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Exhibit 10.14
SUBLEASE
THIS SUBLEASE ("Sublease"), dated June 26, 2000 ("Effective Date"), for
reference purposes only, is entered into by and between IPRINT.COM, INC.
("Sublessor") and NAPSTER, INC. ("Sublessee").
RECITALS
A. Pursuant to that certain Lease Agreement dated September 14,
1999 as amended by that certain Addendum to Industrial Real Estate Lease, dated
on or about September 21, 1999 ("Addendum"), (the "Master Lease"), a copy of
which is attached hereto as EXHIBIT A, Frederick and Doris Nicolini ("Master
Lessor") leased to Sublessor that certain real property located at 1475 Veterans
Boulevard, Redwood City, California, more particularly described in the Master
Lease (the "Premises"). Capitalized terms not otherwise defined herein shall
have the same meanings as provided in the Master Lease.
B. The term of the Master Lease commenced on October 1, 1999
and shall expire on September 30, 2003.
C. Sublessor desires to sublease to Sublessee, and Sublessee
desires to sublease from Sublessor, the Premises upon the terms and conditions
provided for herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, Sublessor and Sublessee covenant and agree as
follows:
AGREEMENT
1. PREMISES. On and subject to the terms and conditions below,
Sublessor hereby leases to Sublessee, and Sublessee hereby leases from
Sublessor, the Premises together with all trade fixtures, furnishings and
equipment located on the Premises as of the date of execution of this Sublease.
2. TERM. The Term (herein so called) of this Sublease shall commence
on the later of: (i) the date on which Master Lessor consents to this Sublease
in the manner described in Section 17 and (ii) July 1, 2000 (the "Commencement
Date"), and shall expire June 30, 2001, unless sooner terminated pursuant to any
provision hereof (the "Termination Date").
2.1 RENEWAL OPTION. Sublessee shall have one option to renew
this Sublease for six (6) months, from July 1, 2001 to December 31,
2001 ("Option Period"), by providing Sublessor with Sublessee's
written notice of its intent to exercise such option by March 1, 2001.
The Rent for the Option Period shall be Nine Dollars and Twenty Five
Cents ($9.25) per rentable square foot per month, or Ninety Seven
Thousand Four Hundred Ninety Five Dollars ($97,495.00) per month. If
Sublessee timely exercises its right to renew for the Option Period,
Sublessee shall deposit in the escrow account described in Section 5.2
of this Sublease an additional Five Hundred Eighty Four Thousand Nine
Hundred and Seventy Dollars ($584,970.00) no later than May 31, 2001
for the entire
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rent for the Option Period. If Sublessee does not make such deposit by
May 31, 2001, the right to renew shall be automatically terminated.
3. SUBLEASE SUBJECT TO MASTER LEASE.
3.1 INCLUSIONS. It is expressly understood, acknowledged and
agreed by Sublessee that except for Sections 1.08, 1.10, 1.12, 2.01,
4.04(b), 6.04 and 13.06 of the Master Lease, the first sentence of
Section 13.02(a) of the Master Lease, all of Article 14 of the Master
Lease, and Sections 16 and 17 of the Addendum, this Sublease shall
incorporate by reference the terms, conditions and covenants of the
Master Lease, modified in appropriate circumstances so as to make such
Articles, and any Sections contained therein, applicable only to the
subleasing hereunder by Sublessor of the Premises covered hereby. Each
reference in the Master Lease to "Lease," "Landlord," "Tenant" and
"Property" shall be deemed to refer to this Sublease, Sublessor,
Sublessee and Premises, respectively, and, along with all of the
provisions set forth in this Sublease, shall be the complete terms and
conditions hereof. Subject to any applicable cure periods, upon the
breach of any of said terms, conditions or covenants of the Master
Lease by Sublessee or upon the failure of Sublessee to pay Rent (to be
defined below) or comply with any of the provisions of this Sublease,
Sublessor may exercise any and all rights and remedies granted to
Master Lessor by the Master Lease. Sublessee does hereby expressly
assume and agree to perform and comply with, for the benefit of
Sublessor and Master Lessor, each and every obligation of Sublessor
under the Master Lease as applied to the Premises hereunder. All
insurance Sublessee shall obtain pursuant to Section 4.04 (provided,
however, Sublessee shall not be required to obtain or maintain the
property and rental income insurance described in Section 4.04(b) and
any reference in Section 4.04 to such property and rental income
insurance shall not apply) shall name Master Lessor and Sublessor as
additional insureds.
