective date of such expansion, the
base monthly rent for the entire Premises (including such Expansion Space), the
amount of Tenant's improvement allowance for the applicable Expansion Space, and
the Tenant's Share after such expansion.
23. Tenant's Right of First Refusal to Lease Additional Space. If at any
---------------------------------------------------------
time during the initial or any extended term of
10
<PAGE>
this Lease Landlord determines to lease any additional space not encumbered by
lease, options, or rights of refusal at the Project ("Additional Space"), then
Landlord shall notify Tenant of the terms on which Landlord is willing to lease
such Additional Space. If Tenant, within eight (8) business days after receipt
of Landlord's written notice gives Landlord notice in writing of its agreement
to lease the Additional Space on the terms stated in Landlord's notice, then
Landlord shall lease to Tenant and Tenant shall lease from Landlord the
Additional Space on the terms stated in Landlord's notice. If Tenant does not
give Landlord written notice of its agreement to lease the Additional Space on
the terms contained in Landlord's notice within said eight (8) business day
period, then Landlord shall thereafter have the right to lease the Additional
Space to a third party, provided that the material terms agreed to with said
third party are substantially the same as the terms stated in Landlord's notice
to Tenant. If Landlord does not lease the Additional Space within six (6) months
after the expiration of said eight (8) business day period, any further
transaction shall be deemed a new determination by Landlord to lease such
Additional Space and the provisions of this Paragraph shall again be applicable.
24. Cancellation. Tenant shall have the option to cancel this Lease prior
------------
to the expiration of the initial term by giving written notice specifying its
election to so cancel this lease to Landlord no later than the first day of the
thirty-fourth (34th) month of the lease term, in which event such cancellation
shall be effective as of the end of the forty-second (42nd) month of the term.
Tenant acknowledges that if Tenant so terminates the lease term pursuant to this
Paragraph, and as payment for the privilege of terminating the lease as herein
provided, Tenant shall pay to Landlord (in addition to all other payments for
rental or other payments due during the time the lease is in effect), the amount
of One Hundred Forty One Thousand Nine Hundred Sixty-Six and no/100 Dollars
($141,966.00). Such payment shall be made by certified or cashiers check no
later than the last day of the forty-second (42nd) month of the term.
LANDLORD: TENANT:
- -------- ------
THE JOSEPH AND EDA PELL REVOCABLE ELECTRONICS FOR IMAGING,
TRUST a California corporation
By: /s/ Joseph Pell Eda Pell By: /s/ E. Arazi
Printed Printed
Name:_____________________________ Name: E. ARAZI
Title:____________________________ Title: C.E.O.
Date: 8/10/92 Date: 7 August 1992,
11
<PAGE>
SECOND ADDENDUM TO LEASE
This Second Addendum to Lease ("Second Addendum") is dated for references
purposes April 1, 1993, and is made between the Joseph Pell and Eda Pell
Revocable Trust ("Landlord") and Electronics for Imaging ("Tenant") to be a part
of that certain Agreement of Lease ("Lease") dated July 30, 1992. Landlord and
Tenant agree that the Lease and First Addendum to Lease are modified and
supplemented by this Second Addendum as follows:
1. Premises. The Premises shall be increased by 2,536 rentable square feet
--------
(2,255 useable). ("Phase II Expansion") as shown on Exhibit A to the Lease.
The total Premises shall be increased from 32,863 rentable square feet
(31,254 useable) to 35,399 rentable square feet (33,509 useable). The total
square footage on the second floor of the building shall be 10,399 rentable
square feet (9,245 useable).
2. Term. The effective date of this expansion shall be April 1, 1993.
----
3. Rent. Tenant agrees to pay Landlord $1.44 per rentable square foot per
----
month for the Phase II Expansion ($3,651.84). The base monthly rent payable
for the entire Premises (including the Phase II Expansion) shall be Fifty
Thousand Nine Hundred Seventy Four and 00/100 Dollars ($50,974.00).
20. Rental Adjustment.
(b) Tenant's Share shall be Forty Six and 64/100 percent (46.64%).
Landlord Tenant
Joseph and Eda Pell Revocable Trust Electronics For Imaging
By: /s/ Joseph Pell By: /s/ Signature Illegible
By: /s/ Eda Pell
Date: 6/15/93 Date: 6/8/93
<PAGE>
THIRD ADDENDUM TO LEASE
This Third Addendum to Lease ("Third Addendum") is dated for references purposes
May 20, 1993, and is made between the Joseph Pell and Eda Pell Revocable Trust
("Landlord") and Electronics for Imaging ("Tenant") to be a part of that certain
Agreement of Lease dated July 30, 1992. Landlord and Tenant agree that the
Agreement of Lease and the First and Second Addendums to the Lease ("Lease") are
modified and supplemented by this Third Addendum as follows:
1. Premises. The Premises shall be increased by 6,145 rentable square feet
--------
(5,487 useable) ("Added Premises"). (This is essentially the addition of
the two end sections of the space formerly occupied by Concrete Form
Constructors as shown on Exhibit A.) The total Premises shall be increased
from 35,399 rentable square feet (33,509 useable) to 41,544 rentable square
feet (38,996 useable) as shown on Exhibit A. The total square footage on
the second floor of the building shall be 16,544 rentable square feet
(14,737 useable).
2. Term. The term of this Lease shall be extended from 50 months to 56 months,
----
ending on June 30, 1997. The term for the Added Premises shall be 48 months
commencing on July 1, 1993 and ending on June 30, 1997.
3. Rent. Tenant agrees to pay Landlord $1.65 per rentable square foot per
----
month for the Added Premises referred to in this Addendum ($10,139.25 per
month). (The base rent for all other Premises remains $1.44 per rentable
square foot.) The monthly base rent payable for the entire Premises
(including the Added Premises) shall be Sixty-One Thousand One Hundred
Thirteen and 25/100 Dollars ($61,113.25).
6. Repairs and Alterations. Notwithstanding anything to the contrary in the
-----------------------
Lease or First Addendum, after proper installations by Landlord's
contractor, Tenant shall be responsible for the operation, maintenance and
repair of all equipment in the kitchen/dining facility other than standard
building plumbing, electricity and HVAC.
20. Rental Adjustment.
-----------------
(a) The Base Year for the Added Premises shall be 1994.
(b) Tenant's Share (with the Added Premises) shall be Fifty-five and
80/100 percent (55.80%).
39. Brokers. Landlord and Tenant each warrants that it has had no dealings with
-------
any real estate brokers or agents in connection with the negotiation of the
lease of the Added Premises.
The First Addendum to Lease dated for reference purposes as of July 30, 1992,
made by and between Joseph and Eda Pell Revocable Trust ("Landlord") and
Electronics for Imaging ("Tenant") shall be modified and Amended as follows:
1. Commencement Date. This entire paragraph shall not apply to the Added
-----------------
Premises. The term for the Added Premises and the payment of rent shall
commence on July 1, 1993 whether or not Landlord has substantially
completed the tenant improvements described in Exhibit B to this Third
Addendum and whether or not Tenant is able to occupy or take possession of
all or any part of the Added Premises by that date.
<PAGE>
22. Options to Expand.
-----------------
D. Effect of Exercise. All sections except Subsection 5 (see Commencement
------------------
Date above) of this paragraph shall apply to the Added Premises
including but not limited to the tenant improvement allowance. (See
Exhibit B attached hereto).
24. Cancellations. This paragraph shall be deleted.
-------------
25. Must-Take Option. Tenant shall have a must-take option on 1,905 rentable
----------------
square feet (1,701 useable) on the second floor shown on Exhibit A. The
term on this must-take space shall commence no later than July 1, 1994.
Promptly thereafter Landlord shall execute an amendment to this Lease
confirming the effective date of such expansion, the base monthly rent for
the entire premises including the option space, the amount of the tenant
improvement allowance and the Tenant's share after the must-take space is
added. Landlord shall be permitted to lease this space through July 1,
1994, however, Tenant may exercise its option in writing prior to July 1,
1994 if the space is unoccupied.