3.2 EFFECT. The terms of the Master Lease shall prevail
except as otherwise provided in this Sublease. It is further
understood and agreed that Sublessor has no duty or obligation to
Sublessee under the Articles and Sections of the Master Lease as
Landlord, except as otherwise provided for in this Sublease, other
than to maintain the Master Lease in full force and effect during the
term of this Sublease, subject to Section 15 of this Sublease.
Notwithstanding the foregoing, Sublessor shall not be liable to
Sublessee for any earlier termination of the Master Lease that is not
due to the gross negligence or willful misconduct of Sublessor,
subject to Section 15 of this Sublease. Except as provided in this
Sublease, Sublessee hereby acknowledges that it has read and is
familiar with all the terms of the Master Lease, and agrees that this
Sublease is subordinate and subject to the Master Lease and that any
termination thereof without the gross negligence or willful misconduct
of Sublessor shall likewise terminate this Sublease.
3.3 WAIVER OF SUBROGATION. With respect to the waiver of
subrogation contained in the Master Lease, such waiver shall be deemed
to be modified to constitute an agreement by and among Master Lessor,
Sublessor, and Sublessee (and Master Lessor's consent to this Sublease
shall be deemed to constitute its approval of this modification).
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3.4 MASTER LESSOR'S CONSENT. Whenever notice to or consent
of Master Lessor is required under the Master Lease, or whenever the
Master Lessor fails to perform its obligations under the Master Lease,
upon receipt of Sublessee's written request, Sublessor shall endeavor
in good faith to obtain such consent or performance on behalf of
Sublessee.
4. POSSESSION. If for any reason Sublessor cannot deliver possession
of the Premises to Sublessee on the Commencement Date in the condition required
under this Sublease, Sublessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Sublease or the obligations
of Sublessee hereunder or extend the term hereof, provided that no rent shall be
due hereunder until possession of the Premises has been delivered to Sublessee
in the condition required under this Sublease, which shall occur on the earlier
of (a) July 1, 2000, or (b) the date upon which Sublessee occupies all or any
portion of the Premises for business operations.
5. RENT.
5.1 GENERAL. Rent (herein so called) shall be the sum of
Nine Dollars and Twenty-five cents ($9.25) per rentable square foot
per month, or Ninety-seven Thousand Four Hundred Ninety-five Dollars
($97,495.00) per month.
5.2 ESCROW ACCOUNT. Upon consent of Master Lessor to this
Sublease, Sublessee shall deposit into an escrow account the amount of
One Million One Hundred and Sixty Nine Thousand Nine Hundred and Forty
Dollars ($1,169,940.00) for the entire rent for the Sublease Term.
Sublessor and Sublessee shall execute joint escrow instructions
directing escrow holder to deliver to Sublessor Ninety Seven Thousand
Four Hundred and Ninety Five Dollars ($97,495.00) on the first day of
each month of the Term of this Sublease. Sublessee shall make an
additional deposit if Sublessee exercises its right to renew for the
Option Period as more particularly described in Section 2.1 of this
Sublease. Sublessee shall pay all costs associated with the escrow
account.
5.3 SECURITY DEPOSIT. In addition to Rent, on or before the
Commencement Date, Sublessee shall pay to Sublessor the amount of One
Hundred Thousand Dollars ($100,000.00) as security for this Sublease
("Security Deposit"). The Security Deposit shall be governed by
Section 3.03 of the Master Lease; provided, however, Section 3.03(b)
shall not apply to this Sublease.
5.4 WARRANTS. As a material part of the consideration for
entering into this Sublease, upon execution of this Sublease,
Sublessee hereby grants to Sublessor the irrevocable right to purchase
an aggregate of Ten Thousand (10,000) shares of Napster, Inc. common
stock at the price of Two Dollars per share ($2.00), pursuant to the
provisions of a warrant agreement, a copy of which is attached hereto
as EXHIBIT B.
5.5 COMMENCEMENT. If the Commencement Date does not fall on
the first day of a calendar month, Rent for the first month shall be
prorated on a daily basis based upon the number of days in such
calendar month. Likewise, if the Termination Date does not fall on the
last day of a calendar month, Rent for the final month shall be
prorated on a
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daily basis based upon the number of days in such calendar month. Rent
shall be payable to Sublessor in lawful money of the United States, in
advance, without prior notice, demand, or offset.