Landlord Tenant
Joseph and Eda Pell Revocable Trust Electronics For Imaging
By: /s/ Joseph Pell By: /s/ Signature Illegible
By: /s/ Eda Pell
Date: 6/15/93 Date: 6/8/93
<PAGE>
[CHART OMITTED]
<PAGE>
EXHIBIT B TO THE THIRD ADDENDUM
TENANT IMPROVEMENTS
1. Landlord shall, construct the improvements to the Added Premises
described in, and in accordance with, those certain plans and specifications for
the Added Premises (the "Final Plans") dated __________, 1993, by Fee, Munson,
Ebert. Subject to any Tenant Delays, as hereinafter defined, Landlord estimates
the construction period to substantially complete the tenant improvements to be
60 days from the date of issuance of the permit for the tenant improvements
(said completion date is hereinafter referred to as the "estimated completion
date"), and Landlord will use its best efforts and due diligence to obtain such
permit at the earliest date reasonably possible and complete the tenant
improvements by the estimated completion date. The Commencement Date for the
Added Premises shall be July 1, 1993, regardless of whether the space is
substantially completed and regardless of whether Tenant is actually able to
occupy or take possession of the Premises by that date. However, for each day of
delay in the construction fully in the control of and caused by Landlord, Tenant
shall be provided one day free rent. The free rent shall be credited to Tenant
in the first full month after occupancy by Tenant. Landlord shall provide Tenant
with access to the premises for the purpose of installing modular office
cubicles, computer and telephone wires, other cabling and kitchen equipment, no
later than three weeks prior to the estimated completion date. Landlord shall
have no responsibility for coordinating or installing such cubicles, wires,
cables or equipment. Tenant shall be solely responsible for the cost of
acquisition and installation of its telephone and computer equipment, and all of
Tenant's furnishings, personal property and kitchen equipment.
2. Landlord shall provide a $15.00 per rentable square foot allowance for
the tenant improvements. In addition Landlord shall provide an allowance of
$1.00 per rentable square foot for architectural fees. All costs exceeding these
allowances shall be paid by Tenant within ten (10) days of receipt of invoice
from Landlord. Landlord shall provide Tenant with a construction cost breakdown
for the improvements shown in the Final Plans and Tenant shall provide Landlord
with written authorization to proceed based upon that budget.
3. Tenant may be written instructions or drawings issued to Landlord (a
"Change Order Request") make changes in the Final Plans, including with
limitation, requiring additional work, directing the omission of work previously
ordered, or changing the quantity or type of any materials, equipment or
services. Promptly upon receipt of a Change Order Request, Landlord will provide
Tenant with a statement in detail setting forth the cost of said change
(including a breakdown of costs attributable to labor and materials,
construction equipment exclusively necessary for the change, and preparation or
amendment to shop drawings resulting from the change) and any time delays
anticipated to result from the change, prior to Tenant's final authorization
thereof. Tenant will have two (2) business days after receipt of such statement
in which to confirm the Change Order Request and authorize in writing the work
to be performed pursuant thereto, or to withdraw such request. Change Orders
will be signed by Landlord and Tenant in advance of any Change Order work.
Landlord will not unreasonably withhold its consent to any such Change Order
provided the changes do not, in Landlord's reasonable opinion, adversely affect
the Building's structure, systems, equipment or appearance. No changes to the
Final Plans will be made except pursuant to a written Change Order signed by
Tenant. The cost of all Change Orders which adds cost over the tenant
improvements shown on the Final Plans shall be paid by Tenant after substantial
completion of such Change Order work and within ten (10) days of its receipt of
an invoice from Landlord.
4. Landlord warrants that all tenant improvements to be constructed by
Landlord as initial tenant improvements shall be constructed in a good and
workmanlike manner using materials of good quality in accordance with the Final
Plans and with all applicable laws. Within thirty (30) days after occupancy,
Tenant shall make an inspection of the premises and prepare a punchlist of items
needing additional work by Landlord. Landlord's contractor shall complete all
punchlist items reasonably identified by Tenant within thirty (30) days after
the inspection or as soon as practicable thereafter.