6. CONDITION OF PREMISES.
6.1 "AS-IS" CONDITION. Sublessee acknowledges that Sublessor
occupies and is leasing the Premises on an "as-is" basis and Sublessee
accepts the Premises in an "as-is" condition, pursuant to Article Six
of the Master Lease. Sublessor has made no representations or
warranties with respect to the condition of the Premises; except that,
to Sublessor's knowledge, as of the Commencement Date of this
Sublease, (a) the HVAC, electrical, lighting, plumbing and roof are in
good condition and repair, and (b) Sublessor has not used or stored
Hazardous Materials, as defined in Section 5.03 of the Master Lease,
in violation of the Master Lease. By taking possession of the
Premises, Sublessee is conclusively deemed to have accepted the
Premises in their "as-is" condition as of the Commencement Date,
without any warranty whatsoever.
6.2 SERVICES. Sublessor shall be responsible for: (i) the
provision of and payment for Sublessee's ordinary and reasonable use
of water, gas, electricity, and janitorial service, (ii) maintenance
of the T-1 line and telephone system hardware in place on the
Commencement Date, and (iii) maintenance of the Premises in the
condition existing on the Commencement Date, ordinary wear and tear
excepted, as described in Section 6.04 of the Master Lease.
Notwithstanding the foregoing, Sublessor shall have no obligations of
maintenance or repair whatsoever (i) beyond that which is required due
to ordinary wear and tear and/or (ii) necessitated by the negligence
or misconduct of Sublessee's agents, employees, contractors or
invitees - all of which shall be the sole responsibility of Sublessee.
Sublessor shall deliver the Premises to Sublessee in broom clean
condition.
6.3 TENANT IMPROVEMENTS. Sublessee shall have the right to
improve the Premises upon written receipt of Master Lessor's and
Sublessor's prior written consent of a floor plan, which consent shall
not be unreasonably withheld. All Tenant alterations or improvements
shall be subject to the Master Lease, including without limitation,
Section 6.05 and Section 6.06.
6.4 SUBLESSOR OBLIGATIONS. Except as provided herein,
Sublessor shall have no obligation whatsoever for making any
improvements, repair, maintenance or restoration of the Premises as
Landlord, under the terms of the Master Lease, as incorporated herein.
Sublessee acknowledges that Sublessor's only responsibility or
obligation for maintenance or repair under this Sublease for Master
Lessor's obligations for maintenance and repair of exterior walls,
structure and roof under the Master Lease is, upon receipt of written
notice from Sublessee that the Premises require any such maintenance
or repair for which Master Lessor is obligated under the Master Lease,
Sublessor shall timely deliver such written notice to Master Lessor.
Notwithstanding the foregoing, Sublessor agrees to indemnify and hold
Sublessee free and harmless from any and all fines or assessments
(including any related claims, liability, loss, damage or expense), or
any requirement to alter the Premises, that result from any final
determination by a court as to the Premises' compliance with the U.S.
Americans with
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Disabilities Act, provided: (i) the fine, assessment or requirement to
alter is not caused in any way by any act or misconduct of Sublessee,
or by any repair or alteration of the Premises by Sublessee made with
or without the required approvals, (ii) Sublessee will cooperate with
Sublessor, at Sublessor's expense, to facilitate the making of any
required alteration, and (iii) in no event will any such fine,
assessment, requirement to alter the Premises, or the undertaking of
such alteration constitute a breach of this Sublease by Sublessor.
7. PARKING. Sublessee shall, at no additional cost, have access to
sixty (60) parking spaces either on the Premises or nearby, which may include
parking in the nearby Kaiser facility. Sublessor intends to and shall use
reasonable efforts to coordinate with the City of Redwood City and County of San
Mateo to lease and obtain the approval and the right to develop as a parking lot
the County-owned property in the vicinity of the Premises. If and when Sublessor
negotiates and executes such a lease and obtains such approval and right,
Sublessor shall, at no additional cost, provide parking to Sublessee upon such
County-owned property. Sublessor shall endeavor to accomplish all of the
foregoing within ninety (90) days from the Commencement Date.