<PAGE>
5. The carpet from the existing space shall be reused in all areas except
the kitchen area. There shall be adequate HVAC provided so as to prevent odors
travelling into the rest of the building from the food service.
6. Upon termination of the Lease, all of the tenant improvements shall
remain in the premises unless Landlord shall consent in writing to the removal
thereof by Tenant.
7. Tenant acknowledges that Landlord will make no independent review of
the Final Plans and that Landlord does not warrant either expressly or
impliedly, the adequacy of the Final Plans, the tenant improvements or Tenant's
equipment for Tenant's intended purpose, other than a Warranty that the tenant
improvements have been constructed according to the Final Plans in a good and
workmanlike manner, and in accordance with applicable laws.
Landlord Initials
Tenant Initials
<PAGE>
FOURTH ADDENDUM TO LEASE
This Fourth Addendum to Lease ("Fourth Addendum") is dated for references
purposes May 25, 1993, and is made between the Joseph Pell and Eda Pell
Revocable Trust ("Landlord") and Electronics for Imaging ("Tenant") to be a part
of that certain Agreement of Lease dated July 30, 1992. Landlord and Tenant
agree that the Agreement of Lease and the First, Second and Third Addendums to
the Lease ("Lease") are modified and supplemented by this Fourth Addendum as
follows:
1. Premises. The Premises shall be increased by 2,912 rentable square feet
--------
(2,600 useable) ("Added Premises"). (This is essentially the addition of
the space formerly occupied by Cohran and Harvath as shown on Exhibit A
attached hereto). The total Premises shall be increased from 41,544
rentable square feet (36,109 useable) to 44,456 rentable square feet
(41,596 useable). The total square footage on the second floor of the
building shall be 19,456 rentable square feet (17,337 useable).
2. Term. The term for the Added Premises referred to in this Addendum shall be
----
47 months commencing on August 1, 1993 and ending on June 30, 1997.
3. Rent. Tenant agrees to pay Landlord $1.44 per rentable square foot per
----
month for the Added Premises referred to in this Addendum ($4,193.28 per
month). The base monthly rent payable for the entire Premises (including
the Added Premises) shall be Sixty-Five Thousand Three Hundred and Six and
53/100 Dollars ($65,306.53).
20. Rental Adjustment.
-----------------
(a) The base year for the Added Premises shall be 1994.
(b) Tenant's Share (with the Added Premises) shall be Fifty-Nine and
70/100 percent (59.70%).
39. Brokers. Landlord and Tenant each warrants that it has had no dealings with
-------
any real estate brokers or agents in connection with the negotiation of the
lease of the Added Premises.
The First Addendum to Lease dated for reference purposes as of July 30, 1992,
made by and between Joseph and Eda Pell Revocable Trust ("Landlord") and
Electronics for Imaging ("Tenant") shall be modified and Amended as follows:
1. Commencement Date. This entire paragraph shall not apply to the Added
-----------------
Premises. The term for the Added Premises and the payment of rent shall
commence on August 1, 1993 whether or not Landlord has substantially
completed the tenant improvements described in Exhibit B to this Fourth
Addendum and whether or not Tenant is able to occupy or take possession of
all or any part of the Added Premises by that date.
<PAGE>
22. Options to Expand.
-----------------
D. Effect of Exercise. All sections except Subsection 5 (see Commencement
------------------
Date above) of this paragraph shall apply to the Added Premises
including but not limited to the tenant improvement allowance. (See
Exhibit B attached hereto).
Landlord Tenant
Joseph and Eda Pell Revocable Trust Electronics For Imaging
By: /s/ Joseph Pell By: /s/ Signature Illegible
By: /s/ Eda Pell
Date: 6/15/93 Date: 6/8/83
<PAGE>
EXHIBIT A TO FOURTH ADDENDUM
[EXHIBIT OMITTED]
<PAGE>
EXHIBIT B TO THE FOURTH ADDENDUM
TENANT IMPROVEMENTS
1. Landlord shall, construct the improvements to the Added Premises
described in, and in accordance with, those certain plans and specifications for
the Added Premises (the "Final Plans") dated _______, 1993, by Fee, Munson,
Ebert. Subject to any Tenant Delays, as hereinafter defined, Landlord estimates
the construction period to substantially complete the tenant improvements to be
60 days from the date of issuance of the permit for the tenant improvements
(said completion date is hereinafter referred to as the "estimated completion
date"), and Landlord will use its best efforts and due diligence to obtain such
permit at the earliest date reasonably possible and complete the tenant
improvements by the estimated completion date. The Commencement Date for the
Added Premises shall be August 1, 1993, regardless of whether the space is
substantially completed and regardless of whether Tenant is actually able to
occupy or take possession of the Premises by that date. However, for each day of
delay in the construction fully in the control of and caused by Landlord, Tenant
shall be provided one day free rent. The free rent shall be credited to Tenant
in the first full month after occupancy by Tenant. Landlord shall provide Tenant
with access to the premises for the purpose of installing modular office
cubicles, computer and telephone wires, other cabling and kitchen equipment, no
later than three weeks prior to the estimated completion date. Landlord shall
have no responsibility for coordinating or installing such cubicles, wires,
cables or equipment. Tenant shall be solely responsible for the cost of
acquisition and installation of its telephone and computer equipment, and all of
Tenant's furnishings, personal property and kitchen equipment.
2. Landlord shall provide a $15.00 per rentable square foot allowance for
the tenant improvements. In addition Landlord shall provide an allowance of
$1.00 per rentable square foot for architectural fees. All costs exceeding these
allowances shall be paid by Tenant within ten (10) days of receipt of invoice
from Landlord. Landlord shall provide Tenant with a construction cost breakdown
for the improvements shown in the Final Plans and Tenant shall provide Landlord
with written authorization to proceed based upon that budget.
3. Tenant may by written instructions or drawings issued to Landlord (a
"Change Order Request") make changes in the Final Plans, including with
limitation, requiring additional work, directing the omission of work previously
ordered, or changing the quantity or type of any materials, equipment or
services. Promptly upon receipt of a Change Order Request, Landlord will provide
Tenant with a statement in detail setting forth the cost of said change
(including a breakdown of costs attributable to labor and materials,
construction equipment exclusively necessary for the change, and preparation or
amendment to shop drawings resulting from the change) and any time delays
anticipated to result from the change, prior to Tenant's final authorization
thereof. Tenant will have two (2) business days after receipt of such statement
in which to confirm the Change Order Request and authorize in writing the work
to be performed pursuant thereto, or to withdraw such request. Change Orders
will be signed by Landlord and Tenant in advance of any Change Order work.
Landlord will not unreasonably withhold its consent to any such Change Order
provided the changes do not, in Landlord's reasonable opinion, adversely affect
the Building's structure, systems, equipment or appearance. No changes to the
Final Plans will be made except pursuant to a written Change Order signed by
Tenant. The cost of all Change Orders which adds cost over the tenant
improvements shown on the Final Plans shall be paid by Tenant after substantial
completion of such Change Order work and within ten (10) days of its receipt of
an invoice from Landlord.
4. Landlord warrants that all tenant improvements to be constructed by
Landlord as initial tenant improvements shall be constructed in a good and
workmanlike manner using materials of good quality in accordance with the Final
Plans and with all applicable laws. Within thirty (30) days after occupancy,
Tenant shall make an inspection of the premises and prepare a punchlist of items
needing additional work by Landlord. Landlord's contractor shall complete all
punchlist items reasonably identified by Tenant
1
<PAGE>
within thirty (30) days after the inspection or as soon as practicable
thereafter.
5. Upon termination of the Lease, all of the tenant improvements shall
remain in the premises unless Landlord shall consent in writing to the removal
thereof by Tenant.
6. Tenant acknowledges that Landlord will make no independent review of
the Final Plans and that Landlord does not warrant either expressly or
impliedly, the adequacy of the Final Plans, the tenant improvements or Tenant's
equipment for Tenant's intended purpose, other than a Warranty that the tenant
improvements have been constructed according to the Final Plans in a good and
workmanlike manner, and in accordance with applicable laws.