8. INDEMNITY. Sublessee agrees to indemnify and hold Sublessor and
Master Lessor and the property of Sublessor and Master Lessor, including the
Premises, free and harmless from any and all claims, liability, loss, damage or
expense resulting from Sublessee's occupation and use of the Premises,
specifically including, without limitation, any claim, liability, loss, or
damage arising:
8.1 By reason of injury to person or property, from whatever
cause, while in or on the Premises or in any way connected with the
Premises or with the improvements or personal property in or on the
Premises, including any liability for injury to the person or personal
property of Sublessee or Sublessee's agents, officers or employees;
8.2 By reason of any work performed on the Premises or
materials furnished to the Premises at the instance or request of
Sublessee or Sublessee's agents or employees;
8.3 By reason of Sublessee's failure to perform any
provision of this Sublease or to comply with any requirements imposed
on Sublessee or any the Premises by any duly authorized governmental
agency or political subdivision; and
8.4 Because of Sublessee's failure or inability to pay as
they become due any obligations incurred by Sublessee in the business
operations to be conducted by Sublessee on the Premises.
9. NOTICES. Any notice required or permitted to be given under this
Sublease shall be in writing and sent by United States mail, registered or
certified mail, postage prepaid, return receipt requested, or transmitted by
facsimile with a hard copy sent within one (1) business day by United States
mail, and in all cases addressed as follows:
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TO SUBLESSOR AT: iPrint.com, inc.
Attention: Mr. Greg Korjeff
1450 Oddstad Drive
Redwood City, CA 94063
To Sublessee at: Napster, Inc.
Attention: Ms. Lyn Jensen
1475 Veterans Boulevard
Redwood City, CA 94063
or such other place as Sublessor or Sublessee shall from time to time supply to
the other in writing.
10. BROKERS. Sublessee shall pay a brokerage commission to Cornish &
Carey Commercial ("Broker") pursuant to a separate commission agreement between
Sublessee and Broker. Sublessee hereby represents and warrants that, except for
Broker, Sublessee has dealt with no other broker in connection with this
Sublease and the transactions contemplated herein. Sublessor hereby represents
and warrants that Sublessor has dealt with no broker in connection with this
Sublease. Sublessee and Sublessor shall indemnify, protect, defend and hold each
other harmless from all costs and expenses (including reasonable attorneys'
fees) arising from or relating to a breach of the foregoing representation and
warranty.
11. DEFAULT. In addition to defaults contained in the Master Lease
(which are incorporated herein by reference), failure of Sublessee to make any
payment of Rent within ten (10) days after the date due hereunder shall
constitute an event of default hereunder. In the event Sublessee breaches any
other provision of this Sublease or abandon the Premises prior to the
Termination Date, Sublessor may, in addition to any rights and remedies granted
to Sublessor pursuant to Section 3.1 hereof:
11.1 Continue this Sublease in effect by not terminating
Sublessee's right to possession of the Premises, in which event
Sublessor shall be entitled to enforce all of its rights and remedies
under this Sublease, including the right to recover Rent as it becomes
due under this Sublease; or
11.2 Terminate this Sublease and recover from Sublessee:
(a) The worth at the time of the award of
the unpaid Rent which had been earned at the time of the termination
of this Sublease;
(b) The worth at the time of the award of
the amount by which the unpaid Rent which would have been earned after
the termination of this Sublease until the time of the awards exceeds
the amount of rental loss that the Sublessee proves could have been
reasonably avoided;
(c) The worth at the time of the award of
the amount by which the unpaid Rent for the balance of the Term after
the time of awards exceeds the amount of rental loss that the
Sublessee proves could have been reasonably avoided; and
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(d) Any other amount necessary to
compensate Sublessor for all detriment proximately caused by Sublessee's
failure to perform its obligations under this Sublease.
12. SUCCESSORS AND ASSIGNS. This Sublease shall be binding and inure
to the benefit of the heirs, executors, administrators, successors and assigns
of the parties, but nothing contained in this Section shall be construed as
consent by Sublessor to any assignment of this Sublease or transfer of any
interest therein by Sublessee.
13. WAIVER. Waiver of any breach of any of the provisions of this
Sublease by Sublessor shall not constitute a continuing waiver of any subsequent
breach by Sublessee either of the same or of any other provision of this
Sublease.