Landlord Initials
Tenant Initials
2
<PAGE>
FIFTH ADDENDUM TO LEASE
This Fifth Addendum to Lease ("Fifth Addendum") is dated for references purposes
July 12, 1994, and is made between the Joseph Pell and Eda Pell Revocable Trust
("Landlord") and Electronics for Imaging ("Tenant") to be a part of that certain
Agreement of Lease dated July 30, 1992. Landlord and Tenant agree that this
Lease is modified and supplemented by this Fifth Addendum.
1. Premises. The premises shall be increased by 1,905 rentable square feet
--------
(1,701 useable square feet) ("Must-take Premises"). The total Premises
shall be increased from 44,456 rentable square feet (36,109 useable square
feet) to 46,361 rentable square feet (37,810 useable square feet).
2. Term. The term for the Must-take Premises shall be for 36 months commencing
----
on July 1, 1994 and ending on June 30, 1997.
3. Rent. Tenant agrees to pay Landlord $1.65 per rentable square foot for the
----
Must-take Premises ($3,143.25). The total rent payable for the entire
Premises (including the Must-take Premises) shall be $68,449.78 per month.
20. Rental Adjustment.
-----------------
(a) The base year for the Must-take Premises shall be 1994.
(3) Tenant's Share shall increase from 59.7% to 62.3%.
The First Addendum to Lease dated for reference purposes as of July 30, 1992,
made by and between Joseph and Eda Pell Revocable Trust ("Landlord") and
Electronics for Imaging ("Tenant") shall be modified and Amended as follows:
1. Commencement Date. This entire paragraph shall not apply to the Added
-----------------
Premises.
22. Options to Expand.
-----------------
D. Effect of Exercise.
Subsection 5 to Paragraph 22(D) shall not apply to the Must-take Premises.
(See Paragraph 2 above.)
24. Cancellations. This paragraph shall be deleted as it applies to the Must-
-------------
take Premises.
Landlord Tenant
/s/ Joseph Pell /s/ Signature Illegible
Joseph Pell GVP & CFO
Date: 9-14-94 Date: 9/7/94
<PAGE>
SIXTH ADDENDUM TO LEASE
This Sixth Addendum to Lease ("Sixth Addendum") is dated for references purposes
January 19, 1995, and is made between the Joseph Pell and Eda Pell Revocable
Trust ("Landlord") and Electronics for Imaging ("Tenant") to be a part of that
certain Agreement of Lease dated July 30, 1992, and the First through Fifth
Addendums. Landlord and Tenant agree that this Lease is modified and
supplemented by this Sixth Addendum.
1. Premises. The premises shall be increased by 3,418 rentable square feet
--------
(3,101 useable square feet) ("Additional Premises"). The total Premises
shall be increased from 46,361 rentable square feet (43,297 useable square
feet) to 49,779 rentable square feet (46,398 useable square feet).
2. Term. The term for the Additional Premises shall be for 27 months
----
commencing on April 1, 1995 and ending on June 30, 1997. The Commencement
Date will be adjusted to the date the current tenant vacates the space.
3. Rent. Tenant agrees to pay Landlord $1.75 per rentable square foot for the
----
Additional Premises ($5,981.50). The total base rent payable for the entire
Premises (including the Additional Premises) shall be $74,431.28 per month.
20. Rental Adjustment.
-----------------
(a) The base year for the Additional Premises shall be 1995.
(3) Tenant's Share shall increase from 62.3% to 65.6%.
The First Addendum to Lease dated for reference purposes as of July 30, 1992,
made by and between Joseph and Eda Pell Revocable Trust ("Landlord") and
Electronics for Imaging ("Tenant") shall be modified and Amended as follows:
1. Commencement Date. This entire paragraph shall not apply to the Additional
-----------------
Premises.
22. Options to Expand.
-----------------
D. Effect of Exercise.
4. Landlord shall provide to Tenant an allowance for tenant
improvements to such Additional Premises in an amount equal to
$10.00 per useable square foot including architectural services
which shall not exceed $1.00 per useable square foot. This
allowance must be expended within the first six months of
possession and can only be used on these particular premises.
Subsection 5 to Paragraph 22(D) shall not apply to the Additional Premises.
(See Paragraph 2 above.)
24. Cancellations. This paragraph shall be deleted as it applies to the
-------------
Additional
<PAGE>
The Joseph Pell and Eda Pell Electronics for Imaging
Revocable Trust
/s/ Joseph Pell /s/ Signature Illegible
Joseph Pell
Date: 5-23-95 Date: 5/1/95
<PAGE>
SEVENTH ADDENDUM TO LEASE
This Seventh Addendum to Lease ("Seventh Addendum") is dated for reference
purposes December 4, 1996, and is made between the Joseph Pell and Eda Pell
Revocable Trust ("Landlord") and Electronics for Imaging ("Tenant") to be a part
of that certain Agreement of Lease dated July 30, 1992, and the First through
Sixth Addendum. Landlord and Tenant agree that this Lease is modified and
supplemented by this Seventh Addendum.
Landlord and Tenant are parties to the Lease pursuant to which Landlord
leased to Tenant and Tenant leased from Landlord office space. Tenant wishes to
exercise is first option to extend the Lease as set forth in the First Addendum
to Lease dated July 30, 1992. The Lease is hereby amended as follows:
1. Premises. The existing premises of 49,779 rentable sq. ft. and 46,398
--------
useable sq. ft. located on the first and second floors of the building
located at 2855 Campus Drive in San Mateo, California.
2. Term. The term of the option period shall be three years commencing July 1,
----
1997 and ending on June 30, 2000.
3. Rent. Tenant agrees to pay Landlord 52.60 per rentable square foot per
----
month for the Premises. The total Base Rent payable for the entire Premises
is $129,425.40 per month.
4. Over-standard Electrical. Landlord provides Tenant an electrical service
------------------------
allowance of $.155 per rentable sq. ft. which is included in the Base Rent.
Landlord and Tenant recognized that Tenant's electrical service shall cost
in excess of the $.155 allowances due to Tenant's heavy electrical and air
conditioning requirements. Therefore, Tenant agrees to pay for all
electrical charges over and above the monthly allowance provided above,
less any over-standard charges to other tenants in the building (any usage
over the $.155 allowance provided to each Tenant).
Landlord shall charge Tenant $9,000.00 per month for the over-standard
electrical useage as a projected expense. This amount shall be paid along
with the monthly rent. At the end of the year, Landlord shall prepare a
PG&E invoice analysis showing the actual cost of over-standard usage by
Tenant. Landlord shall credit Tenant for any costs in excess of the total
projected sum paid by Tenant over the year. If the amount of Tenant's
credit is less than the actual cost then Tenant shall reimburse Landlord
within thirty (30) of receipt of an invoice. The monthly amount paid by
Tenant for over-standard electrical usage for each year shall be based on
the previous year's charges. A similar accounting between Landlord and
Tenant will occur annually.
1
<PAGE>
5. Except as set forth herein, the Lease shall remain unmodifed and in full
force and effect. Should there by any conflict between the terms of the Lease
and the terms of this Seventh Addendum, the terms of this Seventh Addendum shall
control.
IN WITNESS WHEREOF, the parties have executed this Seventh Addendum to
Lease as of the date first written above.
The Joseph Pell and Eda Pell
Revocable Trust
/s/ Signature Illegible
Joseph Fell, Trustee
Electronics for Imaging, Inc.
By:/s/ Signature Illegible
Emi Sultman
Its: Vice President, Strategic Relations
2
<PAGE>
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
WILSON, SONSINI, GOODRICH & ROSATI
Two Palo Alto Square
Palo Alto, California 94306
Attn: Real Estate Department/DKK
MEMORANDUM OF LEASE
-------------------
THIS MEMORANDUM OF LEASE is made as of the 30th day of July, 1992, by and
between THE JOSEPH AND EDA PELL REVOCABLE TRUST ("Landlord") and ELECTRONICS FOR
IMAGING, a California corporation ("Tenant").