14. ATTORNEY'S FEES. In the event that either party hereto brings an
action or proceeding involving the Premises to enforce any provision of this
Sublease, the prevailing party shall be entitled to reasonable attorney's fees,
costs and expenses.
15. EARLY TERMINATION OF SUBLEASE. Sublessor agrees not to terminate
the Master Lease voluntarily, or modify the Master Lease in a manner that
adversely affects Sublessee's rights under this Sublease. Notwithstanding the
foregoing, Sublessor shall have the right to terminate or modify the Master
Lease as provided in the Master Lease in the event of damage or destruction or
condemnation. If the Master Lease should terminate prior to the expiration of
the Sublease, Sublessor shall have no liability to Sublessee on account of such
termination. Sublessor and Sublessee will each refrain from any act or omission
that would result in the breach of any of the covenants, provisions or
conditions of the Master Lease on the part of Tenant under the Master Lease. If
this Sublease is terminated prior to the Termination Date, Sublessor shall
relinquish all rights to any amounts on deposit in the escrow account described
in Section 5.2 hereof, except amounts due and owing to Sublessor.
16. ASSIGNMENT AND SUBLETTING.
16.1 CONSENT. Sublessee shall neither assign this Sublease
nor sublet the Premises, or any part thereof, without first obtaining
the consent of Master Lessor and Sublessor, which consent shall not be
unreasonably withheld or delayed. If Sublessee desires to effect an
assignment or sublet, then, within thirty (30) days prior to the date
when Sublessee desires the assignment or sublet to be effective,
Sublessee shall provide Sublessor with written notice requesting
Sublessor's consent. Consent to one assignment by either Master Lessor
or Sublessor shall not be deemed a consent to any subsequent
assignment or subletting. Any assignment or subletting without the
consent of Master Lessor and Sublessor shall be void and shall, upon
the mutual agreement of Master Lessor and Sublessor, terminate this
Sublease. If Sublessee assigns or sublets all or any portion of the
Premises, Sublessee shall pay to Sublessor as additional Rent fifty
percent (50%) of the Profit, as defined in Section 9.05(b) of the
Master Lease.
16.2 RECAPTURE. If Sublessee desires to assign this Sublease
or sublet a portion of the Premises such that such assignment or
sublet will result in assignment or sublet of more than fifty percent
(50%) of the Premises (or more than 5270 rentable square feet)
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aggregate to one or more assignees or sublessees, within thirty (30)
days of Sublessor's receipt of written request for consent to such
transfer or assignment, Sublessor will notify Sublessee of its
election to do one of the following: (i) consent to the proposed
assignment or sublet subject to such reasonable conditions as
Sublessor may impose in providing such consent and in which case
Sublessee shall pay to Sublessor as Additional Rent fifty percent
(50%) of the Profit; (ii) refuse such consent, which refusal shall be
on reasonable grounds; or (iii) terminate this Sublease as to all or
such portion of the Premises which is proposed to be assigned or
sublet and recapture all or a portion of the Premises. For the purpose
of this Sublease, the sale of Sublessee's capital stock through any
public exchange or issuance for purposes of raising financing only
shall not be deemed an assignment, subletting or any other transfer of
the Sublease or the Premises.
17. MASTER LESSOR CONSENT. This Sublease is subject to the condition
precedent of Sublessor obtaining Master Lessor's consent as required by Article
Nine of the Master Lease, which consent shall be evidenced by Master Lessor's
execution of this Sublease as set forth below. Sublessee shall use its
reasonable efforts to obtain Master Lessor's consent to this Sublease. If
Sublessor is unable to obtain Master Lessor's consent within fifteen (15) days
of the Effective Date, this Sublease shall terminate.
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18. COUNTERPARTS. This Sublease may be signed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, the parties have executed this Sublease as of the
date first written above.
SUBLESSOR:
IPRINT.COM, INC.
BY:-----------------------------------
ITS:----------------------------------
SUBLESSEE:
NAPSTER, INC.
BY:-----------------------------------
ITS:----------------------------------
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Master Lessor hereby consents to the subleasing of the Premises by Sublessor to
Sublessee on the terms and conditions set forth in this Sublease.
MASTER LESSOR:
By: -----------------------------
Frederick Nicolini
By: -----------------------------
Doris Nicolini
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EXHIBIT A
MASTER LEASE
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EXHIBIT B
WARRANT
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