W I T N E S S E T H
-------------------
1. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, approximately 32,863 rentable square feet and 31,254 usable square
feet of space (the "Premises") at that certain improved real property commonly
referred to as 2855 Campus Drive, San Mateo, San Mateo County, California, being
more particularly described on
Exhibit "A" attached hereto, on the terms and conditions of that certain
- -----------
Agreement of Lease and First Addendum to Lease (collectively, the "Lease") dated
the date hereof by Landlord and Tenant regarding the Premises.
2. The term of the Lease is projected to commence on November 1, 1992,
and to expire on December 31, 1996, but the actual commencement and expiration
dates of such term shall be as provided in the Lease.
3. Landlord hereby grants to Tenant two (2) consecutive options to extend
the term of the Lease, each for an additional term of three (3) years,
commencing when the then existing term expires, upon the terms and conditions
described in the Lease.
4. Landlord hereby grants to Tenant an option to lease all of the
remaining space on the second floor of the building in which the Premises are
situated on the terms and conditions described in the Lease.
5. Landlord hereby grants to Tenant a right of first refusal to lease any
additional space (not encumbered by lease, options or rights of first refusal)
at the building in which the Premises are situated on the terms and conditions
provided in the Lease.
<PAGE>
6. The purpose of this Memorandum is to give public notice of the
existence of the Lease and of certain rights and options granted therein. In the
event, however, of any inconsistency between this Memorandum and the terms and
conditions of the Lease, the Lease shall prevail.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease, by
their duly-authorized representatives, as of the day and year first above
written.
LANDLORD:
--------
THE JOSEPH AND EDA PELL
REVOCABLE TRUST
By: /s/ Joseph Pell Eda Pell
Title: ____________________
TENANT:
------
ELECTRONICS FOR IMAGING,
a California corporation
By: /s/ E. Arazi
Title: C.E.O.
STATE OF CALIFORNIA )
) ss.
COUNTY OF MARIN )
Before me, C.D. GRAY, a Notary Public in and for the County and State
aforesaid, personally appeared JOSEPH and Eda Pell, who is personally known to
me (or proved to me on
the basis of satisfactory evidence) to be the person who subscribed the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity and that by his/her signature on such instrument the person
or entity on behalf of which the person acted executed the instrument.
WITNESS my hand and official seal this 10TH day of August, 1992.
/s/ Signature Illegible
Notary Public
My commission expires:
-2-
<PAGE>
STATE OF CALIFORNIA )
) SS.
COUNTY OF San Mateo )
Before me, GAY M MINDER, a Notary Public in and for the County and State
aforesaid,
personally appeared E. Arazi, who is personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person who subscribed the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity and that by his/her signature on such instrument the person
or entity on behalf of which the person acted executed the instrument.
WITNESS my hand and official seal this 7th day of August, 1982
/s/ Gay M. Minder
[SEAL OMITTED]
Notary Public
My commission expires: November 11, 1995
-3-
<PAGE>
EXHIBIT A
---------
The land referred to herein is situated in the City of San Mateo, County of
San Mateo, State of California and is described as follows:
Lots 1 through 7, Parcel A and Parcel B on the map entitled "Peninsula
Office Park, City of San Mateo, San Mateo County, California", which map
was filed in the Office of the Recorder of the County of San Mateo, State
of California on October 2, 1972 in Book 78 of Maps at Pages 32 and 33,
together with Parcels 1 and 2 as designated on the map entitled "Parcel Map
No. 154, BEING A RESUBDIVISION OF LOT 8 PENINSULA OFFICE PARK, CITY OF SAN
MATEO (VOL. 78 of maps pages 32 and 33) SAN MATEO COUNTY, CALIFORNIA",
which map was filed in the Office of the Recorder of the County of San
Mateo, State of California on December 22, 1976 in Book 34 of Parcel Maps
at Page 34.
<PAGE>
EXHIBIT B
TO
SUBLEASE AGREEMENT
FLOOR PLAN
A floor plan generally depicting the Sublease Premises is attached hereto.
<PAGE>
[CHART OMITTED]